The Power of Flex by Elia Group

THE POWER OF FLEX Enabling consumers to benefit from the energy transition November 2023

TABLE OF CONTENTS

FOREWORD

CLARIFYING A FEW KEY CONCEPTS COVERED IN THIS REPORT

KEY MESSAGES

CONCLUSION

HOW DID WE CONDUCT OUR STUDY?

NEED FOR FLEXIBILITY

VALUE FOR CONSUMERS

BARRIERS

SOLUTIONS

SUCCESS STORIES

GLOSSARY

114

ANNEXES

116

FOREWORD

Removing barriers to consumer-side flexibility will be a game changer Dear reader, The rising number of electric cars and heat pumps indicates that they are rapidly nearing mass-market adoption. Together with the electrification of industrial processes, it demonstrates that electrification is spreading across society both earlier and at a faster speed than predicted. This carries important implications for the electricity system. Imagine charging all of these millions of electric devices at the same time. This would not only put the stability of our electricity grid at risk, it would also be highly inefficient. Such a scenario is quite possible.

▶ The increasing electrif ication in industry, mobility and heating carries important implications for the electricity system. To prevent the ineff icient management of the system, unlocking consumer-side flexibility is essential.

If we don’t properly manage this rise in electrification, we will encounter challenge after challenge. It is therefore becoming urgent to focus on the barriers that are hindering the implementation of consumer-side flexibility. Indeed, this massive number of new electrical devices carries a great deal of value: their charging or heating moments can be spread out across time. By being able to consume electricity in a flexible way, households and industries will be given control over the management of their own consumption. They will be able to avoid costly price peaks by mainly consuming electricity when it is sufficiently windy or sunny. However, for reaping its full benefits, a plug-andplay approach to flexibility is essential.

▶ Residential and industrial customers who own electrical devices will be able to avoid expensive price peaks by consuming energy at times when green electricity is more abundant. This approach will level out consumption peaks and help to handle fluctuations in the supply of renewable energy.

The good news is that flexible consumption both benefits consumers and has a positive impact on the electricity system. It can flatten consumption peaks and help to manage the variability of renewable energy. This, in turn, directly contributes to security of supply and is an important lever for reducing capacity needs that are linked to the rising demand for electricity. So how can consumer-side flexibility be unlocked?

▶ This vision paper lays out a future in which consumers are offered access to wholesale electricity prices and can put flexibility to work on a market-wide scale. Real-time price signals, a seamless data access for energy service providers, and the optimisation and interoperability of electrical devices are key factors for enabling consumer-side flexibility.

Providing all consumers that own flexible assets with access to financial incentives is just one of the actions we have identified. Additional obstacles that need to be addressed include seamless data access and flex-ready devices which are technically set up to provide flexibility in the easiest way possible. Once the barriers are eliminated, and consumers realise that they can benefit from having a smart meter installed in their homes, they will begin to request them! We are convinced that the aforementioned changes will deliver more innovation and competition to the energy sector. It will enable a new ecosystem to flourish in which new and existing service providers will offer tailor-made flexibility solutions that benefit consumers and the electricity system as a whole. Enjoy the read!

IN SHORT

Catherine Vandenborre Interim CEO of Elia Group

“If we don’t properly manage this rise in electrification, we will encounter challenge after challenge.”

“Consumer-side electricity will enable a new ecosystem to flourish in which new and existing service providers offer tailor-made flexibility solutions to consumers.”

2018 2023

2021

Elia Group has a history of publishing studies on consumer-side flexibility. Since flexible consumption is highly relevant for society, over the past few years, Elia Group has continuously emphasised its importance and has published several vision papers on the subject. In 2018 and 2021, our primary focus was understanding the impact of consumer centricity. We undertook several pilot projects in collaboration with various partners.

2022

For this study, we went a step further. We organised student challenges in Belgium and Germany and interviewed several energy market parties to better understand the obstacles still hindering the rollout of flexible consumption.

Our current work focuses on addressing the remaining barriers that stand in the way of consumer-side flexibility being unlocked. Since most consumers have no access to wholesale prices, they are still unable to capitalise on their flexibility.

2020

CLARIFYING A FEW KEY CONCEPTS COVERED IN THIS REPORT Flexibility is a multifaceted concept

Implicit and explicit flexibility

Day-ahead and intraday markets

Flexibility is a multifaceted concept, encompassing various methods that involve adjusting and shifting electricity consumption and production in time. It is offered up by controllable technologies which are capable of modifying their generation and production processes upon request.

Implicit flexibility

Day-ahead markets

Intraday markets

Implicit demand-side flexibility occurs when consumers respond to price signals which are triggered by network tariffs and energy prices. By choosing time-based energy contracts that fluctuate in accordance with the market and network conditions, consumers can proactively adjust their consumption behaviour, either consciously or through the use of automatic tools, to reduce their electricity expenses.

Day-ahead markets involve the activation of a flexible asset (which will then have its consumption or generation adjusted) during the following day. This means that there is a lead time between the decision to utilise a flexible asset and actually using it; this lead time can be between 36 hours and 12 hours ahead of day on which the asset will be used.

An asset responding to intraday price signals will undergo short-term adjustments to its power consumption; typically, these adjustments will occur after 3 pm when the intraday spot market becomes active. The lead time between the decision to utilise an asset and its actual activation can range from 30 hours through to just over 5 minutes from delivery.

Consequently, batteries, electric vehicles (EVs), heat pumps, and other flexible devices can be asked to adjust their consumption of electricity at any time between 36 hours to 12 hours before the day on which they will actually be adjusted. End user flexibility is predominantly utilised in this market segment today.

This method requires the use of assets that can be rapidly dispatched (such as batteries or EVs and enables a more precise fine-tuning of demand in response to the latest forecasts, such as expected solar radiation and power generation from photovoltaic (PV) panels.

The list below includes examples of a wide range of different flexibility types: ▶thermal generation units: the output of most conventional thermal units can be adjusted within a specific time frame; ▶demand side assets: some of these assets can offer up flexibility by having their demand adjusted in response to explicit signals, or (implicit) price signals; ▶electricity storage: this type of technology, which can be likened to an energy reservoir, is inherently flexible; ▶interconnectors: these are used to import or export electricity from or to other regions through cross-border forward, intraday/day-ahead or balancing markets. Of the aforementioned options, demand-side flexibility holds the biggest amount of untapped potential. Its volume is expected to rise rapidly in the years to come.

Explicit flexibility Explicit demand-side flexibility involves the system operator (DSO or TSO) contracting flexibility. When an asset’s flexibility is required, the TSO or DSO activates it in accordance with the agreed terms of the contract for a specific duration. This study will mainly focus on implicit flexibility, as part of which consumers respond to market signals. It should be noted that today, controllable assets can receive price signals from markets that relate to different time horizons, such as day-ahead or intraday signals.

Battery home storage systems, particularly in conjunction with solar panels, are best suited to this type of activation. Additionally, EVs can also be effectively utilised, as long as short-term changes to charging activities do not disrupt consumer comfort. The flexibility that heat pumps can offer is significantly influenced by external factors, including the demand for heat (which varies in line with the weather), the quality of a building’s insulation, the type of heat pump, the system’s configuration, and consumer preferences.

We have reached a decisive moment in time. The electrification of industry, mobility and heating offers households and industry significant opportunities to reduce their energy bills. By shifting their use of electricity in time, they can avoid price peaks and also take advantage of abundant electricity supply. This consumer-side flexibility both benefits consumers and the efficiency of the electricity system by managing the volatility of renewable energy. A plug-and-play approach to flexibility is essential for reaping its full benefits.

Consumer-side flexibility will broaden the range of market participants. Any owner of flexible assets will be able to provide it. The biggest impacts will be achieved when the benefits of flexible behaviour are maximally transferred to consumers. For this to happen, direct access to the wholesale market is required. Removing the barriers will increase the market’s competitiveness and enhance its efficiency.

Message

KEY MESSAGES

Real-time price signals, seamless data access and flexready devices* are key levers for eliminating barriers to consumer-side flexibility. Together, these will bring about big changes to the energy system. In return, a new innovative and competitive ecosystem will be created that will make the energy system more efficient, sustainable and affordable.

* Flex-ready devices are assets which are technically set up to provide flexibility in the easiest way possible.

Message

We have reached a decisive moment in time. The electrification of industry, mobility and heating offers households and industry significant opportunities to reduce their energy bills. By shifting their use of energy in time, they can avoid price peaks. This consumer-side flexibility both benefits consumers and the efficiency of the electricity system by managing the volatility of renewable energy. A plug-andplay approach to flexibility is essential for reaping its full benefits.

Flexibility will increasingly be provided by end consumers. Flexibility plays a crucial role in maintaining the stability of a renewables-based electricity system. It helps to keep generation and consumption in constant balance. This ensures society has access to a reliable and stable electricity supply.

Industrial flexibility

Residential flexibility

Today, the business case for flexibility demand is mainly driven by the provision of ancillary services. It predominantly involves the operational adjustment of generation (thermal power plants and renewables), large storage units (batteries) and demand response provided by large industrial players. When needed, they adapt their production or consumption of electricity in real time, in line with whether there is too much or too little electricity available across the grid.

The management of flexibility provided by residential consumers and small and medium-sized companies (SMEs) is currently limited: it is mainly used as part of self-consumption practices, covering activities such as households charging their electric cars or using their heat pumps when their solar panels generate power. This approach to flexibility management is inefficient and restricts the far greater possibilities that could emerge.

I don’t think we’re ready to understand what the new system with flexibility will be like yet. We come from a different world in which flexibility didn’t play an important role. Our understanding of it needs to be sharpened. Andrees Gentzsch, Federal Association of Energy and Water Industries (GE)

Although large industrial consumers are familiar with demand response1, their electrified heating processes, which will soon consume large volumes of energy, will be a disruptive force. Heating can be stored, allowing industrial players to consume electricity outside of prices peaks.

The nature of flexibility is changing. Consumer-side flexibility will involve millions of smaller and dispersed assets like electric vehicles (EVs) and heat pumps. This micro-flexibility will therefore be of a very different nature than traditional forms of flexibility. Despite its benefits, consumer-side flexibility is currently being held back due to a lack of incentives, data access and interoperability.

Transitioning to renewable energy sources will affect all electricity consumers, from industry to citizens. It is important that the latter are not left behind, but instead are given the possibility to be a part of the solution by providing decentralised flexibility to the grid. Damien Lepage, Co-Founder, MeteoElec active in the smart mobility industry

1 Demand response refers to balancing the demand on power grids by encouraging customers to shift electricity demand to times when electricity is more plentiful or other demand is lower, typically through prices or monetary incentives

Figure 1: Changes in Belgium’s electricity consumption between 2010 and 2035 (historical and estimated values) 140 130 Yearly electricity consumption [TWh]

The spread of electrification in Belgium and Germany is ramping up at a faster speed and earlier than forecasted. Its implementation is gaining momentum in three key sectors: mobility, heating and industry.

121.8

120 108.6

110

117.3

104.2

100 90

112.8

125.9

132.9 129.4

95.5 89.3 88.2

84.7

85.8

89.4 88.3

86.4 87.4 88.0 85.7

82.1

84.7

99.5

E-mobility

88.4

Heating

82.9 82.6 84.5

80 70

Existing usages and losses

60 50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Electrolysers and power-to-heat are an output of the economic dispatch model Source: Elia (2023), ‘Adequacy and Flexibility Study for Belgium (2024-2034)’

Frank Geerts, ElaadNL the knowledge and innovation center in Arnhem (NL)

Figure 2: Expected evolution of decentralised flexible assets (EV and PV) in Germany (under scenario B) Amount of flexibile assets (EV and HP) in Germany 40 Amount of assets [Millions]

Continuing the electrification, without tapping into the intrinsic flexibility potential of electric vehicle and other flexible assets, is simply not a possible option.

Electrification of industry, new data centers and electrolysis

37.3

31.7

30 25 20

Although both types of flexibility will be necessary components of our future energy system, consumer-side flexibility differs from the provision of ancillary services.

After-market

In-Market

Ancillary services are driven by opportunity cost and are needed for real-time adjustments as part of after-market transactions. However, this interventionist approach of balancing the grid will not be suited to the new types of flexibility that are emerging alongside the electrification of society.

Consumer-side flexibility will allow consumers to avoid using energy during costly peak periods. This is an in-market approach. Since sources of consumer-side flexibility (millions of electric cars, batteries, heat pumps, boilers, …) will be widely spread out across the electricity grid, it will significantly outdo the scale of current flexibility means.

Unlocking the full spectrum of consumer-side flexibility, from industrial to residential level, will offer important opportunities for both individual consumers and the electricity system. By optimising their energy management, households and industry will avoid price peaks while increasing the efficiency of the overall electricity system. By smoothing out consumption peaks, less fossil-based production capacity will be needed to meet demand. This will result in a direct cost savings and a reduction in CO2 emissions, so benefiting society.

16.3

14.3

Consumer-side flexibility will significantly outdo the scale of current flexibility means

10 5 0

1.2

Reference 2020/2021

B 2037 Heat pumps - Houshold and tertiary sector

B 2045 Electromobility

Source : Germany’s 2023 Network Development Plan (or ‘Netzentwicklungsplan Strom 2037 mit Ausblick 2045’)

Not using the flexibility of electric cars, heat pumps and home storage would be a gigantic waste. But that is exactly what will happen if we do not provide these assets with price signals that reflect the physical reality in the grid and system. Prof. Dr. Lion Hirth, Professor, Hertie School

ASSUMED GROWTH IN FLEXIBILITY OVER THE NEXT 10 TO 15 YEARS

Figure 3: Impact of unlocking flexibility & the timely build-out of additional HVDC interconnectors on the capacity GAP in Belgium Short-term measures

Medium-term measures

Long-term measures

2025-26

2027-29

2030-34

10000

8000

FLEX -900 MW

7000 yr W/ 0M

[MW]

6000

+70

5000 4000

5900

6300

FLEX -1300 MW

5900

FLEX -2000 MW

TritonLink -400 MW

Nautilus + offshore -800 MW

9000

6200

r W/y 0M

+40

6100

6500

Capacity gap if flexibility is not developed

Belgium

6900 Capacity needs provided by CRM2

5200 Need for new capacity

4400

Figure 4: Share of market-oriented flexible assets in private households in Germany

3700

3000 Nuclear extension

2000 1000

Capacity already contracted

0 2025-26

2026-27

2027-28

2028-29

2029-30

2030-31

2031-32

2032-33

2033-34

2034-35

Source: Elia’s Adequacy & Flexibility study for Belgium (2024-2034)

The graph on the left side shows how Belgium’s capacity needs will develop over the next ten years, alongside measures which could be adopted to mitigate these, like more flexible electricity consumption, the build-out of renewable energy sources (offshore) and the construction of new hybrid interconnectors (Nautilus & TritonLink).

As outlined in Elia’s 2023 Adequacy & Flexibility study, it is assumed that by 2030, 70% of the newly electrified industrial demand can be operated in a flexible manner, particularly during moments of scarcity. Newly electrified industrial processes could therefore deliver important benefits to the system.

Unlocking consumer-side flexibility will reduce the Belgian system’s need for capacity by 2,000 MW by 2034, which equates to approximately two combined cycle gas plants.

in %

Scenario A

Scenario B

Scenario C

2037

100

2045

100

By 2034, consumer-side flexibility will make up half of all the flexibility means which will be able to reduce their consumption within 5 minutes of a signal. Moreover, it will make up one third of all flexibility means which will be able to reduce their consumption within 15 minutes to a few hours of a signal or incentive. Additionally, it will make up 15-20% of all flexibility means which will be able to increase their consumption in response to a signal. By 2035, around 2.64 million (49% of the total stock) electric passenger cars are expected to be in circulation. Under the same timeframe, 1.8 million residential heat pumps are expected to be installed.

