Market Based Demand Response - Results from Norwegian research projects

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Ove S. Grande Senior Research Scientist SINTEF Energy Research

Market Based demand Response Results from Norwegian Research Projects IAE/DSM workshop, Trondheim 18 April, 2012

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Outline

•  Introduction

•  Marked Based Demand Response – Value of demand side price elasticity

•  Examples from Norwegian pilot tests – lessons learned –  Load shifting – remote control –  Innovative Power contract: "Fixed Price with return option"

§  EcoGrid EU (FP7) Large scale smartgrid demonstration of an advanced market concept

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NorNed

Power Exchange: Nord Pool Common Balancing Market

Ø  Nordic system: 91 GW (47 GW hydro)

Ø  Central European system: 667 GW

Ø Development towards integration in Europe:

n  Market coupling DA (TLC, CWE)

n  Implicit auction on all HVDC links

n  Integration of balancing markets

Nordic system

Central European system

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Electricity consumption in Norway

•  Total 127 TWh (07) –  Heating: ca 35 TWh –  Large industrials: ca 40 TWh

•  Peak load: 23 994 MW

•  A large (theoretical) DR potential –  Industry ~3 000 MW –  Residential and commercial: ~1 700 MW

•  Production (99 % Hydro): average 130 TWh/Year 50 TWh variation between wettest and driest year

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Monopoly - competetion

Kraftleverand ø r Power supplier

Market operator (NordPool)

TSO (Statnett)

Authorities (NVE)

Revenue cap regulation RPM Elspot

Agreements

Monopoly Market

Revenue cap regulation

Sluttbruker Customers

Nettselskap DSO

Network tariff Energy price

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Remote controlled or automatic load reduction

Price dependent load reduction

Demand side participation in market and system operation"

Market phases

Quantity

Price hedging phase

Spot phase

Price

Time

Control phases

Pre-operational phase

Production planning / Bidding Regulating Power

Operational phase

0 2 4 6 8

10 12

Spot trade

Bilateral trade

4 8 12 16 20 24

Option Market for Reserves

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Value of demand side price elasticity

Load

Manual load shifting

Original demand

Automatic load shifting

Price- dependent response

Price

p0

p1

V0 V1

Remote  controlledload  reduction

Pricedependantload  reduction

Market  phases

Quantity

Price  hedging  phase Spot  phase

Price

Time

Control  phases

Pre-­‐operational  phase

Productionplanning  /Bidding  RegulatingPower

Operational  phase

02468

1012

Spot  trade

Bilateral  trade

4 8 12 16 20 24

Option  Market  for  Reserves

Less than100 MW load reduction would have reduced the price from 13 NOK to 1 NOK

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Price and CO2 emision impact

Marg. Cost [€/MWh] (CO2 ~30 €/t)

40

80

Hydro/wind

nuclear Lignite

Coal

Gas b

Gas p

Oil cond

CO2 emission 0,5-1 t/MWh

Consumption peak

Volume (MW)

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Benefit for customers

€/MWh

Δp

Cost reduction for the Responsive customer

Every customer will benefit from the reduced average price

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Present contract types Norway

•  Standard Variable Price (SVP) •  Spot Price (SP) •  Fixed Price (FP)

SVP

SP FP

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Status AMR Norway

•  Full roll out of Automated Metering and Control systems (AMS) by the end of 2016

•  Functional requirement –  Register and store with a sampling frequency of 60 min (optional15 min ) –  Disconnect or limit power output –  Exchange price information –  Prepared for both output and input of energy on customer (prosumer) level

–  Standardized interface for communication with external equipment (display) –  Connectable to other meter equipment –  Secure storage of data in case of voltage interruption –  Data security measures

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Market based Demand Response Project (2005-2008) Pilots 1.  ”Remotely controlled Load shifting" – peak load reduction

2.  ”Fixed Price with Return option” - reduction of energy in shortage periods

3.  Automatic Demand Response (ADR)

4.  ”Smart house – ToD tariff” – housing cooperative

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Household  electricity  consump2on  in  Norway  

Space heating

Water heating

Approx 80% of electricity consumption relates to water and space heating. Source: : EU/ REMODECE

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Pilot I “Remotely controlled Load shifting – ToD tariff“ •  Test group: 41 household customers

•  Network tariff: Time of Day tariff with high price in periods with

expected shortage (+ 0,10 € , Mon-Fri, hour 9-11 and 17-19)

•  Energy price - Hourly spot price (free choice of supplier)

•  Remote control of water heaters (2-14 kW) via AMR in the defined periods

•  ”El-button” reminder

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time

Pilot I Results

Positive response from all customers. No cold water complaints.

Accumulated 600 -1000 MWh/h load reduction in peak hour indicated.

Automatic load reduction in peak load periods gives a stable demand response

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Pilot II Fixed price with return option (FWR)

•  Fixed Volume - financial contract combined with spot price settlement

•  Objective /characteristics –  Give incentives to load reduction in periods with shortage –  Retaining the advantages of fixed price contracts with

regard to predictable costs –  Reduce the risk for the supplier.

Ø  2500 household customers

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Fixed price volume

Real consumption

time

kWh/h

time

Sale

Fixed price

Price

Elspot

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0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

5000000

2004Q1 2004Q2 2004Q3 2004Q4 2005Q1 2005Q2 2005Q3 2005Q4 2006Q1 2006Q2 2006Q3 2006Q4

[Quarter]

[kWh/quarter]

FWRSpotSVP

+10,4%

-24,5%

+7,7%

Demand response from FWR customers compared to alternative contracts

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EcoGrid EU (FP7 Energy – 2010-2) 2011-15, 20, 6 M€ Ø  Main objectives: §  To demonstrate operation of

a power system with more than 50 % renewable sources

§  To implement ICT systems and innovative market solutions - offering TSOs additional and more efficient balancing services

§  To enhance small consumer and local producers to participate in the power market through real-time operation, energy storage and savings

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The Scope of a Real-time Market

Time scale

The EcoGrid Real-time Market will be an integrated part of the current power markets and supports the need of direct control options on a very short time scale

Intra-day (Elbas) Regulating power market

AGC/LFC/ Frequency-controlled reserves Inertia

Quantity

Days Hours Minutes Seconds Now

Volatility

Direct control

Market-based operation

EcoGrid Real-time

Market

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EcoGrid EU market concept Test period autumn 2012 – spring 2014

Test site: Bornholm Operated by the Danish DSO Østkraft Demonstration in a real system with > 50 % RES Part of the Nordic energy market

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EcoGrid EU Planned test groups

Control Group 2-300

FC

PV

EV

PV

Smart

Businesses ~100

Manual

control user 4-500

IBM/PowerMatcher Users ~700

Siemens Users ~500

??

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Summing up v  Demand response can effectively be integrated into the power market.

v  Full AMR-rollout will empower also the smaller customers to profit from

adaptation to different market situation.

v  Demand response have significant value – relative small decline in demand can contribute to substantial reductions in price in shortage situations.

v  Temporary reduction in domestic space heating and load shifting of water heaters are the most convenient demand response objects in Norway, and the accumulated potential is large.

v  Demand response closer to operation necessary to cope with future challenges related to high share of intermittent production as demonstrated the EcoGrid EU project on Bornholm (Denmark).

v  PARADOX: Success with Demand Response will reduce the price differences and thereby the potential payback for necessary investments .

Ø  Additional incentive mechanisms, e.g. ToD tariffs, needs to be considered in order to achieve wanted socio-economic benefits!

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Thank you for your attention!