Regulatory framework for energy storage systems, barriers ... · • Energy storage can operate as a load but the Regulation on Demand Connection does not apply to storage devices

Regulatory framework for energy storage

systems, barriers and recommendations

Raquel Garde PhDEERA Workshop on Hybrid Energy and Energy Storage Systems, San Sebastian, 22th March 2017

s u m m a r y

1. Introduction

2. Regulatory Framework

3. Barriers

4. Recommendations

0. CENER

0. CENER

Vision & Mision

0. Introduction

Vision

Mission

To be a research centre of excellence in the renewable

energies field with international outreach.

To generate knowledge in the renewable energy field

and to transfer it to the industry in order to boost

sustainable energy development.

Science-Technology –Enterprise System-

Basicresearch

Appliedresearch

Technologicaldevelopment

Technologicalservices

Engineering IndustrialProduction

R&D Projects

Certification

Tests

0. Introduction

Activities and Research Areas

Activities

Areas

Applied research, technology transfer….

Assessment, approval, accreditation and certification services.

Wind

Biomass

Solar Photovoltaic

Solar Thermal

Energy Grid Integration

Energy in Buildings

0. Introduction

CENER in numbers

0. Introduction

19 M€

190

100

The annual 2015 budget is €18,6 million.

60% self-financing

190 employees

Researchers, technical staff and support personnel

Total investments (2002-2014) >€100 million

More than 200 customers in all five continents

Infraestructures

HeadquartersSarriguren

Wind Test LaboratorySangüesa

Office

Sevilla

CB2GAoiz

Microgrid

Sangüesa

0. Introduction

1. Introduction

1. Introduction

• The European Energy Strategy is designed to achieve three main

goals:

• Security of energy supply

• Competitiveness and affordable prices

• Sustainability

• With ambitious energy and climate change objectives by 2020:

• the reduction of its greenhouse gas emissions by at least 20%

• the increase of the share of renewable energies to at least 20% of

primary energy consumption

• energy savings of 20% or more

• all the Member States must achieve a 10% share of alternative fuels

(electricity, hydrogen, biofuels,…) in their transport sector

• These commitments have been reinforced with long term goals for

2030:• a 40% cut in greenhouse gas emissions compared to 1990 levels

• at least a 27% share of renewable energy consumption

• at least 27% energy savings compared with the business-as-usual

scenario

• And for 2050 a reduction of the greenhouse gas emissions by 80-

95% when compared to 1990 levels.

1. Introduction

• Energy policies, guidelines and directives are grouped in the European Energy

Union Strategy which comprises five main aspects:

• Security, solidarity and trust. To diversify the sources of energy and ensure the

security of supply.

• A fully-integrated internal energy market. To enable free flow of energy in Europe

with adequate infrastructure and regulation.

• Energy efficiency. To reduce the external energy dependence and emissions and to

drive jobs and growth.

• Climate action - decarbonizing the economy. An ambitious climate policy that

includes the EU Emissions Trading System (EU ETS), greenhouse gas emissions

reductions, a roadmap towards low-emission mobility and an energy policy which

makes the EU world leader in renewables.

• Research, innovation and competitiveness. To support breakthroughs in low-carbon

and clean energy technologies throughout research and innovation and to improve

competitiveness.

1. Introduction

1. Introduction

• Communication COM(2010) 639 Energy 2020. A strategy for

competitive, sustainable and secure energy stablishes the strategy for a

more competitive, secure and sustainable path regarding energy issues

• The new energy strategy focuses on five priorities:

• Achieving an energy efficient Europe;

• Building a truly pan-European integrated energy market;

• Empowering consumers and achieving the highest level of safety and

security;

• Extending Europe's leadership in energy technology and innovation;

• Strengthening the external dimension of the EU energy market.



• Electricity Directives

• The Directive 96/92/EC proposed common rules for the creation of an

internal market for electricity. Directive 2003/54/EC updated rules to

overcome the difficulties identified in the process.