Source: German Network Development Plan (2023)3

In all scenarios outlined within Germany’s 2023 Network Development Plan (‘Netzentwicklungsplan Strom 2037 mit Ausblick 2045’), there is a significant projected increase in flexible demand. This increase is essential for the seamless integration of renewable energy sources (RES) into the system and preventing their curtailment.

Germany By 2037, 14.3 million heat pumps (twelve times more than existed in 2020) and 31.7 million EVs (26 times more than were owned in 2020) are expected to be in circulation. By then, 50 to 100% of the households are expected to operate these assets in a market-oriented way.

The plan’s primary scenario (2037B) assumes that to successfully integrate 1,000 terawatt-hours (TWh) of RES into the system, an additional 100 gigawatts (GW) of household flexibility, in addition to industrial flexibility, is opened up. One of the strategies envisioned by the Network Development Plan to facilitate the integration of these RES is to ensure that by 2037, all flexible units in households will operate in a market-oriented way (as depicted in the figure above).

Source : https://issuu.com/eliagroup/docs/adequacy_flexibility_study_for_ belgium_2024-203?fr=sOTBhNDYxOTUwMTY Source : Germany’s 2023 Network Development Plan (or ‘Netzentwicklungsplan Strom 2037 mit Ausblick 2045’)

2 Capacity Remuneration Mechanism (elia.be) 3 Source: 50Hertz, Amprion, TenneT and TransnetBW (2023), ‘Netzentwicklungsplan 2037/2045’

Message

Consumer-side flexibility will broaden the range of market participants. Any owner of flexible assets will be able to provide it. The biggest impacts will be achieved when the benefits of flexible behaviour are transferred to consumers. For this to happen, direct access to the wholesale market is required. Removing the barriers will increase the market’s competitiveness and enhance its efficiency. 16

Transferring the benefits to consumers is the most effective approach. The impact of consumer-side flexibility will be most significant when consumers are able to maximally benefit from it. Intermediaries offering energy services to consumers will still be able to make a profit. However, the bigger the benefits for consumers, the greater their level of participation will be and the more efficient the system will become. We are not seeking to prevent consumers from using electricity during moments of peak demand. Instead, we would like to enable all market participants to adjust their consumption of electricity in response to evolving system conditions and encourage them on a voluntary basis to adopt real-time pricing strategies to optimise their time-of-use behaviour.

Potentially every owner of a flexible asset could become involved in keeping the system in balance. As long as the complete value of flexibility will be transferred downstream, the traded volume of consumer-side flexibility is due to significantly increase. Moreover, consumers will benefit from cost savings, improved data access and insights, and automated execution.

WHAT CAN FLEXIBILITY DO FOR CONSUMERS? Consumers benefiting from flexible electricity use isn’t a new concept. In Belgium, day/night tariffs have been around since the 1980s. With more renewable energy in the system, the best times to use electricity are changing. Consumers should enjoy the rewards of adjusting their consumption to match these optimal times.

€30 versus €320 An EV-driver who owned a 7kW home charging system and a day/night tariff for their energy use would have saved around €30 in 2023 by timing the charging session in a smart way (at night). In that same year, the same EV-owner could have reduced his annual energy bill (excluding non-commodity costs) by almost €320 had they truly charged his car in a smart manner – by allowing an ESP to steer the charging of the car (or doing it themselves)based on the price signal of a dynamic contract. Anticipating further volatility in prices, it is expected that the benefits will continue to grow in the future.

The value of consumer-side flexibility is blocked along the value chain which involves many stakeholders

BALANCING RESPONSIBLE PARTIES

ENERGY SERVICE PROVIDERS

SUPPLIERS

END CONSUMERS Figure 5: Decrease in financial benefits for end consumers along the value chain

▶It starts with Balancing Responsible Parties (BRPs), who trade electricity on markets to secure the energy needed by end consumers.

▶Energy service providers may constitute third parties who are responsible for managing the flexible assets owned by consumers.

▶Suppliers then purchases electricity from a BRP and deliver it to end consumers through supply contracts.

As we move along the value chain, financial benefits decrease, since each party incurs investments and operational costs. It is therefore crucial to ensure that the value created is equitably distributed among these roles, in line with the different risk profiles of each player. The biggest impacts will be achieved when the benefits of flexible behaviour are maximally transferred to consumers.

▶End consumers, who own these assets, are the final link in the chain.

Electricity market with volatile prices

BRP

Supplier

ESP

DSO, MPO, TSO

Customer with flexible assets

Costs to participate to the markets and manage portfolio

Costs to provide customer contracts

Costs to steer flexible assets

Costs to install smart meters and to exchange meter data

Costs to install the flexible assets

What obstacles are preventing consumer-side flexibility from taking off?

Private households are not yet aware of the possibility of providing the grid with flexibility, as some of the prerequisites are missing - especially flexible tariffs. With prime conditions in place, I think that the benefits of flexibility could be more solidly reaped. Of course, information campaigns could also help.

A lack of digital infrastructure The system requires a robust data infrastructure to be in place which is capable of seamlessly delivering consumption data from end users (via smart meters) to energy service providers (through data platforms). On the hardware side, electrical devices lack the ability to communicate with one another and respond to price signals.

Carsten Rolle, Head of Energy and Climate Policy Department, World Energy Council

Valorisation is non-existent Consumers are not receiving adequate price signals which they can use to optimise their time-of-use behaviour. Current entry barriers are excessively high. Enhancing market competition is essential for offering better services to consumers.

Consumers are not engaged enough to participate Consumers need a plug-and-play approach to flexibility as most of them have little understanding about the electricity sector and do not understand what active participation means. They are also concerned about their data privacy – specifically in terms of providing third parties with insights into their energy consumption.

Examples of how consumer-side flexibility is currently being hindered in relation to different market participants I just moved into my new home and want to make it flexible and smart from the start

Residential end-consumers lack knowledge, tools and incentives to shift their energy consumption in time. This is due to various factors, including: ▶ Gradual rollout of smart meters hinders consumer awareness and empowerment ▶ Limited availability of competitive time-based energy price contracts blocks consumers from valorising their flexibility ▶ Consumers remain conservative due to a lack of knowledge about energy flexibility ▶ Conflicting price signals limit the impact on the consumers’ bill ▶ Consumers are concerned about their comfort and privacy due to a lack of trust ▶ Steering services are currently only suited for a niche audience

EVs are driven by people. Heat pumps are used to heat people. If you don’t understand people, you don’t understand residential flexibility. Sam Hamels, Postdoctoral researcher, University of Ghent

EV’s will be an important source of grid flexibility in the future. Charge point operators and mobility service providers are ready to take up the challenge to orchestrate this low voltage end user flexibility. Financial incentives are a crucial component to build a solid business case for our customers, for instance through the widespread use of dynamic energy contracts and time-ofuse grid tariffs. This is an important barrier that should be lifted. Jochen De Smet, President, EV Belgium

House owners waste their flexible potential. My company is a one-stop shop for installing assets, supplying your electricity and interacting with a BRP for market access

We are successful company and want to digitalise and automate our production processes so that we can optimise our energy consumption

Market parties struggle with value creation for endconsumers due to complicated data access and traditional regulation.

Companies are often unaware of the value of flexibility, and thus do not integrate it in their roadmap to net zero.

In particular, Energy Service Provider’s (ESPs) experience:

The main barriers for industry are:

▶ Market communication processes are complex in different countries

▶ Companies lack of knowledge about flexibility potential, required investment and financial benefits.

▶ Data access from smart meters and behind-the-meter devices is complicated ▶ Lack of standardisation and interoperability impedes smooth implementation ▶ Strict regulation slows down the provision of flexibility

▶ It is not easy to adapt the technical and organisational set-up of existing systems, processes, and work habits ▶ There are flexibility-inhibiting regulations in place for large consumers

▶ High entry requirements exist for new market parties

4A ccording to §19 of the StromNEV (Stromnetzentgeltverordnung), companies that have at least 7000 hours of full usage (Vollbenutzungsstunden) in a year can benefit from significantly reduced network charges.

Industry will not agree to offer up flexibility and lose their competitive edge in doing so. We need models and systems which will allow companies to remain competitive Holger Lösch, Deputy Director General, Federation of German Industries

Message

Focus on consumers with the greatest flexibility potential. We do not expect every consumer to become a flexibility expert, but consumerside flexibility should become commonplace. To kick-start consumer-side flexibility, efforts should primarily be focused on consumers who hold the greatest amount of flexibility potential: those who own a smart meter, EV, home battery and/or heat pump. Once they have been supported to use their assets in a flexible manner, a broader group of end users should be encouraged to take part.

Real-time price signals, seamless data access and flexready devices5 are key levers for eliminating barriers to consumer-side flexibility. Together, these will bring about big changes to the energy system. In return, a new innovative and competitive ecosystem will be created that will make the energy system more efficient, sustainable and affordable. 5 Flex-ready devices are assets which are technically set up to provide flexibility in the easiest way possible

Three main actions to unlock flexible consumption We will know that barriers to consumer participation are being successfully removed when end user flexibility becomes increasingly accessible and rising numbers of consumers provide it for the system. Collaboration with the entire energy sector will be crucial, given the complexity of and the pressing need to manage the massive influx of new electrical devices.

Providing consumers with access to financial incentives

2 3

Enabling seamless data access for energy service providers

Introducing flex-ready devices to provide flexibility in the easiest way possible

Providing consumers with access to financial incentives

Enabling seamless data access for energy service providers

What ?

This will fully unlock the value of flexibility for the end consumer and foster competition in innovative services, as many consumers are expected to access the energy market through ESPs. Therefore, it is essential for current market participants to collaborate on shaping a market design that encourages innovative business models and facilitates the integration of flexibility into the broader energy landscape.

Create a secure data exchange ecosystem with well-defined access rights that support near real-time data exchange. This will allow commercial parties to deliver services to consumers and will enable system operators in efficiently manage the grid.

How?

▶Transmission System Operators (TSOs) and Distribution System Operators (DSOs) should investigate dynamic grid fees to enhance the value of flexibility, rather than hindering it.

▶Member States should implement existing EU regulations concerning data access, sharing and management, at both smart meter and behind-the-meter levels.

▶DSOs and Metering Point Operators (MPOs) could consider prioritising the provision of smart meters to residential consumers with flexible assets. The deployment of smart meters is essential for unlocking and capitalising on residential flexibility.

▶System operators can take the lead in building a secure data infrastructure ecosystem. To ensure that data will be shared and promote communication among diverse market participants and across different sectors; having a standardised approach to data access is crucial.

▶Suppliers should offer time-based energy pricing mirroring wholesale prices to consumers so that they are empowered to actively manage their energy consumption. Transparent, monthly energy bills are key to boosting consumer awareness and engagement. ▶Independent neutral parties, such as DSOs, TSOs, associations and governmental agencies, should inform households, industry and small medium enterprises (SMEs) about their flexibility potential so that they can better evaluate their investment decisions. Revised regulations should support flexibility incentives for industry.

Introducing flex-ready devices to provide flexibility in the easiest way possible What ? In contrast with explicit balancing services, there are no specific technology requirements for assets to be driven by financial incentives. However, the assets will always have to meet a minimum number of requirements in order to be able to provide flexibility (e.g. ability to change their load based on external signals, have communication interfaces that allow third party access, compatibility with other devices, etc.). Providing flexibility should be a plug-and-play solution. How? ▶The energy sector requires a Europe-wide standard definition for ‘flexibility readiness’ to guarantee the adoption of future-proof devices and giving the consumers full transparency on the capabilities of the devices they are buying. ▶The European Commission should actively endorse and ensure that dominant communication standards are both future proof and interoperable. While standardisation efforts are primarily led by industry, the European Commission has an important role to play in preventing manufacturers from establishing closed ecosystems.

CONCLUSION Today, society widely recognises the need to invest in grid infrastructure. However, urgent investments in more digitalisation and unlocking flexibility, are as important to achieve security of supply in the most cost-efficient way possible. This is precisely the goal we aim to accomplish with the study we are presenting: raising consumer awareness, pinpointing the obstacles, and collaborating with all stakeholders in the market to establish a new approach to consumption. The numbers in the graphic below refer to the solutions that will be presented on page 80 and onwards.

BRPS

SUPPLIERS

DSOs/MPOs

TSOs

[1.1] Shape together a Consumer-Centric market design [1.7] Offer and actively promote timebased electricity contracts

[1.3] Increase efficiency of the smart meter rollout

[1.8] Provide improved energy invoices

[1.4] In Germany, all MPOs must prepare smart meter rollout

GOVERNMENTS

REGULATORS

EU POLICY MAKERS

[1.9] Commonly evaluate and implement dynamic grid tariffs

[1.2] Set up awareness campaigns for smart meters

[1.5] Empower and educate end-consumers [1.6] Provide guidance and information tools to build a business case based on flexibility

[1.6] Provide guidance and information tools to build a business case based on flexibility [1.9] Commonly evaluate and implement dynamic grid tariffs [1.10] Remove regulation opposing flexibility incentives

[2.1] Implement existing EU regulations concerning data access, sharing and management

[2.2] Build a common European energy data space

[2.2] Build a common European energy data space [2.3] Derogation or update of metering requirement legislation for embedded meters

[3.1] Create a European-wide “flex-readiness” label

[3.2] Develop standards incorporating provision of flexibility

[3.2] Develop standards incorporating provision of flexibility [3.3] In Germany, clarity on the SMGW steering obligations

ASSOCIATIONS

[1.1] Shape together a Consumer-Centric market design

[1.5] Empower and educate end-consumers [1.6] Provide guidance and information tools to build a business case based on flexibility

MANUFACTURERS

HOW DID WE CONDUCT OUR STUDY? The main goal of this study is to identify the barriers that stand in the way of unlocking decentralised flexibility. As the groundwork was laid for it, input was gathered from a number of market actors through a series of interviews that aimed to gain in-depth insights into their views and approaches coming from the experience in different energy contexts and regulatory frameworks Figure 6 : Stakeholders interviewed to identify the barriers on flexibility

The interviews with market actors were designed to map out current issues, the expectations of grid users at all voltage levels who are already providing flexibility, and the expectations of ESPs whose businesses focus on the provision of energy flexibility. The interviews were semi-structured, so allowing interviewees some freedom in their answers. Once the last interview had been conducted during the summer of 2023, the answers were then processed and clustered together, and so shaped the barriers outlined and explored in this study. 55 market actors were interviewed from Belgium (23), Germany (24) and across Europe (8). Interviewees included active ESPs, which were divided into new entrants (mainly aggregators, software developers, project developers and energy optimisers) and historical players (system operators and suppliers). End consumers were also interviewed - both industries which are directly connected to the high voltage grid and residential consumers (who were represented by consumer associations). The manufacturers (OEMs) of heat pumps, solar inverters and chargers were also interviewed. Additionally, for the first time ever since Elia Group began publishing its annual Viewpoints, students from Belgian and German universities were also involved in the preparation of this study: we held two flexibility-related student challenges in Brussels and Berlin in the first half of 2023. The knowledge gained from these interviews and student challenges was then used to identify the barriers that currently lie in the way of unlocking flexibility from across all voltage levels of the grid (for a detailed description of the Student Challenge, look at the box ‘Accessing fresh perspectives on the topic’ in Chapter 3).

