Harnessing flexibility: How European utilities can monetise adaptation

What underlying capabilities are essential for European utilities to successfully adapt to the constantly transforming energy landscape?

By Peter Nemcek and Alexander Kofink of CyberGrid

Europe continues its transition towards a more sustainable and decarbonised energy system. Utilities, which have long been the backbone of this sector by delivering essential services, now face both opportunities and challenges in adapting to this rapidly changing environment.

Among the most promising avenues for economic growth is the flexibility market, a vital component of the modern energy landscape. Flexibility management platforms present utilities with an innovative approach to optimising trading strategies, participating in ancillary services markets and diversifying revenue streams.

According to reports from the European Environmental Agency, the share of energy generated from renewable sources increased steadily from, 14,41% to 23,02% in 2022. Due to the decarbonisation of Europe`s energy system, more renewable energy sources have been integrated in the grid systems. Although this meets the EU Parliament climate target of 42.5% for 2030, it will foster volatility and unpredictability in energy supply.

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Flexibility markets meet this challenge by enabling the real-time balancing of supply and demand in a way that the stability of the grid is maintained even if the volume of renewable energy increases.

From the utilities’ perspective, market participation opens new revenue opportunities. Flexibility can be attained by adjusting generation or consumption in response to market needs. Noting the importance of battery energy storage systems, utilities are gradually increasing investments in batteries and co-locating them with other renewable energy generation sources in order to monetise the flexibility of these critical assets.

By utilising both consumer flexibility and their asset portfolios, utilities can actively engage in energy markets, maximising profits and bolstering the resilience of the energy system. Furthermore, there are new software solutions which enable the management of small and large assets at the same time and also have the options for the hybridisation and interconnection of assets. This provides new possibilities for demand-side management and access to ancillary service markets.

This flexibility can be used in several ways, including shifting energy usage to off-peak times, reducing consumption during peak demand, or even feeding energy back into the grid from decentralised sources like batteries, electric vehicles and participating in grid stability services. All of that with the possibility to react to price signals from all available markets (whole-sale and ancillary markets).

In a renewable-sources dominated grid, one of the biggest challenges is the variability of supply. Wind and solar energy, while clean and abundant, are not always available when demand is highest. Demand-side flexibility enables utilities to adjust demand to periods of high renewable generation or reduce demand during grid stress.

This is useful for avoiding blackouts and other disturbances in the grid and for avoiding costly backup power generation. Proper management of flexibility can result in significant savings for the utilities. In this way, through reducing peak demand, utilities can defer or avoid the need for new investments in power plants or transmission infrastructure.

Furthermore, the demand-side flexibility can decrease the operational costs associated with running the grid because it decreases the need for expensive, fast-ramping conventional power plants that are usually needed for balancing in real-time.

Efficient flexibility management is one of the key aspects of modern management, and automation plays a vital role in it. This capability is particularly important as the energy mix increasingly relies on intermittent renewable energy sources, which can vary significantly with changing weather conditions.

By leveraging automation, utilities can manage these challenges more effectively, ensuring a stable and efficient power grid. In the case of flexible resources, the application of automations in their management brings in many benefits that enhance grid stability.

Automation enables real-time optimisation, which means that energy flows can be constantly monitored and managed. This ensures that the grid is stable even with the renewable energy generation fluctuating. This optimisation of resource usage reduces the amount of intervention required from an operator.

Moreover, automated flexibility management remarkably improves the stability of the grid. By automatically controlling the energy consumption to align with periods of high power generation, utilities can better anticipate and mitigate potential grid imbalances. This minimises the chances of overloading the grid and prevents the wasteful curtailment of renewable energy.

Besides these advantages, automation also is cost-efficient as it decreases the amount of expensive and fast ramping power generation capacity, which is traditionally used for real-time supply-demand balancing. However, it is cheaper to organise the grid stability by using automated systems like demand response from industrial, commercial, or residential consumers, that will control distributed flexibility resources. This approach also reduces the operational costs and increases the reliability of the energy system.

Furthermore, automations enable utilities to generate additional revenue streams by transforming flexibility into a tradable asset. Software solutions for flexibility management, such as CyberGrid’s CyberNoc platform, ensure the efficient connection of distributed energy resources like hydropower plants, CHPs, P2H, industrial and commercial loads, wind farms, solar panels, battery storage systems and electric vehicles into the grid.

These resources may be aggregated and operated as a single flexible asset, which can operate in various energy markets, such as balancing- (FCR, aFRR; mFRR, RR) and short-term- (day-ahead and intra- day) markets. Moreover, automation allows utilities to participate in ancillary services markets which are vital for the stability and reliability of the power system.

Automated software solutions create new revenue streams for utilities, enabling them to offer flexibility services like frequency regulation or voltage control to grid operators.

Moreover, automation plays a vital role in enabling energy prices to react to energy prices, which vary based on real-time supply and demand. This strategy can be used as a motivational tool for consumers to adjust their consumption patterns in alliance with the price changes bringing further flexibility to the grid. In the meanwhile, utilities can monetise this flexibility by combining consumer responses and trading them in energy markets.

Also, sophisticated software solutions enhance energy trading in the wholesale markets. By forecasting energy prices and available flexibility, automated systems can identify the best times to buy or sell energy, maximising revenue while ensuring grid stability.

The industry’s shift towards the automation of renewable energy solutions and the optimisation of battery storage systems is exemplified by the “Smart Integrated Energy” category of the Smarter E Award. This prestigious innovation prize recognises companies and products that are actively shaping tomorrow’s energy world.

CyberGrid’s flexibility management platform CyberNoc won in this category in 2024, which highlights its pivotal role in providing the automation and scalability needed to integrate and monetise distributed energy resources, ensuring a secure and clean grid.

This achievement highlights- CyberGrid`s importance in the ongoing transformation of the power supply industry—from centralised generation to the integration of flexible, distributed resources such as renewable energy, battery energy storage systems, industrial and commercial loads, and residential prosumers.

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