In 2021 and 2022 extraordinarily high prices have been observed in electricity markets across Europe. The main reason behind the high electricity prices is the high price of natural gas, which is used to generate electricity. Natural gas-fired power plants are often needed to satisfy the demand for electricity when the demand is at its highest or when the volumes of electricity generated from other technologies such as nuclear, hydro, or variable renewable energy sources do not suffice to cover demand. Hence, natural gas is often said to be the price-setting technology in the European electricity system. Demand for natural gas and electricity increased as economies opened up after the pandemic lockdowns but also due to the 2022 high summer temperatures and the resulting increased cooling demand in parts of Europe. At the same time electricity generation from certain technologies, e.g., nuclear, has been below historical levels due to technical and weather-dependent circumstances. The Russian invasion of Ukraine added a supply shock that further exacerbated the constraints and pushed prices up.

All actors are needed in the transition of the energy system, not least the end-users, also referred to as the customers. This group may for example provide their demand-side flexibility. However, the incentives today can be seen as being too weak and the barriers to participate with flexibility too high.

Within the ever-changing modern power system, power flows are increasingly transitioning towards becoming controllable and bi-directional. The modern power systems are faced with increased challenges pertaining to the integration of new technologies and devices. On the one hand, the need to integrate highly volatile and decentralised renewable energy sources (such as photovoltaic and wind), while on the other hand, power systems are seeing an increase in loads and capacity due to electrification of the transport, storage and heating/cooling sector (e.g., electric vehicles and heat pumps). Additionally, a change in consumer behaviour and evolving markets are also influencing this transition Such activities create increasing complexities and challenges due to the unpredictability in power flows within the power system. In order to overcome these challenges, system operators are relying on the use of flexibility which offer a wide range of opportunities and sought-after solution by providing a wide range of important services, which can enable system operators in operating their networks in a more efficient and cost-effective manner. However, utilisation of these resources to their full potential requires increased coordination between all relevant stakeholders in the power system. This increased interaction will not only allow for system operators to support each other in the optimal use of their respective grids, but also ensure that operating strategies in one network do not have any negative impact on the other. Furthermore, increased interactions with large and small system end users will allow for increased participation and therefore increased opportunities available from flexible resources.

The following video presents the concepts related to the electricity transition and the challenges faced by system operators when integrating flexibility into their networks. Furthermore, through the implementations of coordination schemes, systems operators can work together in order to ensure the safe, secure and reliable electric systems of the future.