• Goals of Internal Market:

• Increase the efficiency in the production, transmission and distribution of the

electricity

• Reinforce the security of supply

• Reinforce the competitiveness of the European industry

• Respecting the environment

• the concept of energy storage is not mentioned in the documents neither

as a generation system nor as a load


• Third Internal Energy Market Package

• Adopted to reach the goals of the Europe 2020 Strategy in 2009

• The Third Energy Package comprises two Directives and three Regulations:

• Directive 2009/72/EC concerning common rules for the internal market in

electricity and repealing Directive 2003/54/EC

• Directive 2009/73/EC concerning common rules for the internal market in natural

gas and repealing Directive 2003/55/EC

• Regulation (EC) No 714/2009 on conditions for access to the network for cross-

border exchanges in electricity and repealing Regulation (EC) No 1228/2003

• Regulation (EC) No 715/2009 on conditions for access to the natural gas

transmission networks and repealing Regulation (EC) No 1775/2005

• Regulation (EC) No 713/2009 of the European Parliament and of the Council of 13

July 2009 establishing an Agency for the Cooperation of Energy Regulators

• Directive 2009/72/EC

• this Directive 2009/72/EC goes in depth on the effective unbundling of the

transmission system operators

• energy storage is not included or mentioned in the document that could

impact negatively the ESS deployment as a potential asset of the

electricity system


WAYS FOR UNBUNDLING IN THE THIRD ENERGY PACKAGE

Ownership Unbundling All integrated energy companies sell off their gas and electricity networks. In this case,

no supply or production company is allowed to hold a majority share or interfere in the

work of a transmission system operator

Independent System Operator (ISO) Energy supply companies may still formally own gas or electricity transmission networks

but must leave the entire operation, maintenance, and investment in the grid to an

independent company

Independent Transmission System Operator

(ITO)

Energy supply companies may still own and operate gas or electricity networks but must

do so through a subsidiary. All important decisions must be taken independent of the

parent company

• Regulation (EC) No 713/2009

• To establish the Agency for the Cooperation of Energy Regulators (ACER)

• The activities of the Agency comprise:

• to issue opinions and recommendations to TSOs, regulatory authorities, the

European Parliament, the Council, or the Commission;

• to take decisions about national regulatory authorities, access to and

operational security of cross-border infrastructure and others;

• and finally, ACER was requested by the EC to develop the non-binding

Framework Guidelines (FGs) for the Gas and Electricity Market.


• Framework Guidelines and Network Codes

• The Regulation EC 714/2009 established the European Network of

Transmission System Operators for Electricity (ENTSO-E) which was

requested in 2011 to define the Network Codes from the Framework

Guidelines developed by ACER.

• Framework Guidelines on Electricity Balancing

• Framework Guidelines on Electricity System Operation

• Framework Guidelines on Capacity Allocation and Congestion

Management for Electricity

• Framework Guidelines on Electricity Grid Connections


• Framework Guidelines on Electricity Balancing

• The FG on EB address the electricity balancing issues, procurement of

frequency restoration reserves and replacement reserves, activation of

balancing energy and imbalance settlement and defines the role of TSOs

and other stakeholders.

• energy storage is mentioned in several articles:

• “facilitating the participation of Demand Side Response including aggregation

facilities and energy storage”

• “allow Demand Facility, Aggregators and generation units from conventional

and Renewable Energy Sources as well as storage elements to become

Balancing Service Providers”.

• TSOs are not allowed to procure balancing services itself, with some

exceptions, and have to facilitate that BSPs, paying special attention to

energy storage and aggregators, to provide those services in scheduling

areas and under a level playing field competition.


• Framework Guidelines on Electricity Grid Connections

• FGs on Electricity Grid Connections apply to grid connections for all types of

significant grid users SGUs already, or to be, connected to the transmission or

distribution network.

• The Regulation on Grid Connection of Generators applies to new power-generating

modules which are classified according to several criteria in terms of voltage level

connection and maximum capacity of the plant as Type A, B, C or D. However, the

regulation does not apply to storage devices except for pump-storage power-

generating modules.

