DERs – limited flexibility options in Europe
European smart energy business association smartEn’s resource adequacy mechanism mapping has indicated traditional generation assets prevail over distributed technologies.
The study, which updates earlier demand-side flexibility mappings and reviews fourteen countries mostly in western Europe, finds that major barriers continue to be limits to small distributed resources and aggregation.
Moreover, product design and prequalification requirements are rarely technology inclusive and often create implicit barriers to participation, while a market-based approach to resource adequacy is uncommon with procurement mostly done through tenders or bilateral contracts.
The study finds the most common demand-side assets participating are industrial loads through interruptibility schemes, which have been specifically designed for them.
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However, while providing an interesting opportunity for large electricity consumers, in some cases, such as in Germany, these schemes can come in conflict with the tariff design, creating contradicting signals.
In terms of countries with resource adequacy mechanisms, the study finds that France and Belgium stand out.
In France, the participation of demand-side resources in resource adequacy mechanisms is advanced compared to other EU countries, although still quite limited compared to
traditional generation.
Resource adequacy in France is guaranteed through a market-wide capacity mechanism. A call for tenders for interruptible loads is also organised to ensure system security. In addition, the French system operator contracts capacity through an annual call for tenders from demand response.
As of today, around 3% of the total certified capacity in the French market is represented by demand response.
In Belgium in April 2021 a new capacity remuneration mechanism was introduced based on reliability options to guarantee security of supply from 2025.
The participation of demand response and storage in the first auction was significantly lower than conventional power plants, but it is reasonable to expect greater participation of demand-side capacity in the next auction.
No ideal resource adequacy mechanism
“No ideal resource adequacy mechanism is in place and too many barriers to demand-side resources still exist across Europe,” says Michael Villa, smartEn Executive Director, of the findings.
“The [European] Commission should ensure all markets and mechanisms are fully compliant with the principle of equal treatment set both in the EU electricity regulation and the new state aid guidelines for the security of supply. This is a system efficiency priority, otherwise the costs of decarbonisation will increase.”
The study report points out that in general, resource adequacy mechanisms are a useful tool to maintain system stability and address resource adequacy concerns.
With an expected increase in capacity requirements across Europe, due to the increased volatility of renewable energies and the decommissioning of traditional generation plants, resource adequacy mechanisms will play a key role in guaranteeing system stability.
Demand-side flexibility and a market-based approach will be consequential in ensuring a stable grid at competitive costs, the report concludes.
Countries mapped in the study in addition to Belgium and France are Finland, Germany, Great Britain, Greece, Ireland, Italy, Poland, Portugal and Sweden, along with snapshots on Bulgaria, Lithuania and Spain.
