DSM CASE / DENMARK

By smartgrider In DEMAND SIDE MANAGEMENT Posted 2015-05-12 12

DENMARK

Regional electricity system context and project organisation – Key Figures Denmark

 

 

DENMARK

ECOGRID EU: REAL-TIME MARKET DEMONSTRATION

 

The EcoGrid EU project is a large-scale demonstration of consumer participation in the balancing of renewable electricity generation by active demand response to real-time price signals created from the present prices in the conventional balancing market. Advance meters and ICT solutions will enable small-scale customers to offer the Transmission System Operators (TSOs) additional balancing resources.

The fundamental principle of the EcoGrid EU real-time market concept is to exploit flexibility in electricity consumption. At residential level, flexibility is in this case typically associated with heat pumps and electric heating either for hot water or to keep the house warm. The consumption is flexible since the heat can be stored and there is normally a range of acceptable temperatures. There may be other significant sources of flexibility consumption in homes, eg if an electric vehicle is used.

The test-site is located on the Danish island Bornholm. Here wind power supply already exceeds the entire demand for electricity in many hours the course of a year. This surplus situation is likely to appear more frequently in the future – significantly increasing the need for power balancing resources. Introduction of a real-time market can provide valuable balancing resources and ancillary services and contribute to reduce the costs of these resources.

2,000 electricity customers on Bornholm will by means of flexible consumption participate in the demonstration. A majority of the test participants will be equipped with demand response devices with smart controllers and smart meters, allowing them to respond to five minutes real-time prices based on their pre-programmed demand response preferences.

The customers’ feedback regarding the ICT technology introduced in the project and their ability and motivation to change consumption based on the real-time prices will be most valuable as source for concept adjustment in the final part of the project.

 

Project fact box

• Project funding and organisation:  EU’s 7th Framework Programme supports the EcoGrid EU project. The total budget of EcoGrid EU is € 21 million of which EU finances more than half. The 15 European EcoGrid EU partners represent global industry experience, applied research and representative geographic distribution, ie Northern Europe, Central Europe, the Iberian region and Eastern Europe. Nordic partners cover a significant share of the consortium since the demonstration is located on the Danish island Bornholm that is connected to the Nordic power system. The EcoGrid EU project started in 2011 and is scheduled to end in 2015.

 

Objectives & Benefits

The objective of the EcoGrid EU project is to illustrate that modern information and communication technology (ICT) and innovative market solutions can enable an operation of a power system with more than 50% renewable energy sources (RES) such as wind, biomass and photovoltaic (PV).

The basic idea of EcoGrid EU market concept

 

EcoGrid EU propose to extend the current wholesale electricity market to allow structure with a real-time market that will offer the Transmission System Operator additional balancing resources and ancillary services by facilitating the participation of a large number of small-scale electricity customers and other distributed resources (DER). A modernisation of the existing power market design will increase the market value of eg wind power and other DER which in the long run is expected to provide the economic incentives for a higher penetration of renewables.

 

The EcoGrid EU real-time market concept

The EcoGrid EU market concept is based on the publication of real-time price signals. Adapting the behaviour of flexible resources like electric heating and heat pumps will contribute to maintaining the balance of supply and demand in the power system

From the wholesale market perspective, this implies that a five-minute price signal is created by for example the TSO, by continuously monitoring the power system and adjusting the price signal to correct the balance of the system. To do so, it is necessary to create reliable forecasts of the expected response to price changes. These will be utilised when computing the marginal price change required to trigger a response of the right size, leading to a proper rebalancing of the system.

The EcoGrid EU real-time market concept allows regulation of distributed energy resources (DER) through price signal without direct measurement of the individual DER response.

 

Extension of the current market set-up

As the wind power and other RES generation increase, so will the need for more dynamics in the power system. The introduction of real-time market is an obvious step in the further development of the existing electricity wholesale markets and balancing markets that creates more favourable conditions for the future composition of renewable generation and energy resources. This will not necessarily require a replacement of, but an extension of the current market set-up.

