DEMAND-SIDE RESPONSE AS A SOURCE FOR FLEXIBILITY
Using flexible resources only for constraint management is unlikely to be a viable business case on its own, but the DSO should have access to other revenue streams as well, such as providing services to the TSO. In the long term, the DSO is expecting overloaded feeders in their low voltage (LV) network due to increased consumption. This applies all types of networks: rural, suburban and urban. Flexibility provided by DSR could help to defer or avoid some of the network reinforcement investments. Other possible applications include security of supply and island operation. Security of supply in this case means that DSR can help to reduce the effects of planned outages in the network due to e.g. maintenance work. Island operation is applicable in remote rural areas, where a long transfer line could be replaced by an island system with distributed generation, energy storage and DSR. 3.2.4
Suppliers
In this section we consider suppliers which are part of a vertically integrated energy company. This means that the same company also owns electricity generation which can be affected by competition from DSR. The supplier interviewed for this study had experience from previous DSR pilots, which were not considered a success due to small financial benefits for the end-customer and some technical challenges. The scale of the potential DSR market is not considered attractive enough currently and roles and responsibilities of different market participants are still unclear. Examples of this are the role of the DSO in DSR activities and balancing responsibility in DSR activations. Drivers for DSR for the suppliers include new revenue streams from providing system services to the TSO, using DSR as part of their portfolio and risk management to reduce wholesale costs, and offering cost reductions for customers by avoiding price peaks. On the other hand, the revenues for the generation fleet can be reduced if DSR can offer the same services at a cheaper price or if consumption is reduced when the price of electricity is high. In its DSR pilot, one supplier found that lack of automated loads reduces the potential supply of DSR. The pilot focused on industrial loads. Residential loads have the biggest volume, but their DSR provision is harder to plan for, guarantee and control due to the large amount of small loads. Another technical barrier is the DSR’s relative position to generation. Technical requirements of system services were written originally for generation and can be too onerous for DSR resources. 3.2.5
Aggregators
The drivers for aggregators are similar to suppliers but aggregators, which in the context of this project are considered to be independent third party service providers with no generation capacity, do not have existing customers and systems like the suppliers do from their electricity sales and trading activities. One potential Estonian aggregator interviewed for this study mentioned that the main barriers, currently, are related to business model uncertainties and data availability, especially for providing DSR capacity to system services. The TSO does not have all the necessary data to calculate the potential value of flexibility of a potential DSR provider. Other uncertainties for calculating the customer’s business case are the lack of clarity in
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