Figure 7: Number of participants interviewed for the study, per category of market actor

0 End-User

ESP DE

OEM Other

NEED FOR

FLEXIBILITY

A considerable amount of flexibility has to be harnessed from different sources across the power system if we want to integrate an increasing amount of renewable energy into our system and ensure the energy transition is a success The recent energy crisis has caused Belgian, German and European policymakers to accelerate the energy transition and establish a net zero based system. European bodies and national governments are adopting ever-more challenging targets and plans which are focused on developing renewable energy sources (RES), phasing out coal and nuclear power, and incentivising the electrification of industry and the mobility and heating sectors. The energy transition is, therefore, transforming our energy systems. Until now, in order to maintain the balance on the electricy grid, production has largely followed consumption, meaning that it was mainly production units (and some large, often industrial, consumers) that were in the capacity to react to market signals and adjust their production level accordingly . However, as the number of intermittent RES rises, electricity production is becoming less flexible, since power can only be harnessed from the wind or sun when it is available. This shift away from non-renewable energy sources, towards cheaper renewable energy, makes us less dependent on (imported) fossil fuels. However, it is also putting pressure on our power system because:

▶RES are inherently intermittent, since they are subject to variable and uncertain weather conditions; ▶the phasing out of nuclear and coal power plants in some European countries and replacing these with intermittent renewable energy production is causing a capacity gap to emerge; ▶decarbonisation and the ensuing electrification of mobility and heating is increasing the demand for electricity as well as the amount of variable demand, given the fact that consumer behaviour drives the demand for energy for these newly electrified appliances. All of this increases the need for better forecasting (and thus better visibility) of the final electricity consumption. Together, these factors are increasing the need for different types of flexibility (ramping, fast and slow flexibility) to be harnessed from across the system. The IEA defines flexibility as: “the extent to which a power system can modify electricity production or consumption in response to variability, expected or otherwise” 1. We need more and more flexibility to be activated across the system to keep it balanced and cover expected and unexpected variations in demand and generation. In other words, consumption will have to follow production.

1 International Energy Agency (2011), ‘Harnessing variable renewables’

To achieve the Paris agreement goals, power systems around the world will need to evolve and provide four times the amount of flexibility they do today by 2050. Demandside flexibility will be key to achieve this increase of system flexibility, in order to ensure security and affordability as part of clean energy transitions Pablo Hevia-Koch, Head of Unit Renewable Integration and Secure Electricity, IEA

Electricity production

Electricity consumption

Belgium is undergoing a significant transformation in terms of how it produces electricity, as it has decided to partially phase out its nuclear power production in a gradual way. From 2025 onwards, Belgium will predominantly rely on RES and gas for its domestic generation of electricity; from 2029 onwards, new offshore wind power generated in the Princess Elisabeth Zone2 will contribute to reducing it’s the volume of energy provided by gas-fired power generation.

The country’s electricity imports will increase following the commissioning of Nautilus and TritonLink (two interconnectors Belgium will build with the UK and Denmark, respectively), and both will allow more RES to be imported into Belgium. Calculations from Elia’s ‘Adequacy and Flexibility Study for Belgium’3, published in June 2023, estimate that by 2034, the country’s solar, onshore and offshore wind installed capacity will have increased by 54% (18 GW), 52% (6.9 GW) and 60% (5.8 GW), respectively compared with 2023.

Figure 8: Historical and simulated energy mix for Belgium Historical

Simulated

120

Generated electricity [TWh]

100

Wind

As outlined in the same study, electrification and the accelerated expansion of low-carbon electrons will contribute to the decarbonisation of society over the next 10 to 20 years. Electrification is gaining momentum in three key sectors – mobility, heating and industry – which is reflected in the increase in electrical demand that is expected to occur in Belgium over the next decade. Newly electrified processes in industry (for power-to-heat and new uses, such as data centres) will make up an important share of the Country’s consumption of electricity in future. By 2034, under the CENTRAL scenario, the share of decentralised flexibility in the total upward flexibility means is expected to rise from almost non-existent in 2024 to around one third for fast and slow flexibility and close to half for ramping flexibility. The share of decentralised flexibility in the total downward flexibility means in 2034 is less important, however still growing from a negligeable contribution in 2024 to 15 - 20% by 2034, still under the CENTRAL scenario. All of this contributes to integrating a total 31 GW of intermittent RES (solar and wind) to the grid, and to absorbing a 60% increase in the total yearly electricity consumption in 2034, cospared to 2023.

Figure 9: Estimated amount of passenger cars (Evs and plug-in hybrid vehicles, or PEVH) and hydronic heat pumps in Belgium (in thousands) Amount of electric passenger cars (EV+PEVH) (thousands) 3000 2500 2000

Estimation 2023

1000

AdeqFlex’21 AdeqFlex’23 Historical

500 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

In addition to passenger cars, e-trucks, busses and vans are also accounted for (was not the case in AdeqFlex’21) Recent sales (beginning of 2023) confirm the uptake and go beyond the value assumed for 2023 if extrapolated for the rest of the year. +50% sales between 2021 and 2022 • +80% sales expected in 2023

Equivalent amount of hydronic heat pumps (thousands)

Gas 20 Nuclear

199 5 199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0 202 1 202 2 202 3 202 4 202 5 202 6 202 7 202 8 202 9 203 0 203 1 203 2 203 3 203 4 203 5

Nuclear

Gas

Oil

Biomass & Waste

Hydro

Solar

Wind

800

600

130 Estimation 2023

400

200

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 In addition to hydronic HP, air-to-air HP sales and penetration has increased but they have a lower contribution to heating demand. Recent sales (beginning of 2023) confirm the uptake and go beyond the value assumed for 2023 if extrapolated for the rest of the year. + 60% sales between 2021 and 2022 • + 90% sales expected in 2023 Source: Elia (2023), ‘Adequacy and Flexibility study from Belgium (2024-2034)’

Source: Elia (2023), ‘Adequacy and Flexibility study from Belgium (2024-2034)’

Figure 10: Estimated amount of passenger cars (Evs and plug-in hybrid vehicles, or PEVH) and hydronic heat pumps in Belgium (in thousands) 140

Prof. Dr. Jan Desmet, Professor, University of Gent

1000

Biomass

The power of flexibility can only be unleashed for residential end users if they are provided with adequate steering services, assuring comfort and automation, and financial incentives to raise interest of consumers. The development of these services makes the future flexibility potential very challenging

1500

Yearly electricity consumption [TWh]

PARADIGM SHIFT IN BELGIUM

121.8

120 108.6

110 95.5 89.3 88.2

84.7

85.8

89.4 88.3

86.4 87.4 88.0 85.7

117.3

82.1

Electrification of industry, new data centers and electrolysis

99.5

88.4 84.7 82.9 82.6 84.5

E-mobility Heating

80 70

Existing usages and losses

60 50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Source: Elia (2023), ‘Adequacy and Flexibility study from Belgium (2024-2034)’

2 FPS Economie (2023), ‘Belgian offshore wind energy’ 3 Elia (2023), ‘Adequacy and Flexibility study from Belgium (2024-2034)’

132.9 129.4

104.2

100 90

112.8

125.9

Electrolysers and power-to-heat are an output of the economic dispatch model Source: Adequacy & Flexibility study for Belgium (2024-2034)

PARADIGM SHIFT IN GERMANY Electricity consumption

Germany has set itself high RES targets over the past few years, and is aiming to be climate neutral by 2045. The German government decided to close its last three nuclear plants in April 2023 and phase out its coal power plants by 2038 at the very latest (with its aim being to close them down earlier than this deadline). The country is now aiming for 80% of its gross electricity consumption to be covered by renewables by 2030. The government also wishes to reach 215 GW of solar capacity by 2030 (3.5 times the figure in 2020); 115 GW of onshore wind energy by 2030 (a twofold increase compared with 2020); and at least 30 GW and 40 GW of offshore wind capacity by 2030 and 2035 respectively (four- and fivefold increases compared with 2020). By 2045, the Country wishes to reach 400-450 GW of solar capacity (seven times the figure in 2020); 70 GW of offshore wind (eight times the figure in 2020); and 160-180 GW of onshore wind (four-and-a-half times the figure in 20205). This would lead to a total annual renewable electricity production of 900-1050TWh by 2037.

ln the long term, Germany is expecting to experience a significant surge in electricity demand due to the extensive electrification of different sectors. This includes the electrification of industrial processes, transportation and heating systems (such as heat pumps and district heating), and the adoption of electrolysers for hydrogen production. These reflect Germany’s commitment to net zero, with electricity playing a pivotal role in the decarbonisation of society. By 2037, up to 50% (Scenario A) and 100% (Scenario B) of the flexible units in households are expected to be operated in a market-based manner. Industrial demand side management capacity is due to increase sevenfold. These developments are aimed at integrating around 900 TWh of renewable energy into the grid and managing an 86% increase in electricity demand.

Figure 11: Share of market-oriented flexible assets in private households in Germany in %

Scenario A

Scenario B

Scenario C

2037

100

2045

100

By 2037, 14.3 million heat pumps (an almost twelvefold increase compared with 2020), and 31.7 million EVs (twenty-six times the number in 2020) are expected to be in circulation in Germany. By then, 50-100% of households are expected to operate these assets in a market-oriented way. By 2045, 16.3 million heat pumps and 37.3 million and EVs are due to be in circulation, with 75-100% of these operating in line with market needs.

Flexibility is one of the most important topics for the future. We are adding increasingly volatile energy sources to the system. This is putting our networks under an enormous amount of pressure. It will be important for network operators to make the need for flexibility clear and transparent and for them to work with their customers to find solutions to unlocking it in an optimal way across the system Andrees Gentzsch, Member of the Executive Board, Federal Association of Energy and Water Industries

Figure 13: Expansion of renewable energy in Germany Installed Capacity [GW] 1000

900

800

Figure 12: Estimated amount of decentralised assets in Germany

Energy carrier

Reference 2020/2021

A B C A B C 2037 2037 2037 2045 2045 2045

Electricity consumption in TWh Net electricity consumption

478

828

891

982

Gross electricity consumption

533

899

961

1053 1079 1106 1303

999 1025 1222

700

Installed Capacity [GW]

Electricity production

Sector coupling Heat pumps – Household and tertiary sector Amount of assets in millions Electromobility Amount of assets in millions

1.2

14.3

600

500

400

300

14.3

16.3

200

100

1.2

25.2

31.7

34.8 37.3

37.3 0 2020/2021 (reference)

2037 A

Nuclear Energy Coal Hard Coal Natural gas Oil Source: 50Hertz, Amprion, TenneT and TransnetBW (2023), ‘Netzentwicklungsplan 2037/2045’

2037 C

2045 A

Pumped storage Other conventional production Wind onshore Wind offshore Photovoltaic

Source: 50Hertz, Amprion, TenneT and TransnetBW (2023), ‘Netzentwicklungsplan 2037/2045’

5 50Hertz, Amprion, TenneT and TransnetBW (2023), ‘Netzentwicklungsplan 2037/2045’

2037 B

2045 B

2045 C

Hydropower Biomass Other renewable generation Battery Storage

As millions of electrical assets are used for heating and mobility purposes, it is becoming increasingly urgent to unlock new sources of flexibility on the consumer side. Spotlight on Belgium

Flexibility in the EU power system needs to almost double by 2030 compared to today to keep up with the growth of variable renewable electricity sources reaching 71% of nondispatchable capacities. To cope with this necessary and urgent evolution, we need to rely on traditional clean sources of flexibility and develop new ones, notably from consumers. Flexibility from all electrified demand-side sectors will play a pivotal role in achieving climate neutrality cost-effectively, if consumers are empowered and allowed to play this active role and are rewarded for that. The flexibility business community has both technologies and data-driven services to enable this consumer-centric transition

Although this has been highly successful in the past, and will remain relevant in the future, meeting evolving flexibility needs requires expanding the sources of flexibility, and providing market access to new flexibility sources. As the number of RES in the system rises, and millions of electrical assets are used for heating and mobility, it is becoming increasingly urgent to unlock new sources of flexibility on the consumer side, by removing the barriers that are currently blocking their activation in the market.

To ensure its system remains adequate, Belgium organises a central competitive bidding procedure (Capacity Remuneration Mechanism, CRM) to which both generation capacity (new and existing) and, the development of flexibility to reduce demand during winter peaks, and storage can participate. On top of this, flexible demand can also lower the capacity needs, to be auctioned in the CRM bidding procedures, and thus reduce the related expenses. Towards 2035, the adequacy cost savings from an improved market design and mitigating barriers, allowing to move from a scenario scenario with low share of unlocked flexibility (LOW FLEX scenario), to a scenario with high share (HIGH FLEX scenario), are estimated between €55M and €119M. As the years pass (see Figure 14 below), this adequacy gap is expected to increase, in line with the rise of electrification. As flexibility is unlocked across the system, it will reduce the total amount of additional capacity needed to ensure the system remains adequate. As a matter of fact, Belgium’s need for additional capacity in 2034 could be reduced by up to 2,000 MW if it unlocks flexibility from across the system in time. Half of this flexibility could come from industry and the other half could be delivered by household EVs and heat pumps. Elia’s 2023 ‘Adequacy and Flexibility Study for Belgium (2024-2034)’ concluded that by 2034, system costs could be lowered by between €250 and €400 million per year if end consumers use market prices to inform their consumption of electricity.The system savings will come from:

▶Adequacy: by 2034, the adequacy gap could be reduced by up to 2,000 MW (which is equivalent to two combined cycle power plants); this would otherwise have to be filled through the use of conventional technologies. ▶Balancing: system reserve costs will be reduced since less capacity has to be reserved

Figure 14: Changes in Belgium’s capacity needs: 2025 to 2035

Short-term measures

Medium-term measures

Long-term measures

2025-26

2027-29

2030-34

10000

8000

FLEX -900 MW

7000 yr W/ 0M

6000

+70

5000 4000

5900

6300

FLEX -1300 MW

5900

FLEX -2000 MW

TritonLink -400 MW

Nautilus + offshore -800 MW

9000

[MW]

Today, flexibility predominantly involves the operational adjustment of thermal power plants and demand response from large industrial players. These units significantly modify their production or consumption of electricity, reducing or increasing the latter, in order to ensure a balance between production and consumption at all times.

6200

r W/y 0M

+40

6100

6500

Capacity gap if flexibility is not developed

6900 Capacity needs provided by CRM2

5200 Need for new capacity

4400 3700

3000 Nuclear extension

2000 1000

Capacity already contracted

0 2025-26

2026-27

2027-28

2028-29

2029-30

2030-31

2031-32

Source: Elia (2023), ‘Adequacy and Flexibility study from Belgium (2024-2034)’

Michael Villa, Executive Director, SmartEN

2032-33

2033-34

2034-35

TIME-BASED ENERGY CONTRACTS

OF HOUSEHOLD FLEXIBILITY WILL BE NEEDED IN ADDITION TO INDUSTRIAL FLEXIBILITY

The plan’s central scenario (2037B) assumes that to integrate 1,000 TWh of RES into the system, up to 100 GW of household flexibility will be needed in addition to industrial flexibility

Estimates of the value of avoided investments via the deployment of demand-side flexibility might reach up to €29 billion (approximately US $32.3 billion) per year for the EU alone Florence Carlot, Partner, Arthur D. Little

B 2037

C 2037

A 2045

B 2045

C 2045

888

911

932

1,043

1,028

1,128

Market linked peak pricing

Static time-of-use (ToU) pricing

Time Time

€/kWh

Renewable electricity generation [TWh]

A 2037

Time-based energy contracts involve different pricing structures. These are based on the level of exposure endconsumers have to wholesale prices. Three possible structures of such contracts are explored below.

Variable peak pricing

Dynamic pricing

€/kWh

100 GW

All scenarios explored in Germany’s 2023 Network Development Plan foresee a massive rise in flexible demand in order to integrate RES into the system, so avoiding their curtailment and even higher infrastructure needs.

A time-based energy contract is a type of electricity pricing structure that charges consumers different rates for their use of electricity during different times of the day. These contracts work by using smart meters to track consumers’ electricity usage. At the end of each billing period, consumers are charged for their use of electricity based on their usage during each pricing period.

