IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v14y2021i15p4475-d600580.html
   My bibliography  Save this article

How to Procure Flexibility Services within the Electricity Distribution System: Lessons from an International Review of Innovation Projects

Author

Listed:
  • Karim L. Anaya

    (Energy Policy Research Group, Cambridge Judge Business School, Cambridge CB2 1AG, UK)

  • Michael G. Pollitt

    (Energy Policy Research Group, Cambridge Judge Business School, Cambridge CB2 1AG, UK)

Abstract

The aim of this paper is to analyse and evaluate the deployment of smart platforms (operated by distribution system operators—DSOs—or by independent parties) in key jurisdictions that facilitate the trading of flexibility services—primarily by DSOs. We look at key innovation projects/initiatives from seven jurisdictions, including Australia, France, Germany, Great Britain, Japan, The Netherlands and Norway. We have deliberately selected 13 use cases that operate under different regulatory frameworks and market rules, and have been recently implemented (from 2017 onwards). With the selection of key use cases this study seeks to discuss the different smart architecture solutions and main capabilities across different demonstrators and their relationship to business as usual. It also analyses flexibility market designs, identifies main characteristics, and compares different price formation schemes and procurement methods. The value of flexibility for DSOs is also discussed.

Suggested Citation

  • Karim L. Anaya & Michael G. Pollitt, 2021. "How to Procure Flexibility Services within the Electricity Distribution System: Lessons from an International Review of Innovation Projects," Energies, MDPI, vol. 14(15), pages 1-26, July.
    • Handle: RePEc:gam:jeners:v:14:y:2021:i:15:p:4475-:d:600580
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/14/15/4475/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/14/15/4475/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Anaya, Karim L. & Pollitt, Michael G., 2020. "Reactive power procurement: A review of current trends," Applied Energy, Elsevier, vol. 270(C).
    2. Orlando Valarezo & Tomás Gómez & José Pablo Chaves-Avila & Leandro Lind & Mauricio Correa & David Ulrich Ziegler & Rodrigo Escobar, 2021. "Analysis of New Flexibility Market Models in Europe," Energies, MDPI, vol. 14(12), pages 1-24, June.
    3. Peter Cramton & Emel Filiz-Ozbay & Erkut Ozbay & Pacharasut Sujarittanonta, 2012. "Discrete clock auctions: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 15(2), pages 309-322, June.
    4. Küfeoğlu, S. & Liu, G. & Anaya, K. & Pollitt, M., 2019. "Digitalisation and New Business Models in Energy Sector," Cambridge Working Papers in Economics 1956, Faculty of Economics, University of Cambridge.
    5. Erik Heilmann & Nikolai Klempp & Heike Wetzel, 2020. "Market design of regional flexibility markets: A classification metric for flexibility products and its application to German prototypical flexibility markets," MAGKS Papers on Economics 202002, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    6. Cherrelle Eid & Paul Codani & Yannick Perez & Javier Reneses & Rudi Hakvoort, 2016. "Managing electric flexibility from Distributed Energy Resources: A review of incentives for market design," Post-Print hal-01792419, HAL.
    7. Jan Marc Schwidtal & Marco Agostini & Fabio Bignucolo & Massimiliano Coppo & Patrizia Garengo & Arturo Lorenzoni, 2021. "Integration of Flexibility from Distributed Energy Resources: Mapping the Innovative Italian Pilot Project UVAM," Energies, MDPI, vol. 14(7), pages 1-29, March.
    8. Pol Olivella-Rosell & Pau Lloret-Gallego & Íngrid Munné-Collado & Roberto Villafafila-Robles & Andreas Sumper & Stig Ødegaard Ottessen & Jayaprakash Rajasekharan & Bernt A. Bremdal, 2018. "Local Flexibility Market Design for Aggregators Providing Multiple Flexibility Services at Distribution Network Level," Energies, MDPI, vol. 11(4), pages 1-19, April.
    9. Alexandra Schneiders & David Shipworth, 2021. "Community Energy Groups: Can They Shield Consumers from the Risks of Using Blockchain for Peer-to-Peer Energy Trading?," Energies, MDPI, vol. 14(12), pages 1-15, June.
    10. Giulietti, Monica & Le Coq, Chloé & Willems, Bert & Anaya, Karim, 2019. "Smart Consumers in the Internet of Energy : Flexibility Markets & Services from Distributed Energy Resources," Other publications TiSEM 2edb43b5-bbd6-487d-abdf-7, Tilburg University, School of Economics and Management.
    11. Radecke, Julia & Hefele, Joseph & Hirth, Lion, 2019. "Markets for Local Flexibility in Distribution Networks," EconStor Preprints 204559, ZBW - Leibniz Information Centre for Economics.
