Energy flexibility for dummies
Let’s discover together the flexibility in your installation
The energy flexinbility is the capacity to adjust consumption, into an installation, as a voluntary curtailment mechanism.
It is addressed to compensate unexpected peak moments in the electricity grid, to fix local congestion or an unbalance.
Traditionally, the grid operators are used to compensate these peak moments with the extra production of electricity from fossil fuel power plants. Unfortunately, this is an expensive (because all the electricity consumers pay it off in their energy bill), polluting (for the source used to generate this electricity from) and inefficient solution.
On top of that, this measure slows the net-zero program of eeach countries.
Let’s see the energy flexibility as a measure to compensate the peak moments from the same demand, when companies or residentials curtail consumption as voluntary mechanism.
The benefits of flexibility
The most important and added value of using the energy flexibility as a compensation from demand side is that it allows consumers to adjust their effective needs, rather than requesting unproductive or unnecessary consumption from the grid.
So, as long as consumers give up to superflous resources, this is a positive effect on efficiency in production or confort processes. And on taking CO2 equivalent emissions down.
Flexibility is one of the crucial key success factors for the energy transition. First, it reduces the use of resources, to the necessary ones. It optimizes the current energy system with active balancing between electricity production and demand.
The optimization mechanism introduces added value in the behind-the-meters processes that rule the production and the comfort in installations. This makes more efficient the governance of demand processes.
From the bottom lines standpoint, the good governance works on minimising the recurrent inefficiency, in order to lower the unproductive electricity needed to deliver a certain service.
Nevertheless, it becomes an incentive if end users are allowed to make this asset available for grid operators needing “good” resources to keep the energy system balanced in any moment. Concretely, this is an economic stimulus to holistic efficiency.
On top of that, flexibility-on-demand mechanisms lowers the unbalance grid costs and the impositive costs of consumers. So, each investment in flexibility have a pay-off. This benefits us all through keep transportation and grid tariffs low but also:
- Lowers the total energy bill (either the variable and the taxes)
- Reduce the CO2-footprint
- Generate new revenue streams
In a nutshell flexibility in energy is the voluntarily option to add (from bottom lines’s renewable sources), lower, shift, postpone the production processes and, for this resson, the consumption of electricity.
Due to the increasing cost of electricity in 2021 and 2022, many business owners decided to reduce the production for the unbearable cost of electricity. So, production might be either reduced or shifted to nightly hours, when the cost of resources is lower.
Another example is that a cold store (in logistics and supermarkets, for instance) cools extra when electricity prices are lower, then switches the cooling off when prices are higher again. So, it levers on the so called thermal inertia of warehouses to keep cool within certain limits, and not compromise the cold-chain of some products.
New revenue streams?
Yes, you correctly heard it: new revenue streams coming from selling that voluntary curtailment, when grid needs resources. So, instread of producing more, consumers allows to reduce consumption.
This mechanism is incentivated by a settlement from the balance service market to compensate this effort.
How to generate revenues?
Flexibility is used to keep the match of the production and demand of power in equilibrium. The price level of electricity is often the key driver. By unlocking flexibility from demand side, the consumers can play a key role in the grid equilibrium and, in exchange, generate revenues by releasing their assets and processes in different energy markets:
- Primary Reserve Markets
- Secondary Reserve Markets
- Tertiary Reserve Markets (commonly for end users)
- Day-ahead/Spot market
- Intraday market
The availability of these local market is fostered in European Union by the Regulation 944 of 2019, where the consumers are pushed and incentivated to operate in the energy markets. But, it leaves the local Regulators to decide the availability of these services and the engagement rules.
Where to start?
From past project, we took away that, in almost all assets and production processes, there is (hidden) room for inefficiency, so some flexibility to be unlocked and to become a valuable assets for new future revenue streams.
Although the business owners master their production processes, it is priceless to set up a call: we listen to your concerns and bring in past experiences. With real time insight, we can either corroborate your mastery and help you to enhance existing processes, with low infrastructure investments.
We suggest the next steps to listen to your need and provide quick feedbacks:
- Contact, to get to know each other
- Energy audit, for an overview of your consumption habits, throughout processes and assets. This is the outcome of phase 1 where we start building the installation’s digital twin.
- Consumption control and flex benefit calculation, to run a deep dive in the processes to provide insights on the available assets (flexibility), in phase 2. This triggers businesses control on their own processes to minimise recurrent inefficiency.
- If interested to unlock phase 3, we trigger the flexibility opportunity to unlock resources for the markets, under the flex service contract.
- After the agreement signature, we enable the installation into the aggregation platform.
- Onboarding, we control the business activation.
- Start participating in local flexibility market and cashing in the new revenue streams.