Swedish Flexible Demand Activities And Plans

By smartgrider In DEMAND SIDE MANAGEMENT Posted 2015-05-24 (No Comments)


Market structureElectricity market is deregulated for production and the retail customer market including households. Network companies are monopolies.
Number of retail customers5,2 million
Electricity used- 2011142 TWh
Electricity supplied- 2012162 TWh [including export] of which 78 TWh hydro power.
Wind power suppliedApproximately 10 TWh annually [increasing]. Some hours wind power is 25 % of national power demand.
Peak Demand for Power - 201127 000 MW approx.
Net Revenue to Distribution Companies- 201041 billion SEK, 4,8 billion EUR approx. only for the network service including metering.
Transmission and Distribution Network 545 000 km lines of which:
329 500 km underground lines
215 500 km overhead lines
Transmission lines are 15 000 km at 400 kV and 220 kV
170 network companies [various size; some public and some privately owned and mixed].
Retail companies There are c. 120 electric retailers in Sweden.
Vast majority of end users, including households, actively choose their retailer. Contracts may be related to spot price with a surplus, fixed price for a given period or other.
Level of AMR/AMI system penetrationVery close to 100 percent.
ContactMagnus Olofsson / Elforsk - Swedish Electrical Utilities’ R & D Company magnus.olofsson@elforsk.se

Sweden – Regional electricity system context / Key Figures


Swedish Flexible Demand Activities And Plans

The Swedish Government has made firm decisions related to market design regulation and support of research, innovation and demonstration of Smart Grid applications. Flexible demand is considered important enabling demonstration projects. The framework for the new regulation and initiatives for research, innovation and demonstration is presented here as well as two use cases: the National Power Reserve, and ElPiloten.

The first case features a larger scale procurement approach where industrial facilities and generators provide seasonal reserve services to the system through procurement by the system operator. By 2020 this method is intended to switch to a market approach where reserve power is no longer procured ahead of time, but managed completely through demand management and the capacity of interconnected markets.

The second case features a distributed demand management approach where residential loads can be aggregated to provide services to the system. These aggregated responses will respond to spot market prices.

Together these cases feature a comprehensive market approach to add short time balancing resources in addition to the large capacity of hydro power.


Objectives & Benefits

Ultimately each of the projects presented here have the objective is to maintain margins in the technical power system effectively as well as to reduce the spot price volatility. Increase in wind power production in Sweden as well as in neighboring countries is increasing price volatility, and as such the system operator is looking for low-cost mechanisms to react to fluctuations in supply.

For the use cases this ultimate objective drives their project objectives. Use Case 1: National Power Reserve has the objective of providing cost effective market opportunities for industrial customers and aggregated customers. The objective of Use Case 2: Elpiloten is to save money for the customer. An important fundament for this project is a governmental bill that was passed the Swedish parliament enforcing hourly metering at no extra cost for any consumers subscribing to an hourly-based electricity supply contract in force October 1, 2012.


Use Case Project Designs

Use Case # 1 – National Power Reserve with an increasing use of demand flexibility

The Swedish TSO, Transmission System Operator, Svenska Kraftnat by law annually procures a power reserve. It covers both electricity generation and consumption reduction, and can be activated by Svenska Kraftnat during extreme power situations in winter (Sweden has clearly a winter power peak). For the winter of 2014/2015 a maximum of 1 500 megawatts (MW) will be procured, of which 50 percent, if possible, should be from demand reduction capacity – i.e. industries that will be paid to reduce their use of electricity. The 2013/2014 winter procurement of power reserve totals 1,489 MW. Of this, 531 MW is from a reduction in demand. Organisations awarded participation in the demand reduction reserve are paper and pulp industries, other industries, and retailers that aggregate customer demand reduction. The rest consists of generation that can be activated on request of Svenska Kraftnat.

Procurement of demand reduction reserves for the 2013/2014 winter period is as follows:

Demand Reduction


The latest instructions to Svenska Kraftnat state (translated from Swedish): Law (2003:436) that the power reserve will expire in March 2020. The intention is a gradual transition to a market solution through a gradual tapering of the size of the power reserve, which shall fall from 2 000 MW to 750 MW before the power reserve is eliminated. During this phase-out period the percentage of the power reserve consisting of demand flexibility will increase from 25 % and over the final three years account for 100 % of the power reserve. Svenska Kraftnat shall monitor and analyze the liquidation of the power reserve in light of the situation in recent winters and of how the power reserve has been used. This analysis should also examine further integration with other countries, increased internal transmission capacity, consumer flexibility and more volatile production in the power system to meet the needs currently met by the reserve capacity.

Use Case # 2 ­- Elverket Vallentuna El AB/Elpiloten residential demand management pilot

Figure 1. Location of the project: Vallentuna is in the greater Stockholm area.



Elverket Vallentuna El AB is a utility in the greater Stockholm area, see Figure 1. In 2012 the retailer Elverket participated in a case study where new technology was used in order to implement Demand Response in households with a ground source heat pump[1]. The role of Elverket was to facilitate the case study by obtaining customers willing to participate in the field study and to have continuous communication throughout the project in order to collect important customer insights and comments. After the completion of the field study, Elverket arranged a dialog forum with all participants where customers discussed their views on Elpiloten, both functions and overall customer benefits.

( [1]See “Pilotstudie i Vallentuna Reflektioner rorande affarsmodeller for forbrukarflexibilitet och sjalvlarande prognosstyrning for kundanpassad effektreglering. Elforsk report 12:48”, with summary in English.)

