Optimal DSO/market coordination for the activation of distributed flexibility

Authors

Marion Pichoud, Virginie Dussartre, Maxime Lâasri, Jan-Horst Keppler

Abstract

Optimally coordinating flexibility resources is an ever more critical element of ensuring the supply and demand balance at all hours in decarbonizing electricity systems with a high share of variable renewables. This paper estimates the value of coordinating local flexibility providers through competitive wholesale markets of Central Western Europe (Austria, Belgium, Switzerland, Deutschland, France, Spain, Great-Britain, Ireland, Italy, Luxembourg, Northern Ireland, Netherlands and Portugal) as well as the resulting investment needs at the level of the French distribution grid in 2030. It is based on detailed data of the electricity system, energy mix previsions from 2016 and consumption and production data for every 2000 substation of the French distribution network. A key result of this paper is that the economic welfare gains of coordinating multiple heterogeneous local flexibility resources are substantial while requiring only limited investments in the extension of local distribution grids. With a real-time activation signal, coordinating distributed flexibility in the wholesale market will generate a welfare gain of 1.4 billion Euros due to savings in both operational and fixed investment costs in comparison with a situation where no flexibility is offered. This gain can be realized at a cost increase for the reinforcement of distribution networks required by these flexibility activations of only 100 million Euros, mostly concentrated on urban stations with high EVs penetration. Subsequently, the paper offers several extensions such as, for instance, the impact of an easier to implement and predictable longer-term flexibility activation signal, for which the total gains are only 30% lower. Another extension studied is the implementation of a filtering by the DSO of flexibility activations with particularly high power swings with the help of a local “Maximum Power Indicator”, which allows further welfare gains. Overall, the paper provides modelling evidence of the value of aggregating local flexibility resources at the level of the wholesale market, their limited costs in terms of required reinforcements and the benefits of a coordination between issues at local level (grid reinforcement) and European level (generation cost).