Flexibility. This is the key: a flexible system that is able to adapt to the variability characteristic of wind and solar photovoltaic energies. Because the wind does not always blow when we need it, and the sun does not always shine when we need it. According to the International Renewable Energy Agency (Irena), flexibility is "the ability of an energy system to cope with the variability and uncertainty introduced by solar and wind energy on different time scales, from the very short to the long term, minimizing the discharges of these variable renewable energy sources and reliably supplying all customers' energy demand". Well, flexibility is what the end user of energy can provide through their ability to manage their own demand. So says "The role of the consumer and demand management in the energy transition", the report just published by the Naturgy Foundation and prepared by the consulting firm PWC.
The transition in which we are immersed presents a major challenge, according to Naturgy: how to integrate "absolutely" renewable energies and other clean technologies in the energy sector while ensuring the stability of the grid and energy supply. And the key to this is flexibility. The report identifies three main mechanisms available to the user to enable this flexibility: self-consumption, storage and demand aggregator. In the Conclusions section, the report summarizes the role of each of these tools in these terms.
1 - Self-consumption: the consumer has the capacity to generate his own energy to reduce the demand dependent on the national generation park. Self-consumption not only implies reducing consumer demand on the overall system, but also allows surplus energy to be shared with others (through energy communities) or fed into the grid, also contributing to national generation;
2 - Storage: these systems will be relevant in the empowerment of the consumer and the management of their demand - the authors of the report argue - since, on the one hand, they enhance self-consumption by allowing the storage of surplus energy from renewable sources and, on the other hand, they allow the consumption of electrified services; and
3 - Demand manager or aggregator: this regulated figure is set to be decisive, says the report, for consumers to take a step forward in regulating their consumption, taking some kind of benefit in return, from simply achieving savings on their electricity bill to the limit of actively participating, through a third party, in the electricity markets.
The Naturgy-PWC report then includes an interesting glossary in which it defines self-consumption, collective self-consumption, storage, demand aggregator, sun tax or back-up capacity ("understood as the capacity of a power plant to start and stop in an agile manner - flexibility - and to always be available in the event of problems in the electricity system - reliability and availability - to contribute to meeting peak demand at all times").
The report notes that there are currently more than 4,000 community projects providing energy through energy communities, mainly in Australia, Europe and the United States. In Europe, it adds, energy communities are progressively developing, "but Germany stands out as the country with the largest deployment of energy communities, according to data provided by the Joint Research Centre (JRC) report entitled Energy communities: an overview of energy and social innovation". According to that report, there were about 1,750 energy community initiatives in Germany in 2019; about 700 in Denmark; about half a thousand in the Netherlands; more than 400 in the United Kingdom; about 200 in Sweden; and 33 in Spain (Source: Joint Research Center and PWC analysis).
"In Spain, the authors of the report point out, energy communities are less deployed than in other European countries, especially due to the need for a regulatory model that contemplates them and the emergence of business models that make them viable". Indeed, in Spain the directives that include the figures of renewable energy community and citizen energy community have not yet been transposed. In its report, Naturgy lists four territories in which the degree of regulatory development of this type of community is more advanced. These are.
- The United Kingdom has the Community Energy Strategy, which highlights the figure of Community Energy, incorporating aspects such as collective action with the aim of producing, purchasing and managing energy. This strategy, updated in 2015, also establishes that community projects carried out under this framework must emphasize local participation and control, leadership and the collective benefit of the members or partners that make up such a grouping.
- France first defined the figure of Renewable Energy Community in the "Loi Énergie Climat", a law passed on November 8, 2019 where the objectives for the French climate and energy policy are defined. Article 40, specifically, is the one that establishes its constitution and operation as an autonomous legal entity also indicating the type of participation, control by the members, the activities they can develop, etc.
- Germany, for its part, although it does not have an official regulation by the Government, in 2013 the term Bürgenergie was defined which refers to a new idea based on an energetic change towards more decentralized structures through the application of a series of democratic, social and ecological values. At the same time, it is
characterized by the fact that it is based on a similar basis as the renewable energy communities (as set out in Directive 2018/2001).