€/kWh

Spotlight on Germany

The utilisation of flexibility options holds considerable potential for more efficient use of grid capacities in both distribution and transmission grids. Flexibility facilitates the integration of renewable energy and reduces grid expansion needs. Coordination between transmission and distribution grids is crucial in order to achieve optimal solutions. Clara Büttner, Research Associate, HS Flensburg

Time

Static ToU contracts are based on each day being divided into several time slots (which last up to a few hours each). The price of electricity during these slots is determined in advance and remains constant throughout each slot. Typically, such contracts involve two time slots: daytime and night-time, with the pricing for these slots reflecting historical levels of high (day) and low (night) consumption. An example of this simple structure is the day/night tariff currently used in Belgium. In other cases, days can be split into several smaller slots.

As part of dynamic contracts, the price of electricity reflects the conditions in the wholesale market. Commonly particularly in Nordic countries - prices reflect those on the day-ahead market. In such cases, a supplier margin is added. Prices are calculated for slots that last between one hour to 15 minutes, with each smaller time slot (and its associated cost) then added up to create a consumer’s final bill for a specific period. To name one example, supplier Tibber in Germany is already providing a dynamic tariff based on day-ahead price, plus a surcharge and a monthly fee6.

6 Tibber, last accessed on: 23/10/23

7 Octopus Energy, last accessed on: 23/10/23

Variable peak pricing contracts are a hybrid of static and dynamic pricing contracts. Time slots are fixed and predefined while the price is variable and linked to the market. Consumers are therefore incentivised to use electricity when prices will be at their lowest. A good example of this type of structure is the ‘Cosy’ tariff that supplier Octopus offers for the use of heat pumps in the UK7. The advantage of time-based pricing structures is that they do not impose firm commitments on consumers. Consumers can choose when and how to react to price signals and freely adjust their load to save money during moments of peak consumption across the system. In the future, when most consumers will be able to respond to price signals, both the whole power system and the consumers themselves will benefit from these contracts.

VALUE FOR

CONSUMERS

What do consumers value? Controlling costs, being green and being offered adequate services Consumers are central to our approach. Without consumers being engaged with and invested in the goal of unlocking flexibility, our ambition to decarbonise society will not be achievable. Understanding what motivates consumers to unlock their flexibility is therefore crucial. The recent energy crisis has shown that consumers are willing to change their behaviour if: ▶they are driven by the right and trusted incentive; ▶they receive an acceptable benefit in return for the risks they take; ▶they are provided with the right means or services which allow them to take action in a seamless manner. Consumers have different expectations relating to their energy consumption: some tend to favor financial incentives, by keeping their energy bills under control, whilst others are keen to pass on a cleaner planet to their children, or even seek to satisfy social goals. One shared demand they have is the need to have a sufficient amount of choice regarding how they can meet their goals. Luckily, these consumer expectations are complementary: they carry the overall objective of striving for a secure, reliable and net-zero system.

Controlling their energy costs has therefore become a strategic move for consumers. Enabling consumers to control their costs means that they are provided with the means to change their consumption or production of electricity based on transparent and available financial signals, and hence adapt their behaviour in accordance with their preferences and needs as close to real-time as possible.

We are convinced that flexible consumption has the potential to flatten consumption peaks, having a positive impact on wholesale electricity prices as well as to contribute to security of supply. From a consumer point of view, the electrification of mobility and heating opens new flexibility potentials, offering to consumers the opportunity to actively manage their energy and reduce their electricity costs by shifting their energy use in time

In essence, these market signals, which represent the state of the system, should incentivise residential consumers to switch on their household devices and industrial consumers to ramp up their processes when energy is abundant and switch off their devices or reduce the intensity of their industrial processes (respectively) when energy is scarce.

The first consumer need is being in control of their energy spending. Over the past few years, the share occupied by energy bills in household and corporate budgets has risen.

Catharina Sikow-Magny, Director of Green Transition and Energy System Integration, European Commission

CASE STUDY 1: WHAT FINANCIAL VALUE DOES YOUR EV HOLD? Figure 15: Case Study: Savings of smart charging via a dynamic contract, compared with normal charging via a flat rate contract, based on market conditions in 2023, see annexe A 2000

The energy transition means we are moving towards a system in which the amount of available green energy across the grid varies: at some points in time, there will be an abundance of available green energy across the grid, whilst at other moments in time (for example on cloudy days), the generation of green energy will be limited. Consumers wishing to consume energy that originates from RES require signals which represent the availability of green energy as close to real-time as possible so that they can adapt their behaviour in line with the intermittent nature of RES.

igure 16: Time series of the carbon intensity and price of electricity on the day-ahead market in Germany on 4 F July 2023 600

1600 1400 1200

180

600 400 200

Natural charging single tariff

Gridfees - Volume based [€]

Delayed charging day/night tariff

Taxes & Levies [€]

Smart charging dynamic tariff

Commodity Cost [€]

As part of a case study exploring the savings EV owners could have made in 2023 in Belgium, our findings have demonstrated that an EV owner who had a 7 kW home charging system and a day/night tariff for their energy use would have saved around €30 in 2023 by charging their EV in a smart way (at night). Had the same EV owner charged their car using dynamic tariffs and market signals, they could have reduced their annual energy bill by almost €320, as shown in Figure 15.

In the case above, the original value of the consumer’s flexibility would have been €450. Part of this benefit would then have been allocated to intermediate parties to reach a final residual benefit for the consumer of €320. Our ambition is to reduce the difference between both original and residual benefits, so increasing the benefit enjoyed by consumers and reducing the cost of intermediaries. Other case studies illustrating heat pumps and home batteries are shown in annexe A.

In the end, consumers wishing to financially optimise their consumption or to become greener will adapt their behaviour at the same time. As shown in Figure 16, a clear correlation exists between the availability of renewable energy and the number of hours with low energy prices. In principle, the more green energy is available, the cheaper it will be. As shown in Figure 17, the increased penetration of renewable energy over the years will lead to an increased amount of hours with low prices. By adopting dynamic behaviour consumers should have access to the benefits of these lower prices. Signals which will trigger financial or sustainability-motivated consumers are therefore compatible and complementary. The solutions section of this study explores this further.

Being offered adequate services Lastly, in addition to sustainable and financial value, consumers need the right services to unlock the value of their flexibility. Most consumers are not aware of what flexibility is, how much of it they could provide, and what value it holds for them. Besides focusing on the right use cases, consumers require sufficient freedom of choice regarding providers and services, which will capture the full potential of flexibility held by consumers with different preferences. Exploring, subscribing to and managing these different services should be seamless for consumers.

140 120 100

300

80 60

200

40 20

100

0 0

-20

3/07/23 19:12

4/07/23 00:00

4/07/23 09:36

CO2 intensity (kg/MWh)

4/07/23 14:24

4/07/23 19:12

5/07/23 00:00

DA price [€/MWh]

Source: ESAP(2023), Day-ahead prices

Figure 17: Average share of hours with prices below €5/MWh for each hour of the week in Belgium

Monday

Tuesday

Wednesday

Thursday

Friday

Saturday

Sunday

35% 30% 2034

25% 2030

20% 15% 2028

10% 2026

2024 2025

0% Hours of the week Source: Elia (2023), ‘Adequacy and Flexibility study from Belgium (2024-2034)’

1 This case study was carried out by Elia and is provided as illustration only.

4/07/23 04:48

Time of Day

Share of hours when such situation occurs

800

160

400

Controlling costs

1000

200

500

As an example, consider Figure 16 on the right. On 4 July 2023, in Germany, consuming electricity between 9 am and 4 pm would have greatly reduced a consumer’s carbon emissions. An adequate signal could have nudged end consumers to behave in the desired manner, so reducing their carbon footprint and helping the system.

1800

Being green

Consumers need energy service providers (ESPs) to unlock the value of their flexibility

CONSUMER PROFILES Georg and Eleonora will provide us with insights into consumers’ unique needs, preferences and aspirations: we will be following them on their consumer journeys throughout this study.

I’m Eleonora. I make sure the processes at my industriial plant function efficiently and at the lowest possible cost in terms of energy. As a company, we would like our stakeholders to know that we are a sustainable organisation.

I’m Georg. I’d like to be in control of my energy spending

Georg is a new homeowner who is worried about energy prices. He would like to remain in control of his energy bills, given that his house is equipped with a heat pump and solar panels. Georg also drives an electric car. If needed, Georg is ready to adapt his consumption habits if it allows his energy bills to remain affordable.

Eleonora works for a company that wishes to remain competitive in a cost-driven sector. Therefore, Eleonora is always on the lookout for ways to source the company’s energy in a more efficient manner. Moreover, Eleonora is aware that her company wants to be less carbon dependent. She is therefore looking for ways her company can consume green energy when it is available, and be able to prove this to her stakeholders.

Providing consumers with the right incentives and showing them how they could stand to benefit will not suffice to get consumers to adopt flexible consumption habits. The energy market remains complex and most consumers lack market, technological or legal knowledge to navigate this world. Therefore, ESPs are still required to provide services to help consumers reach their goals (i.e., keeping their costs under control or becoming greener). The use cases that matter for consumers should be focused on. These use cases can range from enabling consumers to visualise their consumption patterns, raising awareness or advising them of the potential benefits of changing their habits, optimising consumption locally, sourcing their energy from different suppliers or valorising their flexibility on different markets. More advanced services would even provide energy-as-a-service, as part of which energy is treated as one component of a provided service (e.g. mobility-as-a-service or heating-as-aservice). ESPs can be established actors (such as suppliers), requiring them to transform their approach to active consumers, or can be new entrants to the energy services market (e.g. energy-as-a-service providers). Through higher competition between existing actors and new entrants, innovation will be fostered, with a downward effect on the price of services and an upward effect on the residual value enjoyed by consumers. The size of this potential market will allow intermediary ESPs that offer energy services to consumers to develop and thrive. One of the keys to the success of this energy services economy will be the share of the total created value that will be given to consumers. The higher the residual benefit, the higher the level of consumer participation will be and the more efficient the overall system will become. If successful, the emergence of this energy services economy will have a positive effect on consumers, the ecosystem and the system overall.

Increasing the share of the cake enjoyed by consumers Although it may seem trivial, consumers are too often left aside today when value is redistributed among the value chain across the energy sector. Nonetheless, if consumers are expected to increasingly support society by becoming active players in the energy sector, and thus give up some level of comfort or take additional risks with regards to their consumption, this cannot be achieved without providing them with something in return. Consumers who adapt their behaviour and preferences in line with the abundance of available energy at a certain moment in time duly expect to receive equitable value for their flexibility.

There are many stakeholders involved in the value chain, as illustrated in Figure 18. The share of financial benefits for each player decreases along the value chain, since each player has investment and running costs they have to meet. An easier, transparent and more efficient market set-up, that reduces the costs for intermediate parties, or disintermediates intermediate agents in the value chain in some cases, will have positive effects on the redistribution of value between each of the actors across the value chain.

Beneficial for consumers and for the system The higher the value consumers can extract from their flexibility, the more consumers will be attracted to the idea of offering up their flexibility. This will, ultimately, benefit society and the system overall. That is why Elia Group has placed on consumers and their preferences at the centre of its strategy and its vision on the paradigm shift that the energy sector needs to undergo, in response to the challenges posed by the energy transition and further electrification of our society was already published some years ago. As part of this, the energy system needs to change from a model where generation follows demand towards a model where demand increasingly follows generation.

F igure 18: Decreasing financial benefits due to different players across the value chain being remunerated for their role

Electricity market with volatile prices

BRP

Supplier

ESP

DSO, MPO, TSO

Customer with flexible assets

Costs to participate to the markets and manage portfolio

Costs to provide customer contracts

Costs to steer flexible assets

Costs to install smart meters and to exchange meter data

Costs to install the flexible assets

The solutions to unlock the value of flexibility, by lowering the barriers for a true energy services economy, and consequently the flexibility held by consumers, are outlined further in the following sections of this study.

ACCESSING FRESH PERSPECTIVES ON THE TOPIC - STUDENT CHALLENGES In order to access new perspectives relating to the topic of flexibility and barriers to unlocking it, Elia Group decided to involve university students in the preparation of this study. Elia and 50Hertz organised two 10-week challenges for university students in Belgium and Germany. 23 engineering students from the University of Leuven, Université Libre de Bruxelles and University of Ghent and 20 Master’s students from the Technical University of Berlin and the Berlin School of Economics and Law took part in our challenges. They were tasked with creating a fictional start-up focused on unlocking flexibility from across the energy system. Whilst they were motivated to challenge the status quo and create value for society, the students had little background knowledge about energy markets and flexibility – which was valuable. Two winning teams were selected at the end of the challenges in Belgium and Germany.

Our students are highly motivated to engage with the urgently needed real-world changes. Along with their knowledge of the fundamentals gained through their university course work, this challenge has helped them to design innovative and sustainable energy management solutions that consider both consumer preferences and system security.

Thanks to the cooperation with 50Hertz and Elia Group, our master’s students had the opportunity to work on practice-relevant projects and were able to demonstrate their creativity and professional skills.

Prof. Dr. Kai Strunz, Professor, TU Berlin

Prof. Dr. Wojciech Stiller, Professor, HWR Berlin

LUNIVERSE LUNIVERSE was crowned as the winning idea at the end of the challenge held in Germany. A student team from the Technical University of Berlin designed it as an all-in-one app solution that tackles the issue of consumer-oriented flexibility. The app optimises households’ energy use by integrating smart home devices from different manufacturers into one user-friendly app, offering customers an all-in-one energy management system. Through LUNIVERSE, customers are able to easily control and manage their household devices and optimise their electricity bills without any loss of comfort; users are even able to easily switch in between electricity suppliers.

CoAmp

Figure 19: 50Hertz CEO Stefan Kapferer and the students who took part in the challenge in Germany

CoAmp was crowned as the winning idea at the end of the challenge held in Belgium. Students from KU Leuven designed the solution after exploring the need to keep the grid in balance through the lens of the employer/employee relationship. Employers are having to increasingly focus on corporate sustainability reporting; both internal and external stakeholders are more and more interested in working for employers that match their environmental values. Additionally, employees, as many households, have been impacted by the energy crisis and are worrying about rising electricity bills. Many employees may well be exploring whether to invest in new assets or renovate those they already have (such as EVs, heat pumps or solar panels), meaning they are potentially facing expensive investments. Neither employers nor employees use their renewable energy resources as much as they could, since many employees are likely to be at work when their solar panels are producing electricity, whilst many employers don’t make use of their offices or sites on (potentially) sunny weekends.

CoAmp provides industrial companies with a solution that aims to empower their employees to monetise their flexibility. The collaborative energy programme facilitates employee-to-employer energy trading, fosters employee engagement through gamified energy management, and enhances employee benefit packages, making behind-the-meter energy assets more accessible and affordable. CoAmp aims to bridge the gap between industrial and residential demand side aggregation by building a relationship between employers and employees to accelerate the energy transition.

Figure 20: Elia’s deputy CEO, Frédéric Dunon, awards the CoAmp team with its prize

In designing LUNIVERSE, the students realised that even if some suppliers offer dynamic contracts to consumers, their adoption rate is quite low. This is due to a lack of transparency regarding energy prices and therefore a lack of incentives. Consumers, the team concluded, have trouble using different smart home devices together as part of one approach to energy management.

