Developing a real-time market

The new marketplace, they say, would enhance the use of demand-side resources and thereby address some challenges arising from the energy transition. At the same time, it would enable consumers to take a more active role in the energy market than they currently have.

Continuous energy availability is necessary for all Finns and Finnish industry, the proponents note, however, there are limitations on large scale energy storage so, to ensure availability, there must always be a balance between the production and consumption of electricity. Reaching a balance is more difficult than it used to be, as production is increasingly based on renewable modes of production susceptible to fluctuations in weather, such as wind and solar power. The need for flexibility is increasing while the load-following capacity is decreasing.

The solution, according to VTT and the University of Vaasa: demand-side management of electricity.

The VTT-co-ordinated Fleximar project is a Business Finland funded co-innovation project. It aims to create a “new marketplace for using small demand-side resources.”

The proponents note, for example, that the building stock provides a significant resource for demand-side management, since up to 40% of all energy consumption is related to buildings. “However, the factor limiting the use of demand- side resources is the inability of the present marketplaces to enable trading in small quantities of load-following capacity.”

“The existing systems intended for demand-side management of electricity have been created on the large operators’ terms, and it is too expensive to join them for small operators, such as individual consumers. We are now developing a cost-efficient marketplace welcoming also small operators. The intention is to collect small demand-side components from various operators and to combine them for sale,” says principal scientist Klaus Ka¨nsa¨la¨ from VTT.

Active role for consumers

The new marketplace would balance the load-following capacity markets and strengthen the consumers’ role in these markets. “So far, consumers have held the passive role of bystanders and payers – industrial facilities pay far less for their electricity than consumers, who cannot influence the markets. Our solution would give the consumers a role as active operators. They could be coupled as load-following capacity producers without middlemen and sell, for example, the solar power they have produced themselves in the same market where the wholesalers operate.”

The research project also intends to develop “new management principles, and business and market models supporting the use of the small- scale, flexible demand-side resources connected to the electricity distribution networks.”

“By means of active and intelligent use of flexible resources, it is possible to significantly improve the overall efficiency and reliability of electrical power systems and to maximise the integration of renewable energy sources,” says professor of electrical engineering, Hannu Laaksonen, who leads the project at the University of Vaasa.

In the future, the utilisation of flexible energy resources will increase not only in the transmission network, but also in the distribution networks. Therefore, to maximise the potential overall benefits of flexible energy resources, the transparency of data transfer between operators of transmission and distribution networks and the development of rules related to flexible resources utilisation needs to be improved, he says.

Hannu Laaksonen points out that there should be real-time information about potential restrictions on the use of flexible resources. “When the restrictions deriving, for example, from technical limitations of distribution networks or different customer needs are known, only then the real-time utilisation capacity of flexible resources available can be estimated.”

Pilot network

A pilot version of the new marketplace is up and running, and its architecture, operation and real-time steering is being tested with partner companies.

The marketplace concept will apply stock exchange trading mechanisms and use of intelligent bots and real-time pricing in trading. Location data will also be integrated into the system, enabling local steering of loading even by city district. Local flexibility could be implemented by means of small demand-side resources, says VTT/University of Vaasa and larger load-following capacity would be reserved for exceptional situations.

For further information contact: Klaus Ka¨nsa¨la¨, principal scientist, VTT, tel +358 40 546 0131, klaus.kansala@vtt.fi; Hannu Laaksonen, professor, University of Vaasa, tel +358 29 449 8303, hannu.laaksonen@univaasa.fi; Ulla Henttonen, manager, communications, VTT, tel +358 40 183 2228, ulla-stina.henttonen@vtt.fi

Above Image: Fleximar - the basic concept