- The state of California, prior to Europe, defined energy communities in 2008 as "state-of-the-art communities in which renewable energy technology plays a major role in meeting the demand of its residents, with the ability to feed excess energy back into the grid or into another community. At a minimum this community will need to integrate advanced vehicle transportation models, local renewable energy generation, as well as incorporate sustainable living practices" through the National Renewable Energy Laboratory.
Spain is a step behind, as was said, but the Government is working on the transposition of the Directives and, in addition, the Institute for Energy Diversification and Saving (IDAE, an agency under the Ministry for Ecological Transition and the Demographic Challenge) has just opened the window for those who want to promote an energy community to apply for aid: call Energy Communities -CE- Implementa: 40 million euros, for 40 pilot projects. The deadline for applications was opened on February 1 and expires on March 1; the call will probably be resolved before the summer.
The PWC report highlights two energy community success stories
This is a project in the field of energy communities in which a green energy market has been created where producers sell solar energy directly to consumers (peer to peer trading). Based on blockchain and IoT technologies, Sunchain manages energy exchanges within local ECECs, bringing together producers, consumers and prosumers. Production and consumption data are recorded via blockchain and, through smart meters, energy is allocated to each participant. The goal is to maximize profits for all participants and obtain daily consumption data for better electricity management, while promoting the use of solar energy among domestic consumers.
Ecopower is an initiative that was born in the 1990s as a cohousing project in an old water mill to invest in renewable energy and fight against nuclear power. Over the years, it has evolved substantially to the legal form of a cooperative and currently has 60,000 members who have voting rights in the general assembly that regulates them. This cooperative is based on services such as renewable production through photovoltaic solutions, mini-hydraulic plants and cogeneration plants where the energy is dedicated to the consumption of the users (residential environment, SMEs and public administrations) and the surpluses are used to charge electric vehicles and community batteries instead of selling them to the market. In order to manage this ecosystem, they have a web application "Energie ID" where the community's user data is stored to provide information on production, demand and energy exchange between consumers. Today, the cooperative provides about 1.64% of the domestic electricity in Flanders with 23 wind turbines, 3 small hydropower installations, 1 cogeneration installation and 322 decentralized solar photovoltaic installations on the roofs of schools, public buildings and homes.
And finally, the aggregator
The figure of the independent aggregator is the market participant that provides aggregation services and is not related to the customer's supplier, i.e. to the marketing activity, and is therefore an independent figure.
The EU's ultimate objective with the definition of this figure and its operational framework is to enable independent aggregators to perform their role as intermediaries and thus ensure that the end user (industrial, commercial and domestic) benefits adequately from their activities.
The European Union specifies that all user groups must have access to electricity markets to trade their flexibility and self-generated electricity, or do so on an aggregated basis through a demand aggregator.
To this end, it must ensure that Member States allow and encourage the participation of demand response through aggregation in electricity markets, imposing a series of requirements to ensure the rights and obligations of participants (transparent rules on the roles and responsibilities of such participants, non-discriminatory and transparent procedures for the exchange of information between them or financial responsibility for the deviations they cause in the electricity system) and a series of rights on the final consumer (right to change supplier, freedom to buy and sell electricity services, right to receive their demand response data ....).
The demand aggregator will be greatly enhanced and benefited by new technologies and digitalization, as they will enable it to group together different players in the sector in the same energy subsystem (consumers, small producers, prosumers, batteries, electric vehicle charging points, etc.). With these agents grouped together, the objective is to aggregate and combine the multiple consumption and production of electricity for its efficient sale and purchase on the electricity production market. Aggregators enter into a contractual agreement with consumers and generally operate a large number of distributed energy resources of different types, or they can also specialize in a particular type of resource, such as behind-the-meter storage systems. Thus, through so-called virtual power plants (VPPs), aggregators can sell electricity in electricity markets or provide flexibility services to the system.
The report "The role of the consumer and demand management in the energy transition" highlights several countries in which the figure of the demand aggregator "is regulated and somewhat more developed than in Spain". Thus, France, United Kingdom, Germany, California.