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Project

The Use of Flexibility in Distribution Grids to Defer Network Investments

In recent years the trend towards the decentralization of electricity systems has accelerated. The advent of Distributed Energy Resources (DERs) and the rise of prosumers triggered the Distribution System Operators (DSOs) to investigate a more active approach to managing their networks. European DSOs and national regulators have established more advanced network tariff schemes to incentivize efficient behaviours from the connected prosumers. Others offer non-firm connection agreements to their network users and procure flexibility from DERs, while more advanced market-based procurements of flexibility services are also being investigated.

The Clean Energy Package (CEP) Directive (EU) 2019/944 called on the Member States to develop regulatory frameworks that incentivize DSOs to consider the use of flexibility as an alternative to network expansion. DSOs will have to develop and publish network development plans that consider the trade-off between flexible resources and network expansion. The CEP also includes demand-side flexibility as a new network code area, recognizing the need to elaborate on a regulatory framework for demand-side flexibility. Demand-side flexibility can be implicit, i.e., reacting to pre-defined price signals to which all consumers are subject, or explicit, i.e., flexibility, offered by a consumer or requested by the DSO, is paid a given price. Several open issues are still to be addressed to unlock the potential of demand-side flexibility.

The first contribution of this dissertation is to disentangle the key remaining barriers to demand-side flexibility following the entry into force of the CEP. Such barriers prevent harnessing the benefits of demand-side flexibility to system operators and users and may cause increased network investments and energy bills. This dissertation investigates different academic papers and industry organizations’ reports and underlines the different views on how to tackle the identified regulatory barriers.

The second contribution of this PhD dissertation is a modelling contribution for incorporating demand-side flexibility, modelled as demand reduction, in distribution network planning. A bi-level optimization model is developed where the DSO in the Upper Level maximizes the welfare by making the tradeoff between network investment and flexibility contracting. The DSO also sets the network tariff levels to recover the investment and flexibility costs. Consumers in the Lower Level react to the price signal sent by the DSO. Different types of consumers are modelled throughout this dissertation, i.e., prosumers, passive residential consumers and commercial consumers with varying load profiles. Prosumers can increase their individual welfare by investing in PV panels and batteries and strategically operating them, reducing their energy bills at the expense of passive consumers.

The third contribution is to investigate the regulatory choices that influence the potential of demand-side flexibility in distribution grids. Different regulatory options are assessed through the developed optimization model for the selected case studies. The dissertation shows that the integration of explicit demand-side flexibility is more beneficial with cost-reflective network tariffs. Regarding the level of compensation for demand-side flexibility, the results show that it will be challenging for regulators to set its appropriate level. If it is too low, the passive consumers will be only partly compensated. When it is too high, prosumers will game it. Different types of flexibility contracting have been investigated. An analysis of the contribution of voluntary demand-side connection agreements is performed. It suggests that, in order to further increase welfare, price differentiation based on consumer segments (commercial versus residential) is a fair compromise between full price differentiation for flexibility and uniform pricing. Besides, an investigation of mandatory demand-side connection agreements shows that they result in higher welfare gain than voluntary ones and hints that DSOs may adapt current regulations to promote mandatory demand-side flexibility schemes, however, it may entail implementation issues. A pro-rata mandatory contracting of flexibility across all consumer types is found to provide a fair compromise between welfare gains and ease of implementation.

The fourth contribution of this dissertation is regarding the context-related elements that can influence the use of demand-side flexibility in a specific country or region. Such factors can reduce or increase the benefits of using demand-side flexibility. Understanding them is crucial for regulators when planning such schemes. Context-related elements could be tweaked through regulatory choices. The performed sensitivity analysis finds that the potential of demand-side flexibility is linked to the frequency of the critical days with high electricity consumption. If such events are too frequent, e.g., as frequent as weekend days, then it will be cheaper for the DSOs to design the network to handle these conditions instead of contracting demand-side flexibility. Also, the potential of demand-side flexibility is higher in countries with a lower Value of Lost Load (VoLL), where consumers value less electricity consumption. Finally, another element that would increase such potential, is a notice factor for the curtailment event.

Date:25 Apr 2019 →  6 Sep 2022
Keywords:flexibility, DSOs, TSO-DSO coordination, Mixed complementarity modeling
Disciplines:Solar energy
Project type:PhD project