The rapid increase in renewable power production is disrupting the balance of day to day electricity distribution.
In this article, Mattijs van den Hoed (Vice President Consulting Expert, Central Market Systems) and Martijn Frints (Director of Consulting, Energy & Utilities, Central Market Systems) at CGI, present the case for commoditising flexibility. As a result of local, residential photovoltaic (PV) and large offshore wind farms, power production has become more decentralised, increasingly unpredictable and geographically dependent. Take the example of German transmission system operator, TSO, Tennet, whose network spans the entire length of the country and is heavily dependent on steady winds in the North and Baltic seas. A lull in the wind can send ripples down the whole of Germany. The impact is not limited to TSOs. Balance responsible parties (BRPs) are affected too. These parties trade energy using a prognosis based on long-term standard patterns of usage at the residential level, which are now disturbed by local PV installation. In cases where PV production is netted with consumption on a yearly basis, BRPs may earn very little from the residential household and run a large imbalance risk. On the distribution system operator (DSO) side, local production has the potential to cause local network congestion, as the volume of locally-installed PVs increase.