Energy flexibility – a tool for responsible use of energy
In the near future, the need for flexibility in energy markets will grow. In Sweden, the capacity of installed wind power has already exceeded the 7,000 MW mark, a significant share of the maximum consumption level of around 25,000 MW. As a result, Sweden reached country-specific EU 2020 target regarding share of renewable energy production well ahead before deadline. This has also enabled Sweden to set even more ambitious 2030 targets than originally planned. Therefore we will see a significant grow in wind power also during the 2020s.
In practice, this means that the amount of energy production that varies heavily according to weather conditions, such as solar and wind power, will continue to increase meanwhile more controllable energy production, such as thermal power production, will be removed from the market. As a result, to ensure continued balance of the power system, it must be possible to make development investments in the existing traditional power plants in order to achieve more flexible energy production than before, but a more active grip on energy consumption is also needed.
Earlier, energy production has tried to predict the consumption and to meet the energy needs at various times, but in the future this situation will turn around and energy consumption will soon have to adjust to the varying circumstances.
"We need to be able to use energy when it is available in the greatest quantity and also to reduce consumption rapidly to ensure the operation of power systems, for example, when temporary disruptions in power balance occur. "
Active engagement, i.e. flexible energy use as described above, allows all of us – both companies and households – to achieve significant savings in energy costs and to ensure responsible and sustainable use of energy.
The Nordic Countries’ electricity market is considered one of the most developed in the world. We’ve made particular progress in capitalising on energy flexibility, and marketplaces are continually being developed in a direction that will enable new industry operators and resources to be part of the balancing of power systems. In the near future, the general trend in these marketplaces will be a reduced minimum power requirement and shorter trading periods. From the view of market rules, a reduced minimum power requirement allows smaller operators to actively engage in the marketplaces. Shorter trading periods allow the operators to offer their resources to the markets more flexibly than before. This means for example the transition from hourly trading to a 15-minute trading system.
There is a clear increasing interest towards adding new flexibility to Swedish power system. In 2017 Swedish Energy Market Inspectorate published a report ”Measures to increase demand side flexibility in the Swedish electricity system” in order to estimate the current state of power system flexibility and to determine actions to activate new flexibility. In addition, Svenska Kraftnät has carried through (2017-2018) a pilot project regarding utilization of demand response as frequency controlled reserve (FCR). This was followed by a decision to enable consumption resources to participate in FCR marketplaces during 2019, once the required IT-system updates has been implemented. FCR reserves consist of FCR-N (Normal) and FCR-D (Disturbance) reserves, in which it is possible to participate with a minimum bid size of 0,1 MW. Activation of provided resources needs to be done automatically based on power system frequency.
Advances in technology will also bring new resources into the power system that are suitable for energy flexibility. In the Nordic Countries, the number of electric cars will grow rapidly in line with the objectives set out by the Governments and the first bidirectional charging points are already in use. Battery technology is also developing rapidly, and several banks of batteries with a megawatt size capacity are already introduced in the Nordic countries. The banks of batteries bring new opportunities for optimizing the renewable energy production when combined for example with wind or hydro power and offer very controllable capacity for the reserve marketplaces of the transmission system operators.
In other words, several opportunities for utilizing the flexible resources already exist from optimizing the electricity consumption and acquisition of the market actor to offering flexibility to TSO's reserve marketplaces, allowing companies to participate in the balancing of power systems. In the long term, this will enable increasing the share of clean energy production.
Flexibility marketplaces are now developing rapidly, and we will see more new opportunities in the near future. The first participants in the market gain the most because as the supply increases, the prices paid for flexibility go down. Energy flexibility is one of a host of measures, such as increasing energy efficiency, that play a key role when electricity consumers move towards more responsible use of energy. Empower wants to support this trend with services that allow companies to participate in all existing flexibility marketplaces, as long as certain technical constraints are satisfied.