RET_2015-01-02-03-04_Flipbook

Demand response - Use and limits in a liberalized electricity market – Peter CLAES & Michaël VAN BOSSUYT
• Febeliec also insists on the need for electricity supply to follow demand, as is the
case in other economic markets. If this was not the case and load were always to
follow electricity supply, this would require full participation of households to
demand side response, up to the level of individual appliances, a rapid
development of affordable storage to smoothen the balance between demand
and supply, and many other measures. It is however not compatible with
industrial investments in the field in Belgium, as industrial operations often
require stable regimes, as is shown by the baseload consumption profiles in
many sectors and industries. To enforce this would fatally undermine industrial
activities in Belgium, and accelerate the leakage of jobs and carbon-dioxide
emissions.
As described above, demand side flexibility is interesting in a market environment as a
more cost efficient solution compared to large, not frequently used, reserve generation
capacities to solve issues of generation adequacy for a limited number of hours and
MWs. In countries where specific system adequacy issues have arisen over the course of
the last years (such as Belgium, GB, France, …), demand side flexibility has seen
progress on many levels. The appearance of new market roles as aggregators and
flexibility service providers (FSPs) in general, the more active involvement of suppliers
and balancing responsible parties as well as an increased demand for flexibility products
from system operators have had a positive effect on the development of this segment.
However, several obstacles and barriers currently still exist, hampering the development
of the full potential of the demand side flexibility available within the electricity system.
These barriers include:
• Commercial and legal constraints: The ownership of the load flexibility is not
always clear (transfer of energy); moreover, many market players with flexibility
within their consumption patterns and production cycles have no incentive to
make this available as they have no exposure to market prices (either because of
fixed-price or non-flexible contracts, or because of lack of adequate meters such
as hourly measured or smart meters) and legal stipulations can exclude certain
types of flexibility (e.g. definition of demand side response excluding
participation of emergency generators to certain demand side response products
as they do not reduce consumption).
• System constraints: The minimum size, duration, frequency of activation,
notification period, and other technical constraints of demand side response,
which vary between sectors and industrial processes and for which flexibility
products are sometimes not compatible with technical and safety constraints, are
often based on historical generation-focused requirements and not adapted to
other sources of flexibility.
• Grid codes and tariffs: Grid codes and tariffs should not penalize demand side
flexibility participation (e.g. related to the rebound effect, where grid tariffs can
penalize industrial consumers who want to catch up with production loss after
Revue E Tijdschrift – 131 ste jaargang/131 e année – n° 1-2-3-4-2015 (publication mars/publicatie maart 2017) 4