Our electricity grid cannot keep up with the energy transition. New schools, businesses and neighborhoods have to wait for a connection and solar panels are already switched off at peak times. In a recent report, PhD researchers Bart van der Holst and Gijs Verhoeven discuss the pros and cons of financial measures to better balance the electricity grid load.
'Grid operators are facing capacity problems,' explains Koen Kok, who supervises both PhD researchers. 'And they are urgently looking for solutions.' As part of the larger GO-e project, doctoral students Bart van der Holst and Gijs Verhoeven investigated five financial measures grid operators could take to make better use of the existing grid capacity. 'In the case of grid congestion on the low-voltage grid, which connects homes and small businesses, the norm has always been to simply install new cables to reinforce the grid,' Van der Holst explains. 'However, the current challenges are so big that this way, they cannot be solved everywhere in time. We must therefore also take a different perspective, and start adjusting the planning of our energy consumption as well.'
'Regulator The Netherlands Authority for Consumers and Markets (ACM) and Netbeheer Nederland are currently exploring a new tariff for the use of the electricity grid by small consumers. In preparation for this decision, we examined a number of possible tariff types,' Verhoeven adds. On top of that, the researchers evaluated the advantages and disadvantages of introducing two different contract types, which are already in use in the medium-voltage network. All five measures studied are close to the market and can be introduced with relative ease.
No silver bullet
'The final conclusion of the study is that some of these measures and especially combinations of them are certainly going to help until 2030, but that they are not the final solution,' Kok summarizes. 'It is therefore necessary for grid operators to remain flexible, to keep moving with the changing realities during the energy transition, and to continuously keep possible next steps in mind.'
In their research, the PhD researchers looked at grid tariffs. These are the annual, currently fixed, costs you pay for your connection to the electricity grid. The ACM sets the maximum tariff that grid operators can charge households for the transportation of energy and the construction and maintenance of cables and transformers, for example. Using simulations, the researchers looked at how three options for increasing the flexibility of these tariffs impact the grid load. The factor of relevance here is how much electricity flows in either direction between your home and the grid at any given time.
Three tariff types
The first option involves a so-called bandwidth tariff. In this scenario, a consumer pays a fixed rate for using the grid within a certain bandwidth. This bandwidth also applies to supplying energy back to the grid, such as the energy generated by solar panels. At times when you draw more power from the grid or feed more into it than the predetermined bandwidth, you pay an additional fee for the use of this extra grid capacity. But if you manage to keep the energy transport between your home and the grid flatter, that'll save you money. That means, for example, that it will be profitable to charge your electric car when the sun is shining, or to turn on your dryer only when your dishwasher has finished.
A second option studied was a network tariff based on time of use. With this type of tariff, your network connection costs more if you want to use or deliver energy at peak times, and is cheaper if, on the contrary, you transport more energy to and from the network during off-peak hours.
The last tariff-based option the PhD researchers simulated involved a so-called weighted peak tariff. In this scenario, your tariff is determined by the height and timing of your largest energy consumption. Peaks in off-peak moments have less impact than consumption peaks on a peak moment for the network. In other words: by shifting your maximum consumption to an off-peak time, you can save money.
Leap of thought to contracts
'These tariff types are already being discussed by grid operators at the moment,' Van der Holst knows. 'That was also the reason for us to find out what their expected effects would be on grid congestion. But in addition, we also made a leap of thought: the medium-voltage network already works with certain forms of contracts. What if we would start using these in the built environment as well?'
'For households, this would mean that they would not be represented at the individual level, but that a so-called aggregator would make agreements with the grid operator on behalf of a collection of households to shift energy consumption,' Verhoeven explains. When the grid operator expects congestion for the next day, it can use these contracts to call on the aggregator to use more or less energy. The aggregator then directs electric cars, for example, to charge at a different time, but in such a way that the user does not experience any inconvenience from it. The grid operator then compensates the aggregator, and thus the owner of the electric car, for this service. This way, flexibility gets a value.
For the contracts, the researchers looked at two options. The first type of contracts limits the capacity of connections at any given time. Van der Holst explains: 'You get a connection for a certain maximum capacity, part of which is unavailable on demand. A day in advance, the grid operator lets you know how much of your capacity you can use the next day.' A second option is a so-called redispatch contract. This is based on the same idea, but here it is the user himself who indicates in advance what he thinks he is going to need. The grid operator then indicates at what time the user should use more or less energy.
Combination works best
The experiments and simulations show that a combination of these contracts with a weighted peak rate can lead to a more even distribution of grid use throughout the day and thus less grid congestion in the shorter term. 'But if a growing number of people get dynamic energy contracts and smart devices that can decide for themselves when to use or store energy, there is a good chance that all these users will start using energy at the same, cheap, time. And then congestion will arise again. Also, small users' devices may increasingly be used to make money from solving the imbalance between supply and demand. We show in the study that this can again cause new peaks on the grid,' the researchers warn. Hence, they advocate continuing to think ahead about the possibility of adjusting these types of financial incentives as the energy transition progresses. 'This is a dynamic system, you can't regulate that with rigid instruments.'
The report is not about issues of the future, but about what is happening today, Kok cannot stress enough. 'We have to do anything we can to cover the time we need to increase the grid capacity. In addition, a more balanced load profile of the grid means we make more efficient use of the available capacity.' Kok says the study also shows that these measures will most likely not be the final solution. 'Dynamic energy contracts, where the electricity price depends on when you consume the electricity, are booming. Time scales are getting shorter and shorter in the process. There are already several aggregators who, for example, operate in the imbalance markets with groups of charging electric cars. If this happens on a larger scale, the study shows, its influence will be greater than that of the instruments studied and congestion will reappear anyway. So, then even more dynamics are needed in the incentives from the network.'
The report will soon be available via the GO-e project website (in Dutch).