At the University of Leuven, students that complete our ‘Master of Engineering: Energy’ degree gain a deep understanding of the electrical, mechanical and techno-economic aspects of energy systems. Some of our more entrepreneurial students complemented their studies this year by accepting Elia’s challenge and participated in its flexibility start-up competition, and they were enthusiastic about the journey they went on. They were very proud to be able to present their results to the whole of Elia Group in Berlin as well! Prof. Dr. Geert Deconinck, Professor, KU Leuven

Massive barriers exist that prevent consumers from valorising their flexibility. As each of these barriers are removed, more flexibility will be unlocked and more value will be brought to consumers Figure 21: Barriers identified by interviewees for this study

Main barriers Gradual smart meter rollout residential consumer

This part of the study describes the main barriers from the perspective of the residential end consumer, the energy service provider (ESP) and industrial companies. An analysis of the information gathered during our interviews pointed that end consumer knowledge on energy and flexibility, the rollout of smart meters and the lack of standardisation and interoperability are seen as the biggest barriers to unlock decentralised flexibility. Next to those main barriers, additional ones have been identified. All the barriers identified are presented in Figure 21 and are elaborated in the text below.

BE DE Other

Limited availability of time-based energy price contracts Conservatism due to lack of knowledge Conflicting price signals Comfort and privacy concerns Steering services only for niche audience Complex market communication processes Complicated data access

ESP

BARRIERS

Lack of standardisation and interoperability Strict regulation High entry requirements for new parties

Industry

Lack of knowledge about flexibility potential Difficult to adapt existing systems Flexibility-inhibiting regulations

10%

15%

20%

25%

30%

35%

40%

45%

Residential end-consumers lack knowledge, tools and incentives to shift their energy consumption in time In a renewable-based electricity system, residential end consumers need to be involved by adjusting the consumption of electricity from their EVs, home batteries and heat pumps in response to evolving system conditions. Thereby we are not seeking to prevent consumers from using electricity during moments of peak demand but we want to encourage them on a voluntary basis to shift their energy consumption in time. This will not only benefit the system and the environment but also the consumer. In our interviews we learned that today residential end consumers lack most of all knowledge (about their energy consumption, the possible role of their flexible assets in the energy transition and how they can benefit from flexibility), tools and incentives to unlock their flexibility.

The next section explains the different barriers that consumers are currently facing: 1. Gradual rollout of smart meters hinders consumer awareness and empowerment 2. Limited availability of competitive time-based energy price contracts blocks consumers from valorising their flexibility 3. Consumers remain conservative due to a lack of knowledge about energy flexibility 4. Conflicting price signals limit the impact on the consumers’ bill 5. Consumers are concerned about their comfort and privacy due to a lack of trust

What is blocking the value of flexibility to fully reach Georg and other end consumers? Do you remember Georg the fresh homeowner? Let’s follow him in his journey to fully utilise his smart home. Georg aspires to buy and integrate an EV to his smart home. Georg’s ambition is to reduce his overall energy costs and contribute to fighting climate change. The journey has to be made as easy and understandable as possible for Georg with little to no knowledge about energy or the energy sector. Georg wants to retain a high level of comfort, does not want to be restricted in terms of his energy use and wants to ensure that his private data is properly and securely handled.

I just moved into my new home and want to make it flexible and smart from the start

In the ideal world, it begins with the consumer shopping for the right hardware and installing it in their home, in Georg’s case requesting a smart meter, acquiring an EV and installing a charging pole at his home. Secondly, Georg looks for an energy supplier that matches his preferences and offers him a choice of flexible options via a user-friendly website. He then receives a home energy management system that optimises the household consumption in line with his individual needs and preferences. Georg will be able to monitor his energy consumption and receive frequent reports and insights about his consumption with personal advice and recommendations. Lastly the smart meter records when the electricity was consumed and ensures that Georg receives a correct energy bill.

HARDWARE

CONTRACT(s)

CONNECTIVITY

COMFORT

MONITOR

Buy flexible asset and install additional hardware.

Search and sign optimal supply contracts which fit the consumer’s needs

Connect smart . devises via smartphone application

Set preferences to own needs and comfort

Receive value and report

I just bought an EV. Where and when do I get my smart meter ?

I don’t know how I can save money on my energy bill.

Can I now connect my PV to my EV?

I want to make sure I stay in control.

That’s how much I’ve already saved? Wow!

On the right, we outline five steps that show an ideal journey for a residential consumer.

6. Steering services are currently only suited for a niche audience

Figure 22: Progress of the smart meter rollout across European Member States

1. Gradual rollout of smart meters hinders consumer awareness and empowerment Flexibility starts with the consumer understanding the impact of their behaviour on their consumption. While other European countries have already finalised smart meter rollouts, many households in Germany and Belgium still have analogue meters, as can be seen in Figure 22. Analogue meters work with a mechanical counter and do not record or display when electricity was consumed. Smart meters, on the other hand, track energy use during time intervals, allowing consumers to monitor their consumption habits, understand the impact of their behaviour and receive electricity bills based on their (quarter) hourly consumption. Therefore, to induce a shift in people’s consumption behaviour based on price signals, having a smart meter is a must.

Smart meter rollout (%) 100

100

100 No data available

100 99

Belgium

46% in Flanders (April 2023), 5% in Brussels (December 2022) and Wallonia (February 2023),

The disparity between smart meter rollouts in the different Member States serves as the key obstacle for many customers to effectively participate in flexibility schemes. Not having the right technology leaves customers without a clear understanding of their consumption or the ability to react to price signals when it matters most Savannah Altvater, Data Management & Flexibility Lead, Eurelectric

0 85

100

Source: Power Barometer 2023 (2021 and 2022)1, Fluvius (2023)2, Comparateur-energie (2023)3, Bundesnetzagentur (2022)4

<1 1 Eurelectric (2023), Power Barometer, last accessed on 16/11/23 2 Fluvius (2023), ‘Vlaanderen rondt kaap van 2,5 miljoen digitale energiemeters’, last accessed on 16/11/23 3 Comparateur-energie (2023), ‘A quoi s’attendre avec le compteur intelligent?’ 4 Bundesnetzagentur (2022), ‘Monitoringbericht 2022’, last accessed on 16/11/23

As certified manufacturer of smart meters in Germany, we are supporting their accelerating rollout across the country. In Germany, smart meters are more than just remote readable meters. We are building a highly secure communication platform for the energy transition. The complexity of this project has led to the rollout being delayed in the past. This year, we have made some clear progress: by the end of the year, approximately one million smart metering systems will be in use, and, by 2032, 20 million will form the digital infrastructure for the energy transition.

Spotlight on Germany

Spotlight on Belgium

Germany is one of the Member States that has the lowest amount of smart meters installed in consumer homes. A smart meter, called an ‘intelligentes Messsystem’ in German, consists of two elements: a digital meter for recording the measured values; and a communication unit, or smart meter gateway for communicating with market parties. Metering Point Operators (MPOs) are responsible for the installation of these smart meters.

The availability of smart meters in Belgium varies from region to region. In Flanders, 46% of the smart meters are rolled out at this moment. Its aim is to reach 80% by 2024 and 100% by July 2029. Less than 10% of households have a smart meter in Brussels and Wallonia. The target for these regions is to have a smart meter installed in 80% of households by 2030. Whilst in the past the main barrier in Belgium was the general public’s negative perception of these devices, this is now improving. However, the Flemish government have allowed residents with solar panels that were commissioned before 2021 to postpone the installation of smart meters in their homes until early 2025. In Wallonia, consumers are even able to reject the installation of a smart meter, following the raising of concerns linked to privacy, social security, and health6. These measures slow down the smart meter rollout.

There is still a long way to go, but the German government is aiming to ensure that all parties that consume more than 6000 kWh of electricity per year and/or have an installed production capacity which is higher than 7 kWp has a smart meter installed by 2030. Consumers, who do not fall into this category, can voluntarily request a smart meter. The reasons for the delayed rollout of smart meters mainly concern regulatory hurdles. High security requirements regarding the design and installation of smart meters have complicated the rollout. A German market study carried out by PwC5 demonstrated that around 70% of the country’s MPOs started rolling smart meters out in 2023, compared with 49% in 2022. Around 30% of the country’s MPOs are still preparing this rollout.

Marco Sauer, Head of Regulatory Affairs & Business Development, Theben Smart Energy GmbH 5 PwC (2023), ‘PwC-Studie “Smart-Meter-Roll-out”: Standortbestimmung 2023’, 6 Energie info Wallonie (2023), ‘Compteur à budget’,

2. Limited availability of competitive time-based energy price contracts blocks consumers from valorising their flexibility

The current generation of heat pumps makes it easy to use less power when electricity is scarce or the grids need balancing. We offer consumers the possibility to adapt the use of their heat pumps via dynamic electricity pricing formulas with their internet connection. This smart control of their assets is already helping to balance the grid and is also decreasing energy costs for end users. The rollout of more contracts through which end users can make financial gains from flexibility will be essential as more demand side response is unlocked.

Almost all households in Belgium and Germany have annual or monthly fixed contracts that do not provide them with any signals encouraging them to shift their consumption in time. With time-based energy price contracts, the price can differ each hour and thus not only the volume that is consumed is important, but also when it is consumed. During the hours with low prices, there is a surplus of energy and consumers are incentivised to shift their consumption to those hours. During the hours with high prices, the energy is scarce, and consumers are encouraged to reduce their consumption at those hours. European regulation is being put in place to speed up the deployment of dynamic tariffs. The Electricity Directive (EU Directive 2019/944)7 includes provisions aimed at encouraging the offer of dynamic electricity price contracts to consumers. At the end of 2022, the Belgian national and regional governments implemented laws8 which stipulates that all suppliers with more than 200,000 end consumers must offer a dynamic tariff to them. In Germany, all suppliers must offer dynamic tariffs to their consumers from 2025 onwards9. This is a step in the right direction but does not encourage the development of other energy contracts that remunerate flexibility (like dynamic time-of-use contracts or fixed-price contracts that reduce costs when the remote steering of flexible assets is activated).

Whilst the law requires suppliers to implement dynamic energy price contracts, there are no requirements on the conditions for this offering. Today, high administrative and procurement fees on top of the wholesale market prices reduce the value that consumers receive from their flexibility. Many suppliers will not yet consider exploring competitive time-based energy price contracts if the penetration rate of smart meters is low and there is little demand for those contracts from consumers. The introduction of time-based energy contracts, likely in combination with accompanied steering services, requires big investments and changes in suppliers billing and communication tools. In Flanders, at the time of writing (October 2023), some suppliers offer time-based energy price contracts which follow day-ahead prices. However, no suppliers offer such tariffs to consumers in Brussels and Wallonia. In Germany, mainly pioneering new suppliers are giving consumers the opportunity to benefit from their flexibility with more innovative contracts. This leads to a situation where only a small fraction of the consumers (less than 1%)10 in Belgium and Germany have a time-based energy price contract. Compare that to the 75% of Norwegian households that have a time-based energy price contract11 and it’s clear that we have a long way to go.

3. Consumers remain conservative due to a lack of knowledge about energy flexibility To further comprehend the low demand for time-based energy price contracts, we need to understand that most end consumers in Germany and Belgium have little knowledge about energy and energy flexibility. According to a report12 published by the CREG in July 2023, 2 million households could annually save between 150 and 300 euros by choosing a better fit contract. The energy crisis has raised awareness about the fact that energy might not always be cheap, yet many consumer still do not question their current energy currents. A lack of information about market-based flexibility is an important reason for consumers not to consider time-based contracts when trying to optimise their energy bills. Even if consumers have the necessary knowledge, they are often still looking for predictability, when it comes to energy prices due to their risk averseness. This leads to a rather conversative behaviour from consumers regarding their energy usage and contract blocking their flexibility potential. A recent market survey showed that only 10% of households in Germany consider themselves to be well informed about time-based energy tariffs13. 48% of households said they would refuse a time-based energy tariff, potentially due to the risk of being exposed to price peaks.

Wouter Peeters, Sales Manager Belgium, Nibe

7 EUROPEAN PARLIAMENT AND COUNCIL (2019), Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (recast), last accessed on 17/11/23 8 VLAANDEREN (2022), Afdeling I. Aanwijzing van de netbeheerders, Artikel 4.1.1., 9 BMWK (2023), ‘Kabinett beschließt Neustart für die Digitalisierung der Energiewende und stellt Weichen für beschleunigten Smart-Meter-Rollout’, 10 Mijnenergie.be, ‘Waarom kiezen zo weinig Belgische gezinnen voor een dynamisch energietarief?’; last accessed on 16/10/23 & Federal Network Agency, ‘Monitoringbericht 2022‘; last accessed on 16/10/23 11 Matthias Hofmann and Karen Byskov Lindberg (2023), ‘Residential Demand Response and Dynamic Electricity Contracts With Hourly Prices: A Study of Norwegian Households During the 2021/22 Energy Crisis’; last accessed on 23/10/23

12 CREG (2023), Ondanks de hoge prijzen door de energiecrisis zouden Belgische huishoudens hun energiecontract beter kunnen kiezen 13 Verbraucherzentrale Bundesverband (2023), ‘Dynamische Stromtarife‘, last accessed on 16/10/23

4. Conflicting price signals limit the impact on the consumers’ bill

Spotlight on Germany

bles. Some have argued that the current distribution of grid fees across Germany does not promote an acceptance of renewables and does not provide consumers with incentives to consume cheap electricity from local renewables in areas where it is produced.

The subsidy regime currently does not allow electricity from batteries to be fed into the grid as it is considered ‘grey’ (or polluting), even if the electricity they are storing was generated by local solar production. This is yet another reason for households to only consider local optimisation based on their own (renewable) production, storage capacity and electricity offtake. The batteries can only be used for flexibility purposes and be charged or discharged when an additional meter is installed to prove the origin of the electricity and the local BRP is taking over the optimisation.

Network components are static and independent on the status of the grid. Consuming more can be beneficial to absorb more renewable energy, but with the current design it only increases the network tariffs which again dampens the effect of the time-based energy component.

The issue of the fair distribution of grid fees is currently being hotly debated. Grid customers in regions where the grid has been expanded and many renewables have been connected to it over the last few years usually pay higher grid fees compared to regions with fewer grid connections to renewa-

Both in Belgium and Germany consumers must not pay network components, taxes and charges and VAT for consumption of electricity which is produced from assets

Figure 23: Typical composition of a household energy bill in Belgium and Germany (2023) 6%

11%

16%

FL: 31% BXL: 31% WL: 29%

VAT Energy component Network component Taxes and charges

18% FL: 43% BXL: 41% WL: 39%

FL: 20% BXL: 22% WL: 26%

Spotlight on Belgium Since January 2023, a capacity tariff has been in place in Flanders by the VREG (“Flemish Commission for Electricity and Gas Regulation”) to protect the distribution grid from congestions15. The grid tariff that consumers must pay also depends amongst other aspects on their consumption peak. That means that the network component not only increases when more energy has been consumed but also when more electricity has been consumed at the same time.

smart charging pattern in Figure 24). With the capacity tariff in place, the higher peak generates higher grid fees. Therefore, consumers might not want to exceed their normal peak of 4 kW (see Natural charging pattern, in Figure 24). On this day, consumers would then miss out on €2 of flexibility benefits by reducing their consumption peak by applying a suboptimal smart charging algorithm (see “Smart Charging – Limited” in Figure 24).

The benefits that they could gain from lower energy prices are reduced by the increase in grid fees, caused by a higher consumption peak. Take, for example, the extreme example cited in Chapter 2, during which an EV is optimally charged based on day-ahead pricing, creating a peak of 7 kW (see

The current landscape of grid fees, distribution costs and capacity tariffs fall short of achieving the desired flexibility goals. Overcoming these obstacles is imperative in order to unleash the full potential of home batteries and batteries in general when delivering flexibility. By implementing precise price signals, we can pave the way for their effective participation and contribute significantly to the energy transition. Eva Meijsen, Operations Manager, Opteco

55%

igure 24: Charging profiles for an EV in Belgium on 2 July 2023, charging its 75 kWh battery from a 50% to 100% F state of charge.