    12. Andoni, Merlinda & Robu, Valentin & Flynn, David & Abram, Simone & Geach, Dale & Jenkins, David & McCallum, Peter & Peacock, Andrew, 2019. "Blockchain technology in the energy sector: A systematic review of challenges and opportunities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 100(C), pages 143-174.
    13. Karim L. Anaya & Michael G. Pollitt, 2021. "The Role of Regulators in Promoting the Procurement of Flexibility Services within the Electricity Distribution System: A Survey of Seven Leading Countries," Energies, MDPI, vol. 14(14), pages 1-25, July.
    14. Schittekatte, Tim & Meeus, Leonardo, 2020. "Flexibility markets: Q&A with project pioneers," Utilities Policy, Elsevier, vol. 63(C).
    15. Aikaterini Forouli & Emmanouil A. Bakirtzis & Georgios Papazoglou & Konstantinos Oureilidis & Vasileios Gkountis & Luisa Candido & Eloi Delgado Ferrer & Pandelis Biskas, 2021. "Assessment of Demand Side Flexibility in European Electricity Markets: A Country Level Review," Energies, MDPI, vol. 14(8), pages 1-23, April.
    16. Ottesen, Stig Ødegaard & Tomasgard, Asgeir & Fleten, Stein-Erik, 2018. "Multi market bidding strategies for demand side flexibility aggregators in electricity markets," Energy, Elsevier, vol. 149(C), pages 120-134.
    17. Jin, Xiaolong & Wu, Qiuwei & Jia, Hongjie, 2020. "Local flexibility markets: Literature review on concepts, models and clearing methods," Applied Energy, Elsevier, vol. 261(C).
    18. Zhang, Chenghua & Wu, Jianzhong & Zhou, Yue & Cheng, Meng & Long, Chao, 2018. "Peer-to-Peer energy trading in a Microgrid," Applied Energy, Elsevier, vol. 220(C), pages 1-12.
    19. Eid, Cherrelle & Codani, Paul & Perez, Yannick & Reneses, Javier & Hakvoort, Rudi, 2016. "Managing electric flexibility from Distributed Energy Resources: A review of incentives for market design," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 237-247.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Karim L. Anaya & Michael G. Pollitt, 2021. "The Role of Regulators in Promoting the Procurement of Flexibility Services within the Electricity Distribution System: A Survey of Seven Leading Countries," Energies, MDPI, vol. 14(14), pages 1-25, July.
    2. Lynne L. Kiesling & Leonardo Meeus & Michael G. Pollitt, 2021. "Special Issue “Innovation, Policy, and Regulation in Electricity Markets”," Energies, MDPI, vol. 14(19), pages 1-4, September.
    3. Anaya, Karim L. & Pollitt, Michael G., 2022. "A social cost benefit analysis for the procurement of reactive power: The case of Power Potential," Applied Energy, Elsevier, vol. 312(C).
    4. Karim L. Anaya & Monica Giulietti & Michael G. Pollitt, 2022. "Where next for the electricity distribution system operator? Evidence from a survey of European DSOs and National Regulatory Authorities," Competition and Regulation in Network Industries, , vol. 23(4), pages 245-269, December.
    5. Michael G. Pollitt, 2023. "Locational Marginal Prices (LMPs) for electricity in Europe? The untold story," Working Papers EPRG2318, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    6. Anna Pechan & Marius Buchmann, 2023. "Market design for the procurement of reactive power: the current state in Germany," Bremen Energy Working Papers 0046, Bremen Energy Research.
    7. Covatariu, A. & Duma, D. & Giulietti, M. & Pollitt M., 2023. "Toward an operational definition and a. methodology for measurement of the active DSO (distribution system operator) for electricity and gas," Cambridge Working Papers in Economics 2348, Faculty of Economics, University of Cambridge.
    8. Karim Anaya & Michael Pollitt, 2021. "An evaluation of a local reactive power market: the case of Power Potential," Working Papers EPRG2124, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    9. Wanapinit, Natapon & Thomsen, Jessica & Weidlich, Anke, 2022. "Integrating flexibility provision into operation planning: A generic framework to assess potentials and bid prices of end-users," Energy, Elsevier, vol. 261(PB).
    10. Ander Zubiria & Álvaro Menéndez & Hans-Jürgen Grande & Pilar Meneses & Gregorio Fernández, 2022. "Multi-Criteria Decision-Making Problem for Energy Storage Technology Selection for Different Grid Applications," Energies, MDPI, vol. 15(20), pages 1-25, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aikaterini Forouli & Emmanouil A. Bakirtzis & Georgios Papazoglou & Konstantinos Oureilidis & Vasileios Gkountis & Luisa Candido & Eloi Delgado Ferrer & Pandelis Biskas, 2021. "Assessment of Demand Side Flexibility in European Electricity Markets: A Country Level Review," Energies, MDPI, vol. 14(8), pages 1-23, April.