Conclusions from the field study were that substantial customer savings of 10-15 % were made possible through a combination of increased energy efficiency due to effects such as smoother indoor temperature variations and shifting of consumption from expensive to cheaper hours. These benefits can be achieved without requiring active participation by the customer or compromising the comfort level.

As the project was successful, Elverket is currently launching the next commercial version of the service named “Elpiloten”, or, “The Electricity Pilot”. Elpiloten is now a commercial product in the sense that the customer is paying for the hardware and the service as a subscription. The target market is households with a ground source heat pump, and households with high energy consumption generally due to hot water and heating. The customer savings outweigh the costs for Elpiloten and thus Elpiloten does not require any subsidy. It is a financially sound investment for the customer even if you don’t take into account benefits like increased comfort and monitoring of the heating system.


Picture: Elpiloten hardware

Elpiloten is treated as a commercial service but it also includes a hardware component.

Elpiloten is designed to meet its objective to save money for the customer while maintaining or increasing their level of comfort. Elpiloten works on two levels. First, it decreases the use of energy by using the house’s thermal inertia. Weather forecasts are used to plan the work of the heat pump and the customer has only to set desired indoor temperature. Secondly, Elpiloten also takes into account the spot market prices and plans the work of the heat pump in accordance with low spot market prices. From a system perspective a reduced demand in peak load hours is desirable and has many benefits. These benefits will be described in more detail below.

Elpiloten from a Demand Management and System Perspective

Elpiloten contributes in four areas:

  1. Reduced energy consumption
  2. Reduced peak load
  3. Creates opportunities for active consumers
  4. May increase customers’ awareness of their energy consumption, thus contributing to an increased use of renewable energy. Cutomers tend to view their use of electricity as an environmental problem. At the same time, customers don´t feel that they can affect their own environmental impact. By increasing knowledge, the feeling of their own power to change their impact on the environment increases, thus giving the customer incentives to choose renewable energy.

These four areas of benefit can also be realized in various ways by the customer, the grid company, the supplier and society as a whole.

Reduced energy consumption

  • Customer benefit:
    • Reduced consumption leads to lower energy bills
  • Benefit for society:
    • Decreased energy consumption with maintained level of comfort increases energy efficiency

Reduced peak load

  • Elpiloten considers the spot market prices
    • The spot market prices correlates with peak load hours
    • Reduces demand on critical peak load hours
  • Customer benefit:
    • Lower energy bills
  • Grid company benefit:
    • Reduced need for expanding grid capacity
    • Reduced costs by reduced power load from regional grid owner
    • Reduces risk of peak load pricing from regional grid owner
  • Benefit for society:
    • Reduced demand on infrastructural development, both in grid expansion and production facilities, in order to handle peak load
    • Reduced environmental effects through reduced energy consumption on peak load hours. Peak load hours often require import of electricity with higher carbon payload
  • Supplier benefit:
    • Reduced volume and hence cost for power purchase on peak load hours

Creates opportunities for active consumers

  • Customers
    • No need for behavioral change
    • Customers get more value without being required to engage in any new activity such as changing their supplier.
  • Customer benefit:
    • Customer becomes a participant in the electricity market and contributes to increased market efficiency without personal effort
  • Supplier benefit:
    • Market for new smart solutions provides opportunity for new revenue
  • Benefit for society and grid company:
    • More efficient use of capacity in the grid

Increases energy awareness

  • Elpiloten increases customer knowledge of the energy market
  • Increases the possibility for the customer to make judicious energy decisions
  • Can lead to increased interest in other environmentally friendly energy solutions such as solar energy.

Current status & Results

Use Case 1: The National Power Reserve transition

The National Power Reserve is gradually being phased out and according to Law (2003:436) the power reserve will expire in March 2020. At that stage spot market and other instruments shall be sufficient for a balanced system operation.

Use Case 2: Elpiloten – aggregated residential demand response

Since the field study was successfully completed Elverket and the system supplier Ngenic have continued working with commercializing the service. The first commercial units were installed in mid Spring 2013 and during this Autumn 2013 we will launch the next version of Elpiloten. Our first systems have performed well and have operating stability. We look forward to expanding Elpiloten and continue the development in close co-operation with our customers.


Lessons Learned & Best Practices

Use Case 2: Elpiloten- aggregated residential demand response

Main technical challenges consist of creating easy access and installation for the customer. Customers in general are not well informed about their own heating systems and this creates extra challenges in the marketing and customer communication.

Implications on the market

One interesting question arises if one considers the spot market pricing mechanisms. The spot market price is established the day before consumption. It is based on expected supply and demand for each hour. If smart solutions such as Elpiloten will be used in larger extent, these mechanisms need to be adjusted. Elpiloten will shift the energy consumption from expensive to cheap hours and thus creating difficulties to forecast the demand which is essential for the retailers being responsible for balancing. There will probably arise a need for some sort of adjustment to the different bids in the spot market due to a change in the demand side once prices have been set. In the short term this will not affect the market, but has to be considered if smart solutions gain considerable market penetration.


Key Regulations, Legislation & Guidelines

In order to enforce and facilitate the introduction of Smart Grid technologies in Sweden, In 30 May 2012, Swedish Government has established a Governmental organization named Swedish Smartgrid where more active customers is an important aim. The organization has a large network of participants from industry, Government, authorities and users.

Law (2003:436), link https://lagen.nu/2003:436.

back to top