8 7 6 Chargin power [kW]

that lie behind the same metering point. This means that prosumers may be incentivised to use their flexible assets to maximise self-consumption instead of providing flexibility in line with system needs.

To adjust consumer behaviour, the impact of flexible energy use must be noticeable and rewarded. An energy bill not only consists out of an energy component, that can be influenced by optimal energy usage, but it also contains taxes and charges, VAT and a network component (i.e. grid fees) as shown in Figure 23. The energy component only makes up 55% in Germany and around 40% in Belgium of the total energy bill. The additional components (network component, taxes and charges, …) can significantly dampen the effect of the time-based energy component and lower the attractiveness of providing flexibility for the grid in the consumer’s eyes. This conflicting price signals can discourage the change from a consumer.

5 4 3 2

Arne Brodersen, Senior Strategy Manager, GridX

1 0 2/7/2023 0:00

2/7/2023 6:00

2/7/2023 12:00

2/7/2023 18:00

3/7/2023 0:00

Time of Day Natural Charging

Delayed Charging

Smart Charging

Smart Charging - Limited

14 VREG (2023), ‘Nieuwe nettarieven voor elektriciteit sinds 2023’,

15 E lia, ‘Adequacy and Flexibility study for Belgium (2024-2034)’;

Source: CREG (2023), ‘Hoe is de energieprijs opgebouwd?’, and Verivox (2023), ‘Strompreiszusammensetzung 2023’,

GridX’s IoT platform XENON connects, monitors and controls distributed energy resources. As an FSP, gridX offers its partners smart energy management solutions to leverage and maximise flexibility in clean energy systems. However, despite the availability of advanced digital solutions, there are also legal barriers. For example, if a PV system receives a feed-in tariff or market premium in direct marketing, it is not allowed to feed electricity back to the grid from a battery storage installed next to the PV system, even in winter or during the night.

5. Consumers are concerned about their comfort and privacy due to a lack of trust Some consumers are anxious about their levels of comfort if assets are optimised by an ESP. Some people think that allowing their EV to be charged by an ESP will increase the chances of their car not being sufficiently charged when they need it. Similarly with heat pumps, some consumers fear that the desired temperature is not reached when the heat pump is managed by an ESP. Consumers are typically also concerned about their privacy. Consumers are sometimes opposed to share data of their smart meters or other assets because they are afraid that ESPs are tracking their daily routines and activities and that this data might be misused by unauthorised parties. The lack of trust in ESPs makes it difficult for them to obtain the permission of the consumers to receive their data and unlock the flexibility of their assets.

6. Steering services are currently only suited for a niche audience

Studying consumer behaviour at the University of Ghent As part of ongoing research projects (Flexsys, Interflex), behavioural economists at UGent are studying how the technical flexibility potential of heat pump and EV flexibility can be ‘behaviourally corrected’ and so turned into a ‘realistic potential’.

their EV being only partially charged every once in a while. For example, users were found to be OK with their car waiting for the cheapest hours to charge itself, even if it meant that the range may be lower than expected when they enter the car at a random moment.

By closely studying how users interact with the hardware and software that enable assets to be flexible, the researchers aim to better understand how behaviour affects the process of trying to optimise electricity consumption. Additional constraints, affecting what is possible in practice, are also being explored.

The only exception to this acceptance was when flexible charging meant that consumers would have less than 50 km of range left; in such cases, consumers did not want to interrupt the charging process. Undertaking research like this means it is possible to fully understand how a technical potential is actually employed; more research and experience will need to be undertaken through ambitious collaborations between companies and researchers.

For example, UGent’s real-world pilot of heat pump flexibility revealed that many users want to retain full control over their heating, and sometimes ‘overrule’ a flexibility-related intervention that would trigger a deviation away from their ideal comfort temperature. The reasons provided for overruling the action were diverse, from having guests to a child in the household being sick. At the same time, consumers were found to be happy with

The more real-world residential flexibility products and services can be studied on a large scale, the better. Along with Eneco, UGent will study real-world smart charging at scale in households; moreover, along with re.alto, they will study how smart charging differs in relation to the management of fleets of company cars.

Time-based energy contracts are especially interesting for end consumers who own flexible assets that can be steered remotely and automatically for example based on price signals. However, market-based steering solutions are still missing on a wide scale and are only used by the so-called innovators and early adopters. These consumers are passionate about energy and/or technology and are willing to spend a lot of time and effort in understanding these services. Suppliers or ESPs must focus more on user experience to make services attractive and easy for the majority of consumers.

ESPs struggle with value creation for end consumers due to complicated data access and traditional regulation The average consumer does not want to spend time and effort in valorising their flexibility. It is the role of an ESP to unlock flexibility at the residential consumer while unburdening and empowering the consumer. This process starts by the ESP obtaining consumer permission to get access to the flexible assets behind-the-meter and the necessary consumer data. When unlocking decentralised flexibility, there is an increasing need for more real-time consumption data. The ESP will then look at the different flexibility value streams available on the market and potentially combine different value streams, so-called value stacking. Unburdening must ensure that the consumer involvement and responsibility is limited while respecting consumer preferences and comfort requirements.

What barriers exist that make it difficult for ESPs to deliver the value of flexibility to Georg and other end consumers?

1. Market communication processes are complex in different countries

Let’s imagine a next-generation ESP emerges that wants to help Georg optimise his flexible assets. This provider offers a seamless, all-in-one experience for customers by connecting to and operating all the flexible assets. Through agreements with suppliers and BRPs, the ESP gives consumers access to energy contracts tailored to consumer needs, while providing their flexibility to the market. Below, we outline five steps that gives a vision of how an ideal customer experience with this ESP might unfold.

The provision and settlement of flexibility involves several market parties and data exchange processes. These processes between different market parties are often complex, differ between different countries and are not always scalable to near-real time smart meter and asset data.

House owners waste their flexible potential. My company is a one-stop shop for installing assets, supplying electricity and interacting with a BRP for market access.

The next section explains the different barriers that ESPs are still facing: 1. Market communication processes are complex in different countries 2. Data access from smart meters and behind-the-meter devices is complicated 3. Lack of standardisation and interoperability impedes smooth implementation

CUSTOMER ACQUISITION

HARDWARE and INTEGRATION

CONTRACTS

OPTIMISE

VALUE

4. Strict regulation slows down the provision of flexibility 5. High entry requirements exist for new market parties Advertise and find new customers interested in buying and valorizing their flexible asset

We provide the simplest way to switch to a green and cheap future.

Install necessary hardware and connect to existing appliances. We guarantee to connect the new asset with the existing assets.

After understanding . the comfort and risk preferences of the customer, offer different energy contracts.

Optimise the steering of the flexible assets in portfolio to maximise the objectives. ESP tries to maximise the value of the flexibility by stacking multiple revenue streams.

Deliver value to the end-user. Full transparency thanks to frequent reporting and on-demand insight in all data with our application.

There are so many different devices, how can I seamlessly connect and optimise all of them?

Luckily, we can offer an energy contract that suits your flexible potential.

Having access to real-time data will help us buy cheaper electricity.

The customer benefits and user-friendly applications will keep him happy.

As outlined in ‘The Harmonised Electricity Market Role Model’ 16, the European electricity market information exchange process involves different roles and responsibilities related to data exchange processes. Certain parties can play several roles at once. Since the document is intended as a guide to support countries as they communicate with each other, national processes can differ from each other, meaning that the delegation of roles and data exchange processes are very different in Belgium and Germany. This makes it difficult for an ESP to become active in multiple European countries at limited additional costs. Next to that, near real-time data exchange will play an increasingly important role in the provision of flexibility due to the nature of electricity. Near real-time data from embedded measuring devices helps balancing responsible parties (BRPs) to assess their portfolio position in following up the aggregated asset activation. ESPs can provide near real-time feedback to customers to incentivise their participation in the provisioning of flexibility. However, the current market processes are not designed to ensure close-to-real time data exchange for small-scale assets.

Today market processes are very complex, only partially digital and, for historical reasons, often not compatible. As a result, switching of an e-vehicle or a heat-pump between grid services, self consumption and energy markets and also billing is nowadays not possible in a timely manner. The lack of a data ecosystem massively hinders the nationwide system integration of decentralised flexibilities and business models based on them. Prof. Dr. Jens Strüker, Professor, University of Bayreuth & Fraunhofer FIT

16 ENTSOE (2022), The harmonised electricity market role model, https://eepublicdownloads.entsoe.eu/clean-documents/EDI/Library/HRM/Harmonised_Role_ Model_2022-01.pdf, last accessed on 16/11/23

With the rise of rooftop solar, electric vehicles and home storage, there is an immense opportunity to succeed with business models that will facilitate the interaction between users and the market. The electricity sector is ready for the Airbnb of Power. Hanjo Arms, Partner and Managing Director, Kearney

2. D ata access from smart meters and behind-the-meter devices is complicated Metering data from smart meters

Spotlight on Germany

DSOs in Belgium and MPOs in Germany are responsible for installing smart meters, reading out the smart meters, processing this data and making it available to market parties. ESPs can request this smart meter data via DSOs/ MPOs. However, not all consumers already have a smart meter and not all data infrastructure is equipped yet to share the smart meter data with third parties. Hence, not in all regions it is possible for ESPs to access this data. Next to that, as these processes are bilateral processes, ESPs might have to interact with multiple systems and data formats of the different MPOs/DSOs. Figure 26 shows the data access possibilities for smart meter data in Belgium and Germany.

In Germany, not all MPOs have the technical capability to provide data on a 15-minute bases and real-time data provision is nearly possible at all. Some small MPOs have not yet started to install smart meters in consumer homes, meaning they have not yet adapted their IT systems to process and forward the data. Additionally, processes for accessing the data often still need to be implemented for smart meters, MPOs and Smart Meter Gateways (SMGWs). The smart meter gateway administrator (SMGWA) manages the data access arrangements for the SMGW and the MPO, but external service providers have no access to the data.

Figure 25: The data access framework in Germany ggregation of A time series for balancing groups

Monitoring of the distribu-tion network load and further more

Roles DSO, MPO and SMGWA often integrated in one company

Following month 15 min Aggregated time series for this balancing area

Distribution System Operator

Transmission System Operator

1 day ex-post 15 min Single time series

Following month 15 min Aggregated time series for this balancing group

1 day ex-post 15 min Single time series for his customers

Create forecasts for buying energy and for customer invoices

Supplier/ Balancing group manager At least once a year Yearly consumption, innovative suppliers with more information

Smart Meter Gateway Administrator (SMGWA)

onfigures Smart Meter C Gateway (only entity that can set parameters on SMGW)

Daily, 1 day ex-post 15min (TAF7) Data access via WAN

Metering Point Operator (MPO) Plausibility check and creation of substitute values

Digital Meter Smart Meter

As negotiated 15min (TAF7) Data access must be negotiated with every MPO and permission has to be proven

Spotlight on Belgium In Belgium, smart meters have the ability to send data on a 15-minute basis for settlement purposes and have a commercial port for real-time data. However, sharing this data today is more complicated. Sharing of validated data that is produced on a 15-minute basis with upstream market parties and external ESPs is today only possible in Flanders. In Flanders, ESPs can request access to the end user metering data via APIs by signing a data access contract with Fluvius. Near real-time data can already be accessed directly from smart meters via their commercial ports, following a request from consumers to their DSO to open the port.

The data from assets and devices should also be easily accessible, even if different companies have manufactured these devices. The permission given by the consumer to steer its different assets must be acknowledged by the different manufacturers. The market demand for data of embedded meters held by manufactures is growing. To make flexibility provision financially attractive for ESPs and consumers, the portability of data should be effortless, reducing data transaction costs and IT system costs as much as possible for all parties involved. However, accessing metering or status data from flexible assets is not yet standard. As an ESP, it is still complicated and expensive to access data held by manufactures, as they might try to protect and consequently lock in the data of the asset. However, accessing data through the manufacturers avoids costly installation of additional metering equipment. Today, the manufacturers of the assets decide, if it’s technically possible, how far they would like to allow access to third parties or work with specific part

nerships. By granting other parties access to the data of the embedded measuring devices in an open manner, competition for the steering of the device will increase, lock-in effects will be reduced, and the quality of services will improve. Manufacturers have started to put a price tag on the costs of accessing and processing (real-time) data that needs to be borne – in particular those related to the provision of flexibility – by small-scale assets. Without a fair market for data, there is a risk of market power for certain type of data and it disproportionally increases the costs for ESP to access this data, leaving less value for the consumer. It is important to acknowledge that such measures around open data access must be applied retroactive, to avoid that existing assets (with a long product life cycle) can not profit from new data sharing regulation.

In Wallonia and Brussels, data that is produced on a 15-minute basis cannot be processed for settlement yet. Consequently, suppliers cannot offer time-based energy tariffs in these regions (see previous barrier on time-based energy price contracts). Figure 26: Third-party smart meter data access possibilities in Belgium and Germany Belgium

S ome innovative MPOs offering portal already

Smart Meter Gateway (SMGW)

However, they can (in theory) negotiate with each of the over 800 SMGWAs to access it, if they are granted permission to do so by each customer. Given this, it is in practice impossible for service providers to be granted wide-scale data access via smart meters. The same would apply for their access to real-time smart meter data. The data access framework for Germany is shown in Figure 25.

Metering and status data from flexible assets

Service provider

Customer

Third party access to D+1 smart meter data

Brussels region

Flanders region

Not yet possible for third parties

Possible via data access contract with the DSO

Depending on the technical capability of the MPO

Accessible via P1 port

Nearly impossible to access real-time data today

Using data for valueadded services

Third party access to realtime smart meter data

Germany

Walloon region

The aggregated size of the flexibility available in residential and SME real estate is having a big impact on the energy transition. We need more OEMs to embrace an ecosystem mindset and design their products with interoperability anchored at their core (e.g. via APIs). Doing so will result in a better value proposition and will benefit all partners from the ecosystem. But above all, it will benefit end consumers. Bart Gentens, Chief Operational Officer, Aug.e

3. Lack of standardisation and interoperability impedes smooth implementation

4. Strict regulation slows down the provision of flexibility

Certain brands and models of assets are ready to deliver flexibility but due to a lack of a common standard these assets are not always ready to communicate in an efficient way with ESPs or other devices.

By steering assets in an effective way, ESPs can harness the flexibility which is available behind the meter. Some regulations (like metering requirements, cybersecurity, implementing acts around data access focusing on the head meter) are too strict or not fit for these use cases. These regulations are slowing down the process of ESPs unlocking flexibility on a large scale.

Besides having a sufficient amount of spare capacity, additional technical requirements are needed to operate assets in a flexible manner without too many manual interventions from consumer. An asset should have the ability to measure its own electrical consumption, to transmit these meter values and modulate its power consumption. A high number of international manufacturers are contributing to the growing market for batteries, heat pumps and EVs. As a consequence, assets that do not have qualitative, standardised granular near to real-time measuring data, communication interfaces, and steering capabilities, are entering the market, hindering the large-scale provision of flexibility from these assets. There is still a lack of sufficient standards, or a lack of commonly adopted existing standards. Especially in the heat pump sector, standardisation efforts at a European level are urgently needed. As there are usually multiple devices installed behind the meter, interoperability is important to optimise the total energy usage. For instance, it is hard to connect and align the operation of an EV and PV installation if the locally needed energy management system does not support the communication interfaces from certain manufacturers. Additional components need to be installed when the devices are not interoperable, leading to an increased cost for the ESP and/ or end consumer.