The five-minute real-time market will extend the market operation closer to real-time and potentially reduce the need for more expensive automatic control resources such as load-frequency control (LFC).

Figure 3. The new EcoGrid EU real-time market in the context of existing power balancing markets and control systems.

 

Remove barriers for small-scale market participants: Today and in the future most DERs under the current framework will face barriers to supply balancing resources. This means, by preventing some units for participating in the balancing (or market for ancillary services), the balancing services will be scarce and thus more costly in a terms of socioeconomic costs and not least: The end-user will probably face higher electricity bills in the future – not only because of increased cost for balancing of the power system, but also because of the need for new grid enforcement and investments.

The EcoGrid EU real-time market concept is based on a ‘bidless’ market with price announcement ex-ante. This implies that the final settlement price is determined by prediction of the real-time price responsiveness rather than on explicit bids as known from conventional auction based power markets. A bidless market minimises the efforts (transaction costs) put in by small-scale electricity customers or small-scale generation units, because they must not create bids and schedules, but simply respond to the actual market prices.

 

Overall Project Design

Different ways to test the real-time price responsiveness: The real-time price response can be realised in several different ways – with and without help from automatic control systems and home automation solutions. The test households and the commercial customers are organized in groups dependent on the `price control system´ they belong:

• 500 households in a manual control group
• 1 200 household with automatic control group
• Up to 100 industry/commercial buildings with automatic price control.

Beside these groups a statistical control group of 200 customers represent the “business as usual” case.

The manual control group only has access to real-time price information, i.e. none of their electric household devices are automatically controlled. The manual control group will only receive manual response assistance, e.g. through training/energy advice and a feedback system with consumption and price information. The automatic control groups and the group of industry/commercial buildings will beside manual assistance also receive technical assistance. All of the automated households will have home automation equipment installed in order to optimise the operation of their electric heating, heat pumps or photovoltaic units. The automatic control of industry/commercial buildings include a diverse type of distributed energy resources, e.g. electric vehicles/energy storage facilities, and larger electricity appliances.

Two main approaches are used to realise the demand response of the automated test participants:

1. Automatic control of individual electric devices/resources
2. Aggregated control of a portfolio of electric devices/resources

The automatic control of individual electric devices uses IBM technology and GreenWave home automation solutions. The aggregated control groups are based on two aggregator methods developed by TNO and Siemens respectively. These houses also have two types of home automation system: One from GreenWave Reality´s and one from Siemens-SyncoLiving.

Thus, the EcoGrid EU project uses different Smart home solutions and different ICT control technologies for optimization of the portfolio and demand response to direct price signals (local automation and direct demand response). It means that the systems are vendor independent, allowing for competition and freedom of choice on the hardware and software components.

Implementation of real-time price responsiveness.
A: The manual control of devices 
B: Individual control of devices 
C+D: Aggregator control of a portfolio of devices

 

Current Status & Results

The design phase of the EcoGrid EU real-time market is completed and the first phase of the field test on the Danish island Bornholm started on May 2013. The theoretical concept will be materialised in real life on Bornholm in course of the next 2-3 years.

Recruitment and Customer Participation: In parallel to the development and design of the real time market concept an intensive effort has been done by the local grid company Oestkraft in order to recruit the 2,000 participants required in the demonstration. The recruitment process is considered a success. By August 2013 the objective of 1,900 test households on Bornholm was almost realized.

Before starting the EcoGrid EU recruitment, the communication activities on Bornholm were targeted at raising general awareness of Smart Grid and the EcoGrid EU project among the entire public on the island. The media was informed through eg press releases and a press conference.

One month after the recruitment kick off at Oestkraft´s demonstration house Villa Smart (February 2012), approximately 366 households corresponding to 15% of the required households were signed up for EcoGrid EU. During the next six to eight months, almost 50% of the participants were enrolled in the project without very strong information and recruitment efforts.

