Hey, Europe: You Can’t Get to 100% Renewables Without Demand Side Flexibility
By Amit Narayan, CEO AutoGrid
Europe has inspired the world with its ambitious renewables integration, smart energy trading, and grid balancing. But the next lap in this race requires a different muscle: Demand Side Flexibility (DSF) or the capacity to throttle electricity consumption by end customers as needed.
An important new study from Smart Energy Europe (SmartEn) makes the case for increased DSF in Europe to meet aggressive climate action targets. Gone is the old assumption that because European businesses and homes are more efficient than their US counterparts, potential demand-side resources would be limited. Not true, and today DSF is no longer optional for Europe.
Demand Side Flexibility Answers the Call
SmartEN’s study guides policy makers on how to achieve 55 percent GHG reduction by 2030 in the most cost effective way for both prosumers and the larger grid network. All told, the modelling estimated almost 300 gigawatts (GW) of total flexibility. But even more good news lies behind that big number:
- A five percent overall savings due to lower costs to generate electricity compared to a scenario without the DSF. That equates to €4.6 billion.
- The power system could serve all demand all year long, saving another €9 billion, eliminating current “lost load” not served by available excess renewable generation.
- Curtailment of renewable energy would be reduced by 61 percent, improving the economics and efficiency of the renewable supply portfolio and the availability of decarbonized electricity to consumers.
- GHG emissions would drop by 8 percent or approximately 37.5 million tons, allowing Europe’s power sector to exceed its 55 percent GHG reduction goal by 2030.
Less Regulation, More Digitalization
All these DSF benefits require state-of-the-art digital platforms such as AutoGrid’s FlexTM to squeeze out the most value whether supply or load or energy storage in real time. Among AutoGrid’s pioneering European DSF work was a 100 MW flexibility resource deployed by the Dutch Eneco Group in 2015, a classic virtual power plant (VPP) project that proved out the dispatch of multiple distributed energy resources (DER) in real time into wholesale markets. More recently, Total SE used the Flex platform to provide frequency regulation from its largest battery, a 25MW/25MWh lithium ion battery.
In Europe, and markets all over the world, the variability of solar and wind is often mitigated by fossil fuel generation, usually peaker plants, which remain the most expensive and polluting on the system. The SmartEN study shows that DSF projects like the AutoGrid examples are a much better way for the environment and the economy.
DSF, for example, would be able to fill an estimated capacity shortfall of 60 GW in the EU while saving €2.7 billion, compared to the cost of traditional peaking supply-side resources.
The SmartEn report also estimates EU members can currently offer up just over 10 GW of DSF to the EU’s wholesale markets. Yet that number could grow by 300 percent if existing regulatory barriers are eliminated and political support, via a specific peak demand reduction target, is secured. Such aims are within reach. Just looking at the European industrial sector, energy intensive industries can reduce peak demand on average between 10-17 percent in each Member States, thanks to their DSF potential.
European VPPs Expand to Full Potential
Europe’s first VPP dates back to 2008 with an aggregation of nine hydroelectric plants totaling 8.6 MW of capacity. This VPP evolved over time to include biogas, backup generators, cogeneration and wind power to reach 200 MW in size. Impressive, but this VPP was solely focused on supply-side resources.
Unlike Europe, the VPP market in the US started with demand response. Observers in the US have marvelled at the level of VPP traction in Europe, focusing on renewable integration and robust trading among countries. Yet Europe can also take some cues from the U.S. on DSF. The future of DER optimization rests with VPPs that fully integrate both supply and demand optimizations buffered by energy storage to reduce reliance upon fossil fuels while shrinking both carbon footprints and consumer costs.
Good for business and good for the planet (all regions).