The E-REGIO project, funded by the ERA-Net Smart Grids Plus initiative, analyses, tests, and validates a new way to implement local energy markets around managing storage units and flexible assets supervised by a local system operator (LSO).
The digitalisation of society is heavily impacting the electric infrastructure, energy-production, and connected systems. The most evident sign of digitalisation for end-users of the electric grid is the implementation of automatic metering infrastructure (AMI). In Europe, this transition from analogue to digital meters has been required for all EU member states through legislation in the EU’s Third Energy Package. Many countries have started the process of implementing these meters, with Norway being one example where all consumers have already had smart meters installed.
Part of the goal for this transition is to enable end-users’ active participation in the energy market, either as pure consumers or as prosumers. This further provides the utilities with close to real-time information of the state of the grid. This information is not limited to energy production and consumption and can also contain data on voltage imbalances and variations, ground-faults, and outages. These data are already being used directly by the local DSOs, or by the aid of third-party companies, to detect and solve local problems in the grid faster than what was previously possible.
The AMI rollout creates a backbone functionality for the design of local energy markets and trade in energy flexibility. Together with the advent of IoT (Internet of Things) technologies that enable improved control of loads and feeds, it is possible to establish mechanisms that allow various forms of local trade. A local market can cater for the self-balancing energy cells where local production and loads are matched through price signals. Increased self-consumption within a neighbourhood is often a desired effect. A local market can also function as a tactical unit for the central market and the grid, shifting between internal trade and export as prices change or when the grid owner needs to alleviate congestions or voltage problems.
Benefits of local electricity markets
Indeed, as a core benefit, local energy markets encourage active participation of prosumers through differentiated prices between locally and centrally produced power. Further, local markets facilitate the market-based utilisation of flexible assets, giving end-users economically profitable opportunities to handle local storage and be flexible in their consumption. This enables local markets to solve many of the issues regarding the implementation of smart grid solutions, especially around incentives, business models, and adoption. Active participation in local trading allows consumers to reduce their electricity cost and increase their energy independence at the same time as they maintain their comfort.
Trade can be peer-to-peer or be managed through a pool. It should encourage exchange of locally produced surplus where prosumers sell renewable energy to consumers within a restricted perimeter, typically within the same point of coupling. But it could also be trade in energy flexibility where priority sale is prevalent. This means that some must yield to allow others to increase their consumption for a period. The reason for this could be congestion issues, overall supply constraints and budget limits. The shift in priorities demands a matching compensation. The introduction of local markets opens up for new innovative business models, too. Energy service companies can develop new products combining wholesale and local markets, energy services such as flexibility management, and give third parties market access to provide value-added services. All these push towards an increase of the economic benefits for participants willing to take active roles in local energy markets.
The E-REGIO approach to promoting local energy trade
The E-REGIO local market design is grounded on robust local community interests based on the following four fortifying elements:
- Renewable and local energy
- Service diversity
- Smart mobility
- Economic benefits
Participants in the E-REGIO local market are the LSO and the two types of LSO customers – end-users (small customers) and middle-voltage and high-voltage level customers. The LSO is the most central concept within the E-REGIO local market design, ensuring efficient and seamless operation.
The LSO carries out a joint optimisation of energy flexibility loads (as an aggregator), energy planning (as a retailer and intermediary), energy storage scheduling (as an energy storage manager) and scheduling of electrical vehicles (as an electrical vehicle operator) to provide services to the local power grid and to the local energy community. Based on customer preferences, the objective of the LSO’s optimisation could be to prioritise either community or grid services or both. Additionally, the LSO can also provide technical and value-added services through a complementary services platform where third-party suppliers are given access to (see Figure 1 – E-REGIO local market design).
Considering the needs and problems of the local distribution system operator (DSO), the E-REGIO LSO operator utilises on an advanced ICT platform to deliver the required grid services. For this purpose, the local market participants are being engaged in the market platform and associated local trade by means of innovative business concepts that offer attractive contract designs with well accommodated remuneration terms, community and sustainability benefits and options to make use of complementary services.
More specifically, the contracts are divided in various categories: e.g., between LSO and flexibility providers and between LSO and DSO/other actors. The contracts are managed through the E-REGIO ICT platform for local market trade to ensure optimal use of resources and efficient support of the local grid.
Advanced ICT platform
The E-REGIO project develops an ICT-platform for local energy markets that can handle new models tested during trials. The platform allows the LSO to exercise its multiple roles – aggregator, intermediary towards the central market, local energy retailer, manager of local storage, facilitator of local services and electric vehicles operator. The platform builds upon experiences gathered from the H2020 projects EMPOWER and INVADE to provide a fully replicable solution for local energy trade that can be customised according to the existing local grid needs, available energy and flexibility assets and valid regulations. The platform incorporates mobile apps and websites with user-friendly interfaces to allow local market participants to easily and seamlessly engage in local trade.
Scalable pilot sites at energy sector players to verify the solution
E-REGIO signifies the possibility for economically efficient flexibility management. In particular, the project demonstrates the local energy market with a community electricity storage hub model in operational environments. It further investigates the implication of storage technologies that can support local asset management.
The E-REGIO ICT platform for local trade is being tested at two industrial site locations which successfully demonstrate the high replicability potential of the E-REGIO solution. The one of the pilots comprises a microgrid establishment within the premises of at the Norwegian DSO Skagerak Nett. This pilot investigates the opportunities for delivery of grid services associated with the microgrid’s resources: local prosumers and consumers, stadium facility with high capacity needs, local PV generation and energy storage (see Figure 2 – Configuration of the E-REGIO pilot ‘Skagerak EnergiLab’).
The second E-REGIO pilot is situated at the premises of ÖBO – Sweden’s fourth largest public building owner. The pilot consists of three multi-dwelling buildings where PV units, stationary batteries, and EV chargers are utilised as controllable assets by means of the developed in E-REGIO ICT platform.
The two pilots demonstrate how the E-REGIO platform can be used in different environments to engage end-users and effectively provide grid and community services.
European-wide knowledge sharing
E-REGIO contributes with best-practice guidelines that are truly replicable across different regions by taking into account regional energy regulations and different electricity market models. Further, the project contributes to the diffusion of the market design concept and the best-practice implementation guidelines through uncovering critical motivations and frustrations of stakeholder adoption. The practical steps to knowledge sharing have so far included active participation in the ERA-Net Knowledge Community and dissemination of the project results through various national and international scientific and business channels.
With reference to the E-REGIO project, an important point to make is that digitalisation and digital trends are capable of increasing the integration of renewable energies in the grid, while maintaining stability and dependability. New ICT tools and big data analytics, as exploited by the E-REGIO platform for local trade, will further assist this development, improving reliability, and optimising electricity production, consumption and grid operation.
By utilising on small-scale local market solutions, it could be possible to tailor the solution to the exact grid problem, which can often be the most economically feasible approach for solving local grid challenges. Furthermore, taking a microgrid configuration, local electricity market structures can be built to operate autonomously and be, therefore, independent in the case of an attack or other unforeseen events, further strengthening the robustness of the grid.
It remains to see how fast local market establishments will spread around Europe, but undoubtedly, and as proved within the E-REGIO project, the benefits for both grid operators, end-users and third parties are on place, thus pushing the energy sector towards a more local, socially responsible and sustainable future.
The E-REGIO project (2017-2020) has received funding from the ERA-Net Smart Grids Plus initiative, with support from the European Union’s Horizon 2020 research and innovation program.