The rest of the participants (approx. 900 households) signed up after an ambitious information and recruitment campaign, including direct mails to 3000 electric heated households. On 3 February 2013, Oestkraft invited to public EcoGrid EU event on Bornholm. The visitors could enjoy free cake and coffee, EcoGrid EU exhibitions, speed talks by the Mayor on Bornholm, Energinet.dk and the Danish Consumer Council as well as entertainment by a local band. About 1,000 persons showed up and spent a great part of their Sunday at the event.

The recruitment of industry/commercial buildings is still ongoing. Oestkraft is in close dialogue with commercial customers who are positive to EcoGrid EU participation.

 

Some of the persons closest to the EcoGrid EU customers/participants are the seven electricians from Østkraft installing the EcoHome equipment in households on Bornholm. It typically takes from one to three hours to install the Smart home solutions. It is the electricians that together with the consumers define the comfort preferences and priorities. The EcoGrid industry partners provide continuous support via telephone and email to ensure that the electricians become experts in the EcoHome equipment.

EcoGrid EU training

The training will be organized so participants in the different participant/equipment groups have training together. No more than 10­20 participants are present at the same time. The training is planned to take 1-2 hours per session. The training session will be split in different topics dependent on what is relevant for the type of group doing the training. However, all participants will have a general introduction to EcoGrid EU. They will also be informed about the general energy transition happening in Denmark and the challenge this presents to our energy systems and how they, as consumers, can play an active role in overcoming some of these challenges.

Oestkraft´s EcoGrid electrician team in front of Villa Smart. Ostkraft´s investment in the demonstration house, Villa Smart, represents an important part of the communication about EcoGrid EU and Smart Grid. The demonstration house is one of the first of its kind that puts the ordinary electricity consumer in the centre

 

Field-test phase I: Implementation of basis real-time prices: The first phase of the EcoGrid EU demonstration is ongoing. In this test period the basic real-time pricing is tested through a so-called ‘open-loop’ approach. This implies that the real-time price only will be based on external price information from the Nordic power market (Nord Pool) and balancing markets, as well as system information about availability of wind power. Market rules of the Nordic power system prohibit publishing information reflecting the present power system balance. Therefore, the development of five minutes real-time prices are based on the experience gained through the actual demand response of the test participants on Bornholm and realistic public information available about power prices.

On May 15th 2013 the demonstration and test phase 1 was officially initiated by issuing the first market based real-time price signal to a limited number of households (30 participants). These customers were also the first to have access to the online customer feed-back-system (FBS) “My EcoGrid”. At “My EcoGrid” the participants can find information about the current real-time prices and prognosis for the coming hours. They can also find data from the meter installed in their homes and compare prices, consumption and cost over time. Once every month, the participants can find a report informing them about their performance during the past month, with the EcoGrid EU cost compared to the cost of a non-Smart Grid product. On October 1th 2013 95 % of the residential test participants have access to the feed-back system. The first evaluation results from the EcoGrid EU demonstration phase 1-test of basic real-time prices are expected to be available winter 2014.

Field-test phase II: Implementation of advanced real-time prices: Experience gained from the test participants’ reaction to basic real-time price signals (phase I) gives valuable knowledge and input to forecast of demand response. This facilitates testing more advanced real-time pricing through a so-called ‘closed-loop’ approach that expands the market concept with forecasts of demand response in the second phase of the EcoGrid EU project. Based on the forecast of demand response, real-time prices are calculated and broadcasted to the market in order to obtain a certain objective, ie the amount of balancing resources required by the system operator(s). The balancing services can include a certain net consumption/generation from the distributed energy resources, or a certain reduction of import of electricity with the neighbouring countries or the mainland. The price calculation will utilise advanced demand response forecast models to calculate the price corrections necessary to follow the objective.

Replication potential and perspectives: Will the EcoGrid EU market concept work outside Bornholm? It will certainly not be possible to implement a single standard EcoGrid EU real-time market concept all over Europe without changes in the current regulation framework situations. Therefore, the implementation/replication of a real-time market concept must be considered in relation to the harmonisation process of the electricity markets in Europe, eg a process of drafting framework guidelines and network codes aiming at providing harmonised rules for cross-border exchange of electricity.