    2. Kara, Güray & Tomasgard, Asgeir & Farahmand, Hossein, 2022. "Characterizing flexibility in power markets and systems," Utilities Policy, Elsevier, vol. 75(C).
    3. Gržanić, M. & Capuder, T. & Zhang, N. & Huang, W., 2022. "Prosumers as active market participants: A systematic review of evolution of opportunities, models and challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 154(C).
    4. Lynne L. Kiesling & Leonardo Meeus & Michael G. Pollitt, 2021. "Special Issue “Innovation, Policy, and Regulation in Electricity Markets”," Energies, MDPI, vol. 14(19), pages 1-4, September.
    5. Kara, Güray & Pisciella, Paolo & Tomasgard, Asgeir & Farahmand, Hossein & Crespo del Granado, Pedro, 2022. "Stochastic local flexibility market design, bidding, and dispatch for distribution grid operations," Energy, Elsevier, vol. 253(C).
    6. Carlo Schmitt & Felix Gaumnitz & Andreas Blank & Olivier Rebenaque & Théo Dronne & Arnault Martin & Philippe Vassilopoulos & Albert Moser & Fabien Roques, 2021. "Framework for Deterministic Assessment of Risk-Averse Participation in Local Flexibility Markets †," Energies, MDPI, vol. 14(11), pages 1-34, May.
    7. Martina Arosio & Davide Falabretti, 2023. "DER Participation in Ancillary Services Market: An Analysis of Current Trends and Future Opportunities," Energies, MDPI, vol. 16(5), pages 1-21, March.
    8. Erik Heilmann & Nikolai Klempp & Kai Hufendiek & Heike Wetzel, 2022. "Long-term Contracts for Network-supportive Flexibility in Local Flexibility Markets," MAGKS Papers on Economics 202224, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    9. Orlando Valarezo & Tomás Gómez & José Pablo Chaves-Avila & Leandro Lind & Mauricio Correa & David Ulrich Ziegler & Rodrigo Escobar, 2021. "Analysis of New Flexibility Market Models in Europe," Energies, MDPI, vol. 14(12), pages 1-24, June.
    10. Domagoj Badanjak & Hrvoje Pandžić, 2021. "Distribution-Level Flexibility Markets—A Review of Trends, Research Projects, Key Stakeholders and Open Questions," Energies, MDPI, vol. 14(20), pages 1-26, October.
    11. Liu, Zhengguang & Guo, Zhiling & Chen, Qi & Song, Chenchen & Shang, Wenlong & Yuan, Meng & Zhang, Haoran, 2023. "A review of data-driven smart building-integrated photovoltaic systems: Challenges and objectives," Energy, Elsevier, vol. 263(PE).
    12. Ajla Mehinovic & Matej Zajc & Nermin Suljanovic, 2023. "Interpretation and Quantification of the Flexibility Sources Location on the Flexibility Service in the Distribution Grid," Energies, MDPI, vol. 16(2), pages 1-18, January.
    13. Guray Kara & Asgeir Tomasgard & Hossein Farahmand, 2021. "Characterization of flexible electricity in power and energy markets," Papers 2109.03000, arXiv.org.
    14. Cramer, Wilhelm & Schumann, Klemens & Andres, Michael & Vertgewall, Chris & Monti, Antonello & Schreck, Sebastian & Metzger, Michael & Jessenberger, Stefan & Klaus, Joachim & Brunner, Christoph & Heri, 2021. "A simulative framework for a multi-regional assessment of local energy markets – A case of large-scale electric vehicle deployment in Germany," Applied Energy, Elsevier, vol. 299(C).
    15. Tsaousoglou, Georgios & Giraldo, Juan S. & Paterakis, Nikolaos G., 2022. "Market Mechanisms for Local Electricity Markets: A review of models, solution concepts and algorithmic techniques," Renewable and Sustainable Energy Reviews, Elsevier, vol. 156(C).
    16. Jin, Xiaolong & Wu, Qiuwei & Jia, Hongjie, 2020. "Local flexibility markets: Literature review on concepts, models and clearing methods," Applied Energy, Elsevier, vol. 261(C).
    17. Stig Ødegaard Ottesen & Martin Haug & Heidi S. Nygård, 2020. "A Framework for Offering Short-Term Demand-Side Flexibility to a Flexibility Marketplace," Energies, MDPI, vol. 13(14), pages 1-17, July.
    18. Andreas Zeiselmair & Simon Köppl, 2021. "Constrained Optimization as the Allocation Method in Local Flexibility Markets," Energies, MDPI, vol. 14(13), pages 1-21, June.
    19. Bellenbaum, Julia & Höckner, Jonas & Weber, Christoph, 2022. "Designing flexibility procurement markets for congestion management – investigating two-stage procurement auctions," Energy Economics, Elsevier, vol. 106(C).
    20. Aguado, José A. & Paredes, Ángel, 2023. "Coordinated and decentralized trading of flexibility products in Inter-DSO Local Electricity Markets via ADMM," Applied Energy, Elsevier, vol. 337(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:14:y:2021:i:15:p:4475-:d:600580. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.