Third EU-SysFlex blog: The “supermarket” approach is one way of managing future electric grids10.05.2019News
In a future electricity system with high share of renewable energies, system operators will need to rethink the way they procure flexibility, driven by their actual needs on the one hand and a low-complexity process for flexibility providers on the other hand.
The needs of the future electricity system – such as system adequacy, frequency control, voltage control and congestion management – will drive necessary innovations in the field of system services. The transition from a power system, traditionally dominated by large synchronous conventional generation units, to a system with high levels of variable non-synchronous renewable technologies results in challenges that might endanger the safe and reliable operation of the power system both in the transmission and distribution grid. Innovations in system services are not limited to the creation of new products, but will appear in each step of the process for system provision, ranging from changing the parameters of existing products to introducing new products or changes in the market organisation.
Historically, system services were centered around products based on active power, providing frequency control services for the transmission system operator (TSO). Additionally, recent evolutions in system services have mainly focused on new technologies that could provide similar services, while less attention has been paid to a fundamental change in product design. Although the existing services might be well suited for the ongoing system challenges, they are not yet adapted to a future system dominated by large shares of variable renewable sources of electricity (RES-E). In particular, an evolution towards faster reacting services for frequency control on the one hand and new services for voltage control and congestion management on the other hand will be necessary to safely operate the system. Next, new technologies might be necessary to guarantee a sufficient level of system services at reasonable prices due to the potential need of technical capabilities (ramping, availability…) that can’t be met by existing service providers. Moreover, the specifications for new products such as congestion management will be largely influenced by the operational processes defined by the respective system operators.
Fundamental changes in the energy landscape might require a more fundamental rethinking of the way we organize our products and markets for system services.
The need for new types of system services might in the worst case lead to a large set of different products with different specifications and market arrangements. It is clear that this might increase complexity from the perspective of both the system operator and the service provider. How can we ensure that clarity and simplicity form the basis of our solutions and as such lead to a safe and secure operation of the grid? Think about a concept where system-service providers do not offer flexibility for a single product or market organization (respecting the required specifications), but, on the contrary, offer their flexibility independent of a product or a market and only by indicating the specifications of their flexibility pool (size, activation speed, ramping constraints…). This concept is called the ‘supermarket approach’ where system operators shop around for flexibility, driven by their actual needs on the one hand and the available offers (including a wide range of different specifications) on the other hand. The pricing of flexibility is in this concept less obvious and should be carefully designed. Complementary to the design of new system services, there is a need to bring innovation into the future market arrangements for the procurement and activation of system services.
Innovations in market design are a key enabler for a smooth integration of changes in the field of system services.
Current markets for system services are most often characterized by a centralized market design, organized and operated by the TSO. Future market organizations will be a mix of centralized, decentralized or even peer-to-peer market organizations, dependent on the system needs that should be mitigated. For some system services, it will be even necessary to complement the market solutions with additional regulation due to the nature of the service. This is for example the case for system services that are essential to the stability of the power system (e.g. inertia). It can be debated under which conditions the security of the grid is a valuable argument to call for more regulated arrangements (e.g. via network codes) instead of market-based solutions to provide the necessary system services. It is obvious that, dependent on the chosen market design, the roles and responsibilities, interactions and information exchange between TSOs and DSOs will differ.
The future power system will differ drastically from the system we know today. This requires not only innovative solutions at the level of product and market design, but calls for continuous process innovation for system management and increased cooperation between transmission and distribution system operators. The EU-SysFlex project will propose innovations in product and market design, inspired by the past but ready for the future.
Written by: Helena Gerard
Disclaimer: blog entries reflect individual views of the author(s) that may not reflect official positions or communication of the project / project consortium.