The issue is not that devices do not have the technical capabilities to be controlled in a smart way. The problem is rather they all speak different languages, making coordination between them difficult or even impossible. Over the years, numerous physical interfaces, data formats and communication protocols have emerged, each targeting their own specific use case or application. Sometimes these are proprietary, whilst at other times they are undocumented Joannes Laveyne, Researcher, University of Ghent

Today only a few EV models are bi-directional charging ready. To make sure that Europe can fully unlock the storage and flexibility potential of EVs, we need to make sure that vehicles and charging equipment are bi-directional ready from a hard- and software perspective. Fabian Sperka, Vehicles Policy Manager, Transport & Environment

While there have been many standardisation efforts in the EV market, the heat pump industry is still very scattered. The large amount of protocols that exist is hindering the easy integration of heat pumps into energy management systems. For example, labels like Smart Grid ready (SG Ready) or Virtual Heat and Power Ready (VHPready) are not sufficiently defined or widely adopted by manufacturers, at least not at a European level. Jozefien Vanbecelaere, Head of EU Affairs, European Heat Pump Association

Flexible assets usually have embedded meters into their design. However, currently, they seldomly comply with European and national regulations related to measuring devices and therefore cannot be used for consumer billing reasons. Metering devices used for billing purposes must be compliant with the European Measuring Instrument Directive (MID)17, that outlines safety requirements for measuring instruments across the EU. This legislation is drafted having smart meters at access point in mind and is not fitting the need for flexible assets with submeters. In Germany, metering devices must also be conform to the Eichrecht measurement and calibration act, making it even more complicated for embedded meters to be used for consumer billing purposes. This can be a large hurdle in the valorisation of flexibility on asset level.

Spotlight on Germany For example, a decade ago, Germany decided that the smart meter gateway (SMGW) should become the unique entry point for any communication with a flexible asset for steering commands18. A precondition for using the gateway for steering commands is the availability of an additional hardware component: a steering box. Since these required steering boxes are not yet widely available, these services cannot be implemented at large scale. As a temporary measure, the German parliament explicitly mentioned that market-based control commands and steering signals can also be processed outside of gateway infrastructure, as long as it happens across a secured wide area network19. In practice, WiFi remote control already exists and this may not disappear as soon as gateway steering boxes become widespread in the market. However, the barrier of uncertainty still remains as a new technical guideline could forbid steering outside of the Smart Meter Gateway infrastructure.

In addition to this, Member States have different rules in place which govern how to technically ensure communication chains are secure. Different national rules make it more costly for manufactures to equip and adapt their products, and for ESPs to use these across national electricity markets.

We have to change the way we consume electricity. Now is the time to develop the regulatory framework to suit this. Stefan Thimm, Managing Director, Federal Association of Wind Farm Operators Offshore

As the world transitions to a more sustainable energy system, prosumers with their PV, home storage, heat pump and electric vehicle solutions are playing a vital role in providing flexibility to the grid. By connecting these homes to the energy markets, we at Lumenaza are unlocking a huge potential for reducing carbon emissions and saving costs for everyone. Our innovative platform enables even residential PV owners to access the benefits of market participation, thanks to the recent legal clarification by the EnWG novelle 2023. We believe that this is a gamechanger for the energy sector and a win-win situation for prosumers, utilities and the environment. However, further amendments to legal orders are needed and we encourage policy makers to keep the current pace. Christian Chudoba, CEO, Lumenaza,

17 EUROPEAN COMMISSION (2016), Measuring instruments (MID), Directive 2004/22/EC, Directive 2014/32/EC’, 18 Gesetz zur Digitalisierung der Energiewende” from 2015/2016, Bundesgesetzblatt Teil I Nr. 43 (bmwk.de) 19 EnWG novelle 2023

5. High entry requirements exist for new market parties Suppliers and BRPs are key roles in the value chain of flexibility. Their approach in combination with the market set-up will highly influence how much of the benefits of flexibility will be passed to the end consumer. To successfully offer flexibility services on a large scale to consumers, it is essential to drive changes and foster innovation across the entire value chain. To accelerate these changes, it should be easier for new market parties with creative business models and solutions to enter new EU markets as a supplier and/or a BRP.

BRP entry barriers The primary responsibility of a BRP is to ensure that their portfolio always remains balanced. If a BRP’s portfolio is imbalanced, it settles the imbalance volumes every 15 minutes at the imbalance price with the TSO. The imbalance price could either positively or negatively impact the BRP’s profit and loss, depending on the direction of the imbalance. TSOs request financial guarantees from BRPs to mitigate the risk of invoices remaining unpaid. In theory, any supplier, producer, trader, or customer can become a BRP. However, for smaller market parties, the process of becoming a BRP is challenging and they might be discouraged from doing so. While the process is (rightfully) designed to ensure that BRPs can undertake their responsibilities, some of the requirements may create unnecessary barriers.

Firstly, the contract and other related processes can be complex, making it difficult to find and access the right information and understand what is really needed. In Germany, for instance, many documents are provided in German only. International companies who wish to enter the German market are then confronted with two challenges: the complexity of specific technical data exchange processes and these descriptions being provided in German only. In Belgium, the Terms and Conditions for BRPs describe the requirements and responsibilities for BRPs. As this document has gradually evolved over time, it has become lengthy and not always easy to fully understand. Therefore, a full revision of the structure of the Terms and Conditions for BRPs is foreseen. The current financial guarantee required in Belgium might be prohibitively high for small players. The minimum financial guarantee demanded by Elia for a BRP equals €93,000 and is applied to BRPs for which the maximum daily average electricity consumption or sold volumes is below 50 MW. For players for which the average volumes sold/consumed are well below this level of 50 MW, the minimum financial guarantee could form an unnecessary barrier. Becoming a BRP involves IT requirements to be set up so that operational tasks can be carried out. Given the complexity of these systems, smaller market participants must often significantly invest in procuring or developing the necessary IT infrastructure for communicating information related to their portfolio, so increasing their overall costs.

Supplier entry barriers

As a small market player, we enjoy distinct advantages. Our portfolio consists of thousands small residential batteries, giving us an extensive geographic presence in Flanders, in contrast to substantial centralised assets. This disparity leads to diminished energy losses, as we maintain a predominantly local focus, insulating our portfolio from the virtually negligible consequences of asset failure. Regrettably, our assets remain unused due to high entry barriers. Vincent Beckers, Co-founder, Jabba Energy

To become a supplier, you need to apply to the regional regulator in Belgium and register at the national regulator in Germany for a supply license. The task of a supplier is to purchase electricity from a BRP and deliver it to end consumers through supply contracts. Some requirements and processes make it complex to take on the role of a supplier.

Fourthly, suppliers must get subcontracts with one or several BRPs to source the electricity for every customer since a supplier license does not give parties access to wholesale markets. New players that have not taken on BRP responsibilities, might find it difficult to reach an agreement with BRPs to source the electricity. The less these market roles are unbundled, the more difficult it gets.

Firstly, the entry process and procedure of a supplier can vary across countries and across different regions in one country. In Belgium, to operate across multiple regions, suppliers must undergo the process with each relevant regional regulator with potentially different procedures. In Germany, on the other hand, supplier registration is managed centrally.

Lastly, suppliers must also comply with a lot of regulation regarding “Consumer Protection”. Although this regulation is essential to protect the end consumer in their fundamental rights, some of the elements put forward bring a lot of administrative burden on the suppliers; hence creating potential additional barriers.

Secondly, suppliers must have a significant financial buffer in place to capture the price volatility and consumer risk. Suppliers also need to bear the risk of non-paying consumers, as they already purchase their electricity in advance based on consumption forecasts. Thirdly, high IT investments might also hold some players back from deciding to take on a supplier role. Market parties must run data exchange processes with DSOs in pre-defined communication protocols and data formats. In the German market especially, this involves a large set of rules and responsibilities. As a result, new market parties are confronted with a high degree of complexity when entering the market. In contrast, this degree of complexity is less troublesome for established market parties.

Summary on the barriers for residential consumers and ESPs A summary of the barriers for residential consumers and ESPs can be found in Figure 27. For the realisation of the energy transition, it is important to know and understand the different barriers around flexibility.

Figure 27: Summary of the barriers for residential flexibility presented on the value chain

Electricity Exchange

Transmission System Operator

Role only existing in Germany, not in Belgium

1. Complex market communication processes

Contractual relation Balance Coordinator

Balancing Responsible Party

5. High entry requirements for new market parties

6. Steering services are currently only suited for a niche audience

Supplier

2. Limited availability of competitive time-based energy price contracts

Energy Service Provider

Distribution System Operator

4. Conflicting price signals

Metering Point Operator

Exchange of information

Barriers for Energy Service Providers (ESPs) Barriers for residential end consumers

1. Gradual rollout of smart meters

2. C omplicated data access from smart meters and behind-the-meter devices

Flexible assets 3. Lack of standardisation and interoperability

Residential end consumer 3. C onsumers remain conservative 5. Consumers are concerned due to a lack of knowledge about their comfort and privacy

Smart meter 4. Strict regulation

What are the most important barriers for energy-intensive companies to build a flexibility business case?

Companies are often unaware of the value of flexibility, and thus do not integrate it in their roadmap to net zero Companies play a crucial role in the future providing flexibility to the grid and ensuring the reliability of our energy supply. We observe that today companies rather operate in baseload and that the potential of flexibility remains untapped. Some industry players have already taken on an active role in delivering balancing services, which will remain important in future. Nevertheless, we believe that a significant number of companies are unaware of the value of flexibility, even though they are concerned about their energy supply and are investing in the electrification of their processes. As outlined in Elia Group’s 2022 viewpoint study21, this electrification is one of the reasons industrial electricity consumption is expected to increase by 40-50% in the run-up to 2030. In general, an increasing number of companies will monitor and optimise electricity costs. Where in the past energy costs could be mainly kept under control by consuming a stable amount of electricity and hedging, volatile and high energy prices are pushing companies to reshape their energy management approaches. Hence, providing the grid with flexibility will give companies opportunities to optimise their (future) energy costs and hence should be part of their business case. The next section explains the different barriers that companies are still facing: 1. Companies lack of knowledge about flexibility potential, required investment and financial benefits. 2. It is not easy to adapt the technical and organisational set-up of existing systems, processes, and work habits 3. There are flexibility-inhibiting regulations in place for large consumers

Eleonora is helping us to showcase the difficulties that companies face. We will follow her on the company journey towards net-zero. As an energy manager, it is her job to enhance the energy efficiency and sustainability in the energy-intensive company she is working for.

We are a successful company and want to digitalise and automate our production processes so that we can optimise our energy consumption

The process begins with understanding the current energy consumption patterns, developing energy management expertise, and evaluating flexibility options. Critical decisions include choosing between growing in-house expertise or hiring consultants and integrating the energy roadmap into their business plan.

Energy is one of the main focus points of Agristo’s sustainability strategy. The future energy landscape will be completely different from today, and we need to take this into account in order to reach our goal of 50% renewable energy by 2030. Digital tools and dashboards, flexibility and smart communication between our assets are the key to make this a success. Starting the journey today will prepare us for the future to come.

Three different areas need to be tackled to ensure the process is a success: hardware; supply contracts; and intelligence. This involves improving energy efficiency, securing low prices through power purchase agreements (PPAs), and exploring ESPs. Process automation and culture change, which do not require substantial investments to be made, enhance approaches to energy management. Further transformations include adapting their production processes, investing in flexible production lines with potential overcapacities, and integrating technologies like electrolysis, storage systems or even their own RES generation into their systems. Electrification and internal generation capabilities are central to this. On the right, we outline six steps that show the journey of a company integrating flexibility options.

VISION

REDUCE CONSUMPTION AND SECURE PRICES

INVEST / NEW HARDWARE

OPERATE HARDWARE

REDUCED OPEX

Ambition involving energy optimisation by board or energy manager

Increase energy efficiency, generate own energy and sign PPAs but keep the current process and hardware

Optimising current processes and making energy . an integral part of process planning to overall reduce energy cost (and risk)

Invest in new assets to unlock optimisation and reduce costs and reach sustainability goals

Align and adjust operation rules with production process and electricity market or flexibility product signals

Reduced and foreseeable running costs for energy and smaller carbon footprint

Energy is becoming so expensive; we must do something about it, but what? And how?

First things first: let us leverage what we already have.

We have to rethink energy efficiency. It is not only about reducing, but also consuming it at the right moment.

We have a long way to go, but if we make the right investments today, we will stay competitive.

The product is important, but it is also about how we get there.

Our clients love our green product, and we are helping the energy transition. That’s a win-win.

Peter Vos, Energy Manager, Agristo

21 Elia Group (2022), ‘Powering Industry Towards Net Zero’, Elia Group study on “Powering Industry towards Net Zero” notes one constant demand: electrification combined with access to low-carbon electrons at stable and affordable prices

PROCESS OPTIMISATION

1. Companies lack knowledge about flexibility potential, required investment and financial benefits

3. There are flexibilityinhibiting regulations in place for large consumers

The first step for a company considering the possibility of providing flexibility services is building a business case around it. This is where many players encounter difficulties. Not every company has the knowledge and in-house resources it needs to investigate the different implementation options and value streams and make a reliable estimation of the associated costs and benefits. Even with the required expertise in place, the long-term value of flexibility remains hard to predict due to the uncertain nature of electricity markets. Without a clear business case for flexibility, companies are unlikely to make additional investments in unlocking this flexibility. Often companies lack sufficient and well-qualified expertise regarding their company’s energy efficiency, including the potential for flexibility services.

In Germany, the regulations and incentives linked to grid fees reward large consumers with a constant offtake of electricity from the grid. Part of these payments is based on their peak load, which is why industrial customers avoid load peaks regardless of the actual state of the grid. Additionally, companies have their grid fees reduced when they consume a certain baseload for at least 7,000 hours per year. Given the substantial impact of this on their electricity bills, companies play it safe to ensure they reach this cap. Hence, companies typically refrain from increasing their consumption when prices are low or from reducing their energy usage when prices are high to safeguard the 7,000 hour threshold. In the winter of 2022/2023, the BNetzA published an interim regulation which re-examines the clause relating to flexibility. Energy-intensive industries can now reduce their electricity consumption during moments when there are high day-ahead prices without negatively impacting their reduced grid fees. However, the new regulation is only temporary. It is unclear whether the regulation will become permanent and whether its content will be further developed in such a way that it creates even more flexibility incentives. We want to highlight that changing the 7,000 hour rule must take into account the importance of changing consumption patterns based on price signals and does not create an contradicting incentive.

2. It is not easy to adapt the technical and organisational set-up of existing systems, processes, and work habits Introducing flexibility into a company requires investment decisions to adapt existing system, process optimisation, resource planning and training. Adapting the existing systems will require investment and time; on top of the time most companies are already dedicating to their production processes and own digital transformation. This digital transformation is a step in the right direction since qualitative data is needed to provide balancing services or to react to market price signals. On the other hand, companies focus on the quality of their products and services forgetting additional value of for example a more flexible production. Nevertheless, digitalisation will allow companies to create more precise measurements for energy management systems, and will even be a step towards the steering of some of the company’s productions steps.

High energy costs, market uncertainties, industrial and transportation electrification, and sustainability goals create a complex burden for industrial companies. Managing these challenges in-house on a day-to-day basis can be difficult and costly, leading to a defocus from their core business. As an energy company, Bnewable’s aim is to alleviate this complexity and unburden our clients by developing, investing, operating, and optimizing on-site flexibility. Christophe Degrez, Founder and Managing Director, Bnewable

Multiple companies have highlighted their concerns about the impact of flexibility on their processes and end products, which is an additional barrier to flexibility. The value of flexibility needs to be sufficiently high before companies will consider changing their processes.

