Towards more flexibility in future electricity markets

The increased electrification in society together with the increase in small-scale and renewable electricity production contributes to a more variable demand and supply of electricity, which places new demands on the electricity grids. Local markets for electricity and flexibility is one way to meet these increased demands. In a local electricity market, you can sell electricity produced by your solar cells to your neighbors, and in a local market for flexibility you sell some of your control of when to consume electricity.

“Local trade opens for more and smaller electricity consumers to actively participate in the market with electricity, flexibility, or both. Smaller electricity producers can get a fair market price for their electricity and the company responsible for the local grid can buy flexibility to improve the operation of the grid, while the consumer gets paid. Increased flexibility can also be useful when the transmission capacity in the electricity grid is limited, for example when transferring between different parts of a country”, said Wenche Tobiasson, project manager for FlexiGrid at RISE.

Local market barriers

FlexiGrid includes several countries and demo sites where local markets for electricity and flexibility are tested. For example, there is a demo site at FlexiGrid’s partner Akademiska Hus facilities at Chalmers University of Technology’s Campus Johanneberg to demonstrate how local trading of electricity and flexibility can work. RISE’s focus in FlexiGrid is on how the local markets can be designed and function and on barriers for implementing them. Soon, Wenche Tobiasson, RISE’s FlexiGrid project manager, and her colleagues presents a report on the barriers that exist in today's legislation and regulations.

“We see that development of the regulatory framework is required both at EU level and in individual countries, for example on how the local and national markets can be connected. One of the most important issues is roles and responsibilities. It is very well regulated who can do what in today's electricity market, but the regulations must be adapted to make local trading of electricity and flexibility possible. It is also required that certain roles be clarified, such as the important role of aggregators”, said Wenche Tobiasson.

The aggregator acts on behalf of customers

An aggregator is a market actor who acts on behalf of consumers. The idea is that an aggregator can sign agreements with many customers to offer flexibility and that the aggregator then trades with this flexibility on the flexibility market.

“The electricity market is complicated enough already, and we believe that most customers are not interested in trading with flexibility in the market. Exactly how the aggregators will function remains to be seen, but it could be, for example, that the car must be charged at a certain time and that the aggregator takes care of it in a way that is most beneficial, such as by only charging when the need for flexibility is greatest and you get paid the most."

Electricity prices have increased a lot since the project started, and Wenche Tobiasson have noticed an increased interest in controlling one’s electricity consumption.

“Today's electricity prices depend on other factors such as the price of gas, but local markets and local solutions where consumers can become more active and be able to control their electricity consumption in a better way than today are an important part of the electricity system of the future. At RISE we work with all aspects of this development”.