Ove S. Grande

Demand Response From Household Customers: Experiences From a Pilot Study in Norway

This paper presents experiences from a pilot study focusing on daily demand response from households, utilizing smart metering, remote load control, pricing based on the hourly spot price combined with a time of day network tariff, and a token provided to the customers indicating peak hours. The observed demand response was 1 kWh/h for customers with standard electrical water heaters. By aggregating this response, the potential for demand response from 50% of Norwegian households can be estimated at 1000 MWh/h (4.2% of registered peak load demand in Norway). A cost-effective realization of this potential should have high focus when considering smart metering technology. From a market perspective, a potential load reduction of this size should be bid into the day ahead market. Demand response to price (the day after) will not affect the price, but might create imbalances and the need for activating balancing resources, creating additional costs.

Experience with the Nord Pool design and implementation

The electricity industry of the Nordic countries went through a major restructuring during the 1990s. A wholesale market with significant competition has been established. Nord Pool was established in 1993 as a Norwegian electricity exchange, and extended its trade to Norway and Sweden in 1996. It thus became the worlds first multinational exchange for trade in electric power contracts, and presently it is the only truly international electricity market. There is one market operator, and there are five system operators. Each country has its own regulatory agency. There are no general cross border tariffs. In 2001, power contracts worth nearly NOK 412 billion, about 55 billion Euro, were cleared by Nord Pool, and the combined volume of contracts traded was 2769 TWh, that is more than seven times the physical consumption. An open market with a common framework has made the Nordic market the most liquid electricity market in the world. Three of the countries have full retail market access. Since deregulation of the electricity industry started, restructuring has taken place in all countries resulting in mergers and acquisitions. There is an ongoing concentration of ownership in the wholesale market, and the concentration of the production side causes concern.

Ecogrid EU - a large scale smart grids demonstration of real time market-based integration of numerous small DER and DR

This paper provides an overview of the Ecogrid EU project, which is a large-scale demonstration project on the Danish island Bornholm. It provides Europe a fast track evolution towards smart grid dissemination and deployment in the distribution network. Objective of Ecogrid EU is to illustrate that modern information and communication technology (ICT) and innovative market solutions can enable the operation of a distribution power system with more than 50% renewable energy sources (RES). This will be a major contribution to the European 20-20-20 goals. Furthermore, the proposed Ecogrid EU market will offer the transmission system operator (TSO) additional balancing resources and ancillary services by facilitating the participation of small-scale distributed energy resources (DERs) and small end-consumers into the existing electricity markets. The majority of the 2000 participating residential customers will be equipped with demand response devices with smart controllers and smart meters, allowing them to respond to real-time prices based on their pre-programmed demand-response preferences.

Alternative model for area price determination in a deregulated power system

The area price model used by Nord Pool in the Nordic day ahead market, is an option for other restructured power systems, including the future European spot market for electricity. However, improvements in the methodology for area price determination are needed to make the model suitable for the more meshed and complex power system in Continental Europe. An alternative methodology, where power flow calculations are included, is proposed in this paper. The proposed methodology is based on a combination of nodal and area pricing, and the criterion of optimization is minimization of the total (socio-economic) congestion costs. This paper describes the method and the implementation in a prototype simulation model. Case studies have shown that the proposed model has the potential to reduce socio-economic congestion costs in the Nordic system and to reduce maximum price differences between areas. This means that the transmission system utilization is improved, and the market player risk with respect to area prices is reduced.

Enabling demand response by extending the European electricity markets with a real-time market

The EcoGrid concept proposes to extend the current wholesale electricity market to allow participation of Distributed Energy Resources (DERs) and domestic end-consumers in system balancing. Taking advantage of the smart grid technology, the EcoGrid market publishes the real-time prices that entail an appropriate response of DERs and flexible customers to cope with the production deviation of renewable generating units. In the EcoGrid model the relation between the retailer and the customer stays entirely in the liberalized market, opening opportunities for new retail-level products and contracts supporting desired trade-offs of risk and benefit levels. The concept increases the market value of wind power, which in the long run is expected to provide the economic incentives to a higher wind power penetration. Hence, for a Europe-wide uptake of demand response, a good accordance between the EcoGrid concept and the new ENTSO-E Network Code on Electricity Balancing will be vitally important.

Reserve requirements and price spikes in multinational power markets

During the winter of 2009/10 several incidents with prices between 1000 and 1400 €/MWh occurred in the Nordic power market. These were caused by a combination of demand peaks due to severe cold and an unusually low availability of nuclear power in Sweden. With the activation of out-of-market re-serves, prices were set to 0.1 €/MWh above the highest commercial bid. Only a minor amount of reserves was used. Although the socio-economic effect of the price spikes is limited, the negative effect on consumers is obvious, while also many retailers are negatively affected. The paper presents three alternatives that could have been used to avoid the extreme price peaks: increasing transfer capacities, reducing reserve requirements and increasing the price elasticity of demand. It is difficult to quantify the effect on system security of increasing transfer capacities, but even a marginal increase in the probability of a blackout implies a high cost. However, a reduction of country-specific reserve requirements and a better sharing of reserves between countries does not have an effect on system security if there is available transfer capacity for the reserves. A better functioning demand side would almost certainly have avoided the price peaks.