• Pump-storage power-generating modules shall fulfil all the relevant requirements in

both generating and pumping operation mode. The rest of the energy storage

systems do not have a specific regulation.

• Energy storage can operate as a load but the Regulation on Demand Connection

does not apply to storage devices except for pump-storage power generating

modules and to pump-storage power generating modules that have both generating

and pumping operation mode


• Framework Guidelines on Electricity System Operation

• The Framework Guidelines on System Operation focus on issues of electric

power system and network operation.

• The storage systems are not mentioned or included in this Regulation

• Framework Guidelines on Capacity Allocation and Congestion

Management for Electricity

• The FGs on CA and CM for Electricity deals with the integration, coordination

and harmonisation of the congestion management regimes, insofar as such

harmonisation is necessary in order to facilitate electricity trade within the EU

• this Regulation does not mention any asset concretely but energy storage

systems could have to face some challenges to participate in those markets

since their contributions are not regulated yet


• Clean Energy for All Europeans Package

• Published in November 2016, it pursues three main goals:

• Putting energy efficiency first

• Achieving global leadership in renewable energies

• Providing a fair deal for consumers

• It comprises a set of initiatives to implement the Energy Union, which includes

legislative and non-legislative proposals to create the proper framework to

provide benefits to the citizens while contributing to the main five aspects

mentioned previously in the introduction

• A regulatory framework for a level playing field for all technologies without

risking climate and energy targets will be set through the Renewable Energy

Directive COM(2016) 767, together with the proposals on the new electricity

Market Design.


• Storage in the Winter Package

• Energy storage systems have received very much attention in the new

Directives and Regulations

• Article 1 of the Electricity Directive says: “This Directive establishes common

rules for the generation, transmission, distribution, storage and supply of

electricity, together with consumer protection provisions, with a view to creating

truly integrated, competitive, consumer-centred and flexible electricity markets in

the Union.”

• Article 2 includes a definition: 'energy storage' means, in the electricity system,

deferring an amount of the electricity that was generated to the moment of use,

either as final energy or converted into another energy carrier.”

• Also, the roles of TSOs and DSOs with respect to energy storage are clarified

and they are now allowed to own and operate this kind of facilities in case of

absence of competitive supply “by other parties.”


• Renewable energy directive

• Directive 2009/28/EC and previous ones, 2001/77/EC and 2003/30/EC

mentioned energy storage in a few sentences, referring only to pumped

hydro systems

• a review of the Renewable Energy Directive is part of the Winter Package

and takes into consideration energy storage as supports stronger EU rules

guaranteeing that consumers have the possibility to produce and store their

own renewable heat and electricity and participate in all relevant energy

markets in a non-discriminatory and simple way, including through

aggregators

• Even though the responsibilities for balancing activities are not defined,

DSOs are required to assess the potential of district heating or cooling

systems to provide balancing and other system services, including energy

storage.


3. Barriers

3. Barriers

• Barriers identified in Third Internal Energy Market Package

• Current Business Model

• Feasibility

• Lack of data and knowledge about the ancillary services

procurement and remuneration

• High risk for new investments

• Lack of business cases (multiple incomes streams)

• Financial Support

• European Infrastructure funds and incentives (tax exemptions or

others)

• Market Distortions

• PCIs (pumped-hydro exclusion) ranking

3. Barriers


• Regulatory Framework

• Unbundling principle.

• TSO/DSO cannot have any type of control over an electricity

generation facility

• Preferable a open market approach also for ancillary services

• Definition of storage

• To clarify the unbundling principle

• To overcome administrative barriers when new storage

technologies want to connect to the distribution network

• To define appropriate connection rules

3. Barriers


• Market Design

• Market signals.

