Demonstrating new pricing mechanisms for unlocking local energy system flexibility
The increasing complexity of our energy system including the growing energy demand and the decentralisation of the energy supply puts pressure on the distribution network whose transport capacity is not unlimited. This problem is not present or tangible yet in many areas and it is therefore complex to find and implement the right solution to prevent it. The provided technology should support the future energy system from inception.
As an example, the transition to electric vehicles, will in turn increase the peak demand on the local distribution network, and so, we need to steer the demand away from the evening (peak time) and instead to the night or days with significant amounts of sunlight where local PV generation will be abundant. An integrated approach is essential to match the need of and deliver value to the homeowners whilst meeting the requirements of the local energy infrastructure.
How are we breaking that circle?
Within the ACCESS pilot, Amersfoort will demonstrate a local, community energy market in an operational environment which will meet the requirements of the local network and offer a sustainable solution to homeowners. For doing so it is important to address how the market mechanisms and incentives can be future-proofed:
● Taking the seasonal influences into account when designing sustainability measures.
● Shifting both supply and demand during the day and night rhythm.
● Control the peak load.
Among other things, Amersfoort will test how heat pumps can charge boilers (or heat batteries) during daytime hours when there is a surplus of locally produced renewable energy. Electrical batteries have the functionality to store energy when a surplus of locally produced renewable energy occurs and the price levels decreases. This capability can help to reduce peak consumption levels and avoid congestion at the local distribution network.
“By looking at it as an integrated problem and creating local flexible prices we can limit the grid congestion and the investments that need to be made for increasing its capacity”.
Rob Goudriaan, Energievan
The ACCESS pilot will ultimately validate whether a sustainable integrated local energy market could contribute to the reduction of the total cost of ownership for homeowners. Questions will arise such as will the (social) costs of a sustainable energy system be reduced with flexibility in the community? However, when you’re able to activate and access this flexibility it becomes clear that we must strive within the community to consume as much locally produced renewable energy. Whilst, in parallel, avoid congestion on the local distribution network.
The pricing mechanism needs to change
We have seen that subsidies such as the netmetering scheme can help to boost local renewable energy production. However, ultimately this leads to congestion issues for the local grids. Therefore, we need to change the current pricing scheme and introduce a new method, one that will consider both “local” renewable energy and “local” grid congestion. This then creates a balance in the local energy production and the local grid capacity whilst also factoring in the local demand and making it more financially attractive.
By creating a local energy price that is flexible, both the wholesale market price and the price of local consumption must be considered. Within the ACCESS pilot, Amersfoort will explore the economic and technical viability of this pricing mechanism by testing virtually and in real life its operation with a number of homeowners. The data collected will allow to prove if there is a financial benefit to cover the participants' investments and to avoid or reduce the social cost of investing in the local distribution grid.
“Investments will need to be made for the energy transition. To avoid these costs being unpayable and to shorten the payback time, we need to search for new mechanisms to generate revenues”.
Rob Goudriaan, Energievan
The municipality and energievan.nu has been working on the preparation of the pilot over the past months and are now ready to kick-start the implementation phase with the installation of the batteries in the participants’ households.
With the ACCESS project, the municipality of Amersfoort aims to contribute to the affordability of energy-neutral homes by developing a value proposition for homeowners that enhances the flexibility in the energy system, to make the shift from a central to a decentralised energy supply.
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