How Residential Flex can Relieve Distribution Grids
Congestion in distribution grids has become more prevalent over the years due to increased electrification of domestic energy loads, such as mobility and heating, next to a rapid rise of local production. However, the flexibility inherent in these loads can also be part of the solution to limit overall distribution costs. This blog post dives deeper into how residential flexibility can help overcome congestion in distribution grids and different mechanisms to unlock this flexibility, including its advantages and disadvantages.
Distribution Grids under Stress
Across the world, distribution system operators are worried about the increasing degree of electrification of load and distributed production, and the overloading of the local grid that comes with it. Historically, distribution grids have not been designed for simultaneous peak load usage at all connections. While all households receive a static connection capacity to the distribution system, typically around 10kW or higher, distribution grid assets, such as distribution feeders and transformers, can manage only around 50% of the simultaneous peak load. This is the case because, in a traditional setting, the probability of simultaneous peak load usage was very low. This situation changes as more EVs and heat pumps are connected to the system. Especially if these assets are not controlled smartly or if load synchronization results from reactions to time-of-use price signals, the distribution system is put under serious stress.
Flexibility as an Alternative for Grid Reinforcements
Several solutions exist to mitigate the stress on distribution grids. The traditional ones are banning new connections, reinforcing existing connections, or increasing the capacity of grid infrastructure. However, reinforcing grid infrastructure may have several years lead time, preventing an instantaneous solution and stifling economic growth as economic activities suffer from insufficient connection capacity.
Alternatively, the stress on the grid can be relieved by using the flexibility in batteries, electric vehicles, and heat pumps located in the distribution system. With coordinated operation, these flexible assets can become a hero of the energy transition. However, most flexible assets are not operated in a coordinated way with the stability and security of the energy system in mind today. Coordination is key, as flexible assets have benefits at the end-user (comfort, self-consumption), transmission (balancing), and distribution level (preventing congestion and reversed power flows). For this reason, proper trade-offs should be made to determine the most valuable opportunity to use the available flexibility, and end-users should receive proper incentives to make their flexibility available to system operators.
Incentivizing Flexible Energy Demand in Distribution Systems
Distribution system operators have different tools to incentivize the flexible use of energy, each with a different level of implementation complexity and a different impact on social welfare. These tools should overcome the connection bans on new loads in some countries, such as The Netherlands.
Moving from ordinary static to flexible connection limits is the first tool for DSOs to relieve the stress on their grids during peak moments. Flexible connection limits make the connection capacity at the household level variable over time, i.e., instead of a fixed 10 kW, it may go down to 3 kW at the most congested moments. Flexible connection limits can be implemented in different ways. One example is in the §14a in the German EnWG regulation [1]. This article specifies that every flexible device connected to the distribution system should be registered with the DSO, and the DSO should be given direct control to reduce the connection capacity for a limited number of events during the year. In the US, on the contrary, customers can voluntarily subscribe to direct or indirect control programs, i.e., end-users give the utility consent to reduce their load with direct control or to send requests for manual load reduction. Alternatively, "virtual fuse" products are offered on local flexibility marketplaces. In these products, flexibility service providers commit upfront to reduce their load to an agreed power value in a particular time horizon.
To incentivize end-users to install flexible devices and offer their flexibility, end-users typically get remunerated for their flexibility. This can be through a reduction in grid charges (Germany), by receiving a fixed participation fee and/or activation fee (in the US), or by a market price (in the marketplace). From April 1, 2025, German regulation goes one step further in the remuneration of end-users by offering them the possibility of being subject to dynamic grid charges [1]. Dynamic grid charges incentivize energy use during non-peak periods and are also in place in the UK [2]. With dynamic grid charges, end-users have more control over their energy cost savings. The DSO does not have a definite view of the volumes of flexibility that will be activated in reaction to the price signals but expects them to be in a grid-relieving direction. However, due to simultaneous reactions on price signals, the risk of instabilities due to load synchronization increases [3,4].
Procurement of flexibility on local flexibility markets can improve the visibility of the DSO in terms of activated volumes and limit the risk of simultaneous overreaction to price signals. Several market platforms exist today, such as Epex, Piclo and Nodes, enabling markets on which flexibility is traded years to a day in advance. An important shortcoming of existing market designs is limited coordination with TSO services, which can also benefit from flexible demand located in distribution grids. Moreover, uncoordinated markets provide opportunities for gaming, where assets first get paid for creating issues by participating in one service and secondly get paid to resolve the issues in another service. Moreover, validating correct activation typically relies upon comparison with a baseline. Reliably defining this baseline becomes more challenging if assets get activated across different services.
Coordinated operation to the rescue
To overcome the challenges in existing implementation options, a coordinated operation of flexible assets across transmission (bulk), distribution and end-user edge services is key. Although capable of working with all incentive mechanisms mentioned before, Beebop's solution flourishes in the coordinated operation of flexible assets grid-securely. Beebop aggregates the flexibility of the consumer devices into a tradable asset, considering local grid constraints. During disaggregation, Beebop applies a grid-secure dispatch algorithm that considers local end-users' costs, comfort requirements, and technical device limits.
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References
[1] https://www.bundesnetzagentur.de/DE/Fachthemen/ElektrizitaetundGas/Aktuelles_enwg/14a/start.html [online: 30/09/2024]
[2] https://www.nationalgrid.co.uk/downloads-view-reciteme/635902, [online: 30/09/2024]
[3] Nweye et al, ERLIN: Multi-agent offline and transfer learning for occupant-centric operation of grid-interactive communities, Applied Energy, 2023
[4] Lee et al, Unintended consequences of smart thermostats in the transition to electrified heating, Applied Energy, 2022
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