• market must provide clear signals to reflect the increased

requirements for flexibility in balancing and ancillary services

• market signals alone are not enough due to distortion of feed-in

tariffs for renewable energy and the financial support for

transmission infrastructure

• Grid Fees

• double grid access fees and differences among Member States

• Balancing Market

• Participation of storage in balancing markets depends also on

connection rules definition

• Barriers addressed in Winter Package (EASE)

• No level playing field

• regulation of existing energy system components, e.g. RES

• Insufficient market access

• Network Codes

• openness, competition inter alia, access to bulk markets

• System position of energy storage

• Lack of definition of ES

• Unbundling

• Potential for Heat Storage underestimated

• Unacceptable implementation

• Fees & Taxes

• Insufficient incentives besides R&D funds

• Lack of technical standards

3. Barriers

4. Recommendations

• Highlights

• A level-playing field should be achieved by removing the financial support

for any type of electricity storage as it distorts competition with other options

that can offer flexibility

• TSO should be to define the products needed for balancing and for the

stability of the system and use market based mechanisms for procuring

these products

• kind of control by TSO/DSOs on electricity storage facilities but subject to

conditions

• Include a definition for storage

4. Recommendations

• Highlights

• A system optimisation approach should be followed for the decisions

regarding development of transmission lines and storage or generation

facilities, following clear and transparent criteria, which could be

implemented under the supervision of ACER.

• Close monitoring and participation to the development of the network code

on balancing is recommended for all stakeholders that are interested to see

full access for electricity storage facilities to cross border markets.

• need for storage on the distribution level is growing fast and there are

important regulatory and market issues to be dealt with

4. Recommendations

4. Recommendations

• Recommendations (stoRE)

• Close monitoring of transposition of market based mechanisms

promoted for balancing and encourage integration of mechanisms to

ensure adequate market liquidity for providing the necessary services to

balance the grid.

• Article 9(1) of the Electricity Directive to be officially clarified regarding its

applicability to electricity storage:

• first to include a clear definition of electricity storage in the Electricity Directive

(involving EASE)

• Ensure the functioning of an open, fair and transparent market, by introducing

clear restrictions to the use of electricity storage facilities by system operators

if and when they are allowed some kind of control over them

• Facilitate the market selection of the most efficient solution when a decision

has to be taken for transmission vs. storage (CBA methodology)

4. Recommendations


• Project developers, EASE and ACER to critically review the evaluation of

the proposed electricity storage projects to ensure that it is fair and in

equal terms with the transmission projects.

• European Commission to maintain the possibility to include projects not

foreseen in the TYNDP, in the PCIs.

• To include official definitions of electricity storage in the network codes,

also for small scale systems (smart grid developments), to facilitate

similar administrative procedures in the Member States for their

connection to the grid.

• Project developers and other stakeholders to monitor closely the on-

going development of the network code on balancing.

4. Recommendations


• Common rules should be applied across the EU regarding transmission

access fees and use of system fees for electricity storage systems

• These fees will be calculated with a method that will take into account

the real impact of the electricity storage system on the grid

• Targeted regulatory interventions and initiatives are introduced on a

European level in order to deal with the cause or the effects of market

distortions

4. Recommendations

• Improvements for Winter Package

• Level playing field

• Energy storage could also be established as a separate asset class,

the 4th element along with generation, networks and consumption.

• System position of energy storage

• The word “generated” could be replaced by “produced” to avoid any

connotation that it is a generation asset. Energy storage could also

be established as a separate asset class, the 4th element along

with generation, distribution/transmission and consumption.

• As opposed to allowing ownership only by way of regulator-

approved derogation, the provision could permit ownership

depending on the service.

4. Recommendations

• Improvements for Winter Package

• Unacceptable implementation (fee & taxes)

• The provision could specify that energy storage should not be

subject to double charging.

• Lack of technical standards

• energy storage could be read as to be a sub-element of demand

response. Re-phrase the sentence to put energy storage on an

equal footing as a network code topic.

Regulatory framework for energy storage systems, barriers ... · • Energy storage can operate as a load but the Regulation on Demand Connection does not apply to storage devices

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