Several parts of the EcoGrid EU market concept can be replicated within the current power market design(s) and practises across Europe, which justify and/or increase the probability of a fast track replication of the EcoGrid EU real-time market, eg

•  The EcoGrid EU project implements one specific retailer contract model in the Bornholm demonstration, but the concept does not endorse or rely on a specific contract model.
• Likewise, the EcoGrid EU project uses different smart home solutions and different ICT control technologies for optimisation of the portfolio and demand response to direct price signals (local automation and direct demand response). It means that the systems are vendor independent, allowing for competition and freedom of choice on the hardware and software components.
• The fundamental concept and the infrastructure allow a ‘real time’ market with lower time resolutions. It is relevant in markets where, eg the smart meters with 15 minute or even hourly data readings have already been rolled out, although the dynamic response for balancing and congestion management will be reduced.

The issue of replication and deployment of the EcoGrid EU real-time market concept is one of the key project tasks/work packages that run in parallel with the field test. One very important task will be to clarify the role of the TSO and the balance responsible parties in an EcoGrid EU real-time market setup.

 

Lessons Learned & Best Practices

The education of participants takes place in the demonstration house Villa Smart and communication and technical advisors from Østkraft are giving individual advice to the participants regarding their particular role in the project and the new equipment.

The recruitment process is considered a success although various delays in the projecthave been a challenge. For example the recruitment of participants to the demonstration project has taken place at a faster pace than the installation of the equipment. In retrospect, it would have been wiser to start the recruitment of test participants at a later time and to have taken into account that not all components of the EcoGrid EU equipment are standardized products and that development takes time. The wait can feel long for the participants, which is why it is important that they are continuously being updated and informed about the project.

The experience from the EcoGrid recruitment process shows that communication and involvement of the participants are key elements to project success. Is has proven successful so far to keep the participants interested and signed into the project. Now comes the even greater task of keeping them involved.

 

Strong focus on social values

During the entire recruitment process the communication with the public was focusing on the social values and environmental aspects rather than individual financial benefits of participating in the EcoGrid EU field-test. In addition, the participants are guaranteed that they will not ‘lose money’ by participating in EcoGrid EU. In total, the participants will never pay more for the electricity compared to what they pay according to their normal contract.

In a field test that will have to involve every tenth residential household on Bornholm, it is not only to find enthusiasts, first movers or early adopters of new technology/Smart Grid solutions. During the last recruitment effort, much attention was given to the so-called “mainstream group”-i.e. people not especially interested in energy issues. A considerable part of this group have expressed that the motivation for participating in EcoGrid EU was the new smart equipment. For this group it is important that the equipment look “smart”. They are also expected to be less tolerant for failures in their Smart home equipment installations during the test period than other groups. In the extreme case the project experienced that one of the participants signed out because he did not like the design of the `black boxes.

The project experience is that the great support of the EcoGrid EU project from the public on Bornolm has been an important precondition for the recruitment to the demonstration project and willingness to test the real-time market concept. The support of the project from the public on Bornholm is probably due to the fact that the population already was aware of many challenges associated with wind power and the goal of converting to a CO2- neutral electricity is deeply entrenched among the people and the Danes in general.

 

Strong focus on customer services and Smart Grid advice

The local electricity company on Bornholm, Østkraft, expects that energy advice in terms of Smart Grid consultancy will be a very important part of the customer service in a Smart Grid deployment scenario. Lessons from e.g. large-scale smart meter roll outs in US and Europe show that it is important to have very strong focus on the concerns of customers and from the wider public right from the start. Also account for the fact that the move to smart metering and Smart Grid will have implications for the whole organisation. Also, the European consumer organisation (BEUC) in their analysis of 6 recent studies on use of smart meters reveals that the actual savings average 2-4 percent in the best case where consumers have clearly opted for their use.

In the next 2 years, the theoretical real-time market concept developed in the initial part of the project will be materialized in the real life on Bornholm. The first EcoGrid EU field tests started in May 2013 and the project is expected to terminate in the end of August 2015.