Entelios is a leading provider of fully comprehensive flexibility marketing in all relevant short-term markets. We enable industries, utilities and battery investors to participate in intraday trading and balancing reserve markets in an automated way, making them a driving force in the energy transition. However, the “7000-hours rule” kills business cases for true flexibility provisions. We need a new regulatory framework, that enables more flexibility behaviour. An important step is the current exemption from individual grid fees (§ 118 (46) EnWG), which enables the provision of balancing power and the reaction to very low or very high price signals on the electricity exchange, without risking a loss of individual grid fees. This is a step in the right direction, but it must now be extended and developed further in the longer term. Sebastian Gansemer, Head of Optimization and Planning, Entelios AG

The smart control of our biogas engine based on signals from the energy market has been a clear and convincing pilot case for us. It has accelerated awareness about opportunities regarding flexibility across our own company and has led us to cooperate with external partners and come up with joint innovative solutions. Flexibility is here to stay. Jeroen Deurinck, Energy Manager, Aquafin

Industry Survey by 50Hertz In Spring 2023, 50Hertz surveyed the top 100 companies in terms of electricity consumption in Eastern Germany. The goal of the survey was to evaluate industry’s reaction to high electricity prices in spring 2022 and winter 2022/23.

At the time of the survey, the development of additional flexibility-related options was being planned or discussed by 25% of companies. Many reported that they were planning to expand their own generation capacity (PV and biogas).

A clear majority of companies reported reacting to high energy prices (70%) primarily by adopting long-term electricity savings measures (by increasing efficiency and reducing production volumes). Short-term, intraday shifts in consumption were reported as being used by only 3% of companies.

Inflexible production processes, contractually agreed price hedging and the need to comply with supply chains were reported as being the main barriers to flexibility-related measures. In addition, 38% of companies stated that the grid tariff system in place at the time (e.g. § 19 StromNEV ) influenced their measures.

SOLUTIONS

Elia Group has identified 3 main actions to accelerate the development of decentralised flexibility This chapter outlines the most impactful and urgent recommended actions that should be taken to unlock and capitalise on consumer-side flexibility (recommended actions marked in square brackets [...] throughout this chapter). If all actors from across the value chain work together, we can pave the way for a future in which flexibility seamlessly integrates into operational strategies, thereby offering substantial benefits to all parties involved.

Providing consumers with access to financial incentives

2 3

Enabling seamless data access for energy service providers

Introducing flex-ready devices to provide flexibility in the easiest way possible

SOLUTION 1: Providing consumers with access to financial incentives

In this part we took the perspective of different market parties and identified five enablers to give consumers access to financial incentives: ▶An upgraded market design; ▶Speeding up the rollout of smart meters; ▶Expanding consumer knowledge about energy; ▶Access to time-based energy price contracts; ▶Smart grid fees to generate additional value linked to flexibility.

The co-existence of these two features of the CCMD opens up a wide range of possibilities linked to the development of energy services, on and behind the head meter, that can rely on the real-time price to support the system at the right moments. Making use of this CCMD, Elia Group is currently working on three solutions that will give consumers access to financial incentives and allow flexibility to be maximally optimised across all time horizons. (See Figure 28).

> An upgraded market design Since 2020, Elia Group has been calling for an upgraded market design - the Consumer-Centric Market Design (CCMD)1, which addresses the challenges posed to the energy system by the rapidly increasing share occupied by renewables in the energy mix and the massive electrification of industrial and residential appliances.

Figure 28: Three solutions as part of the CCMD to give consumers access to financial incentives

LIMIT EXPOSURE

▶Evolution towards the real-time price: Elia Group is exploring and assessing the design of the imbalance price so that it is easily understood by consumers and/or their balancing responsible parties and so that it can facilitate the valorisation of flexible assets in accordance with realtime system needs. The real-time price should decrease the high volatility of the imbalance price, trigger right reactions in accordance with system needs and become a single ex ante indicator for the market.

The Multiple BRP/Supplier service gives consumers the opportunity to appoint different BRPs/suppliers behind the same head meter. In this way, a split between the site’s flexible and non-flexible assets is made possible. Moreover, for each asset, consumers can choose tailor-made financial optimisations as part of the solutions proposed by BRPs. This new scheme delivers two major benefits to consumers: on the one hand, site owners will be given many more opportunities to valorise their flexible and non-flexible assets; on the other hand, it contributes to a strong increase in the competition to provide energy services for consumers behind their head meter.

An example of how the Multiple BRP/Supplier service could be applied for one company is shown in Figure 29. The Multiple BRP/Supplier service will be available from 1 December 2023 for consumers connected to the transmission grid in Belgium. Several use-cases of Virtual Balancing Areas are, at the time of writing already operational in Germany. This solution is one of the key elements which will unlock the flexibility of consumer assets driven by financial incentives whilst limiting their exposure to risk. This should increase consumer appetite to become more active in the energy market.

Multiple BRP (TSO) / Supply Split (DSO) ▶Give possibility to split flexible and non-flexible load

The CCMD comprises two main features: ▶Exchange of Energy Blocks: This allows the decentralised exchange of energy, on and behind the head meter, to occur between a consumer and any other market party, allowing him to benefit from dedicated energy services for each of his appliances. This mechanism allows different schemes for flexible and non-flexible parts of consumer loads to be implemented.

Limit consumer exposure to risk: ‘Multiple BRP/Supplier’ 1

▶Increase competition for energy services behind the meter

Figure 29: Example of “multiple BRP” service applied at company A Non-flexible load

GIVE CONFIDENCE

Real-Time Price (RTP)

Production BRP 1 Responsible for the (non-flexible) baseload

▶Decrease high volatility of the imbalance price ▶Trigger right reaction in accordance with the system needs

Company A

▶Single and clear ex-ante indicator for the market

EMPOWER CUSTOMER

DiMax - Direct Access to Markets ▶Facilitate access to DA/ID power exchanges ▶Decrease barriers to become a BRP

BRP 3 Responsible for the valorisation of the production

Flexible load

BRP 2 Provides an optimisation on market prices (day-ahead, intraday, balancing) for your flexible assets

1 Source: Elia Group, Consumer-Centric Market Design (CCMD)

Giving confidence to consumers and their BRPs thanks to the “Real-Time Price” Today, Elia Group encourages BRPs to keep their portfolios balanced via the imbalance tariff, which reflects the marginal price of the balancing energy activated to rebalance the system. To support BRPs with their task, Elia Group provides them with transparent and close to real-time data. Furthermore, Belgium relies on a ‘reactive balancing model’, as part of which the imbalance price constitutes a financial incentive to BRPs to deviate from a balanced position in real time if this helps the system overall to re-balance itself. Building further on the reactive balancing model, Elia Group is committed to exploring and re-assessing the design of the imbalance price in order to ultimately evolve to the use of the real-time price.

Figure 30: Key objectives of the real-time price

In Belgium, discussions focusing on this evolution to a realtime price have been started with all market participants via the Consumer-Centric Market Design Working Group. More information about this group and their reflections will be available in the design note that Elia intends to publish at the end of 2023. In addition, Elia Group is dedicating its next hackathon, which will be held beginning of 2024, to challenges on related to the real-time price.

Currently, certain hurdles stand in the way of wholesale market participation, particularly for smaller and or new market parties. They struggle to directly access the wholesale market due to high costs stemming from financial and operational entry barriers. Being a BRP is a prerequisite for accessing power exchanges and being directly exposed to the imbalance price.

l na ig rs ea Cl

M An ar tic ke ip t R at ea ing ct io n

This single indicator, which comes in the form of the realtime price, must become ex ante information published upfront to incentivise BRPs to engage the correct volume of flexibility while ensuring an efficient and secure reaction for the system. Figure 30 shows the 3 key objectives of the real-time price.

Empowering customers: “DiMaX – Direct Access to Markets”

Ex-ante

Single indicator

Elia Group wants to move from the use of the imbalance price that can be perceived as a simple penalty to the use of a clear financial incentive to support the system. Moving to the real-time price allows BRPs to focus on this price as one single indicator to understand the state and needs of the system.

Efficient Reactions

Representative

In the long term, DiMaX aims to facilitate access to the day-ahead and intraday power exchanges and to ease of the path to becoming a BRP for new and/or small parties. In this way, DiMaX increases exposure to market price signals and allows a full economic optimisation across all time horizons (day-ahead, intraday and real-time balancing).

2 I f the maximum imbalance invoice relating to the previous 12 months exceeds this minimum value, the maximum imbalance invoice relating to the previous 12 months then becomes the minimum required bank guarantee

The key characteristics of DiMaX are as follows: ▶Review of financial collaterals: the current minimum financial guarantee that Elia requires from BRPs is €93,0002. This minimum amount is applied to BRPs for which the maximum daily average of electricity consumption or of sold volumes is below 50 MW. For smaller players, for which the average volumes sold or consumed are well below this level, the required minimum financial guarantee could form an unnecessary barrier. In addition to the above, BRPs must contend with current power exchange fee structures and collaterals, which were originally built to fit bigger portfolios. As part of DiMaX, Elia will investigate, along with the power exchanges, the possibility of lowering the financial barriers that might stand in the way of parties becoming a BRP and an exchange member by reviewing the current tariff structure. ▶Limit financial exposure and reduce the lead time for BRP imbalance settlement: To reduce the possible financial barriers to becoming a BRP, Elia is investigating ways to decrease the imbalance settlement lead time. By introducing a dynamic e-wallet that uses pre-payments and daily invoicing based on close to real-time data, DiMaX will enable faster imbalance settlement to occur for all BRPs. Ideally, through this dynamic e-wallet, BRPs will be able to have a clear overview of their financial balance both for BRP services as well as for trading. In this way, a single interface will be available for financial reporting.

> Speeding up the rollout of smart meters The rollout of smart meters constitutes a necessary condition in order to unlock and valorise residential flexibility. Thanks to the use of smart meters, consumers can access detailed information about their consumption curves. Even for consumers who do not own flexible assets, the application of a quarter-hourly metered consumption curve will allow them to see benefit from the full potential of energy savings they could make. First of all, consumers must be able to get a smart meter. Even though the adoption rate varies between the regions in Belgium, all DSOs have started the rollout. In Germany on the other hand, not all MPOs are already installing smart meters as they will only be obliged to do so from 2025 onwards, according to the GNDEW³. It is important for all MPOs, especially those that have not started with the rollout, to prepare themselves for a sharp rise in residential consumer demand for smart meters.

Efforts should be primarily focused on consumers who hold the greatest amount of flexibility potential: those who own an EV, home battery, solar panels and/or heat pump. Governments and regulators could provide guidance and regulation relating the right priorities for the rollout. Finally, misinformation about the use of smart meters is unfortunately still abundant. Governments and regulators can help creating more awareness around smart meters by demonstrating the benefits and opportunities of having one.

The associated actions Elia Group is calling for are: ▶[Action 1.2] Governments and regulators must set up awareness campaigns which demonstrate the benefits and opportunities linked to smart meters. A clear and coordinated approach is needed to fight misinformation about the area. ▶[Action 1.3] In both Belgium and Germany, DSOs and MPOs should facilitate the customer journey for accessing a smart meter as much as possible. This means they should make request procedures transparent and put the right priorities for the rollout. ▶[Action 1.4] In Germany, MPOs should prepare to roll out smart meters in as smooth a way as possible. A proactive approach is essential, since, starting in 2025, every consumer will be able to request and install a smart meter in their home.

Secondly, the rollout must be organised in an efficient way. Both in Germany and Belgium, consumers wanting to obtain a smart meter face a complex journey. Even though the smart meter installation is already free in Belgium, the procedure to request a smart meter should be simplified and more transparent. Moreover, the rollout should take into account the flexible potential of consumers and/or their willingness to make their consumption more flexible.

For more information, please see the public consultation that was launched relating to the DiMaX design note (Public Consultation on the Design Note Direct Market Access (DiMaX) (elia.be).

The associated action Elia Group is calling for is: ▶[Action 1.1] Elia Group is calling on all market participants to collaborate to further shape a market design that encourages the emergence of innovative business models and facilitates the integration of flexibility into the broader energy landscape.

3 B undesgesetzblatt Teil I - Gesetz zum Neustart der Digitalisierung der Energiewende - Bundesgesetzblatt

> Expanding consumer knowledge about energy It is crucial for consumers to gain more knowledge on their energy consumption habits; how green their consumption is, what the price of energy is, what type of contracts exist and what different options they can choose from. In the past, this was less necessary since energy was invoiced based on a fixed price and a consumed volume. In the future, since flexibility will become a means to keep energy costs under control, it will be important for consumers to better understand how the energy sector operates. To correctly evaluate and accept risks related to financial incentives and dynamic contracts, consumers need to understand the rationale behind price fluctuations. Besides this, consumers are also eager to better understand where their electricity comes from. Abundant green energy usually comes with low energy prices. Being able to know when green energy is being produced so that consumers can use it is definitely a relevant signal. The Energy Track & Trace project, which is being led on by Elia Group and two of its counterparts in Estonia (Elering) and Denmark (Energinet), provides an answer to this need. It is a tracking system which complements the Guarantees of Origin scheme, and allows consumers to verify whether the energy they are consuming originates from renewable sources or qualitative Combined Heat and Power (CHP) facilities (see box on the right side). Providing consumers with this knowledge in a transparent way will build more trust into the system and will also encourage consumers to sign up for different energy contracts.

An increasing number of companies have set specific targets for procuring ‘24/7 carbon-free energy’ (24/7 CFE), meaning that the electricity they consume is matched by clean generation during every hour of the year. Since a large share of RES are being added to the system, the time at which green electricity is available is becoming increasingly relevant for these companies. As part of this journey, companies need a signal which will tell them when to consume electricity, as well as a trusted service to track and register the origin of the electricity they use. On the one hand, signals can be provided to them to indicate when green energy is abundant and should be consumed. Elia Group has explored the provision of signals that show the carbon intensity of the electricity system. Through our CO2 intensity product, consumers or the ESP acting for consumers, can adapt their consumption behaviour and reduce their carbon footprint. This will support the system since - when there is an abundance of green energy available across the grid - it will probably be in need of additional flexibility to integrate this into the system. On the other hand, companies need a reliable carbon accounting instrument to trace back the origin of the energy they consume. This would allow them to measure the carbon intensity of the energy they consume and will support them to reduce this as they seek to use 24/7 CFE, and will enable them to disclose valid statements about the origin and carbon content of their consumed energy to their stakeholders. This instrument needs to be very granular: it should be capable of tracking energy on an hourly basis. The Energy Track & Trace project (ETT) is focused on the creation of such a granular tracking instrument.

ETT aims to provide a highly accurate and trustworthy electricity tracking system for consumers. It creates digital solutions that allow grid users to track renewable energy from its source to its consumption across borders. Secondly, ETT aims to enable fully carbon-neutral processes and products and supports consumers on their decarbonisation journeys by providing a transparent and widely accepted system. To make this happen, ETT uses granular certificates (GCs) which are standardised in line with the EnergyTag industry standard. GCs are digital documents that carry hourly or quarter-hourly timestamps and hold information about energy volumes that are produced and consumed. To avoid any form of double counting, GCs are aligned with the existing European Guarantees of Origin (GO) scheme. The introduction of granular certificates serves different purposes. Firstly, they are a disclosure tool which creates more transparency and accuracy in energy tracking, so increasing consumer trust and satisfaction, allowing them to apprehend the intermittent aspect of renewable generation and get involved in the energy transition. Secondly, granular certification affects the behaviour of consumers and thus affects the energy system as a whole.

Furthermore households, industry, and small and medium enterprises (SMEs) should be educated about their flexibility potential so they can better evaluate their energy investment decisions. Providing tailor-made recommendations to consumers about flexibility opportunities and raising awareness about the value of flexibility are key. For residential end-consumers, third parties are likely to take on this role, while industrial companies and SMEs are more likely to design their own business cases. Understanding and evaluating the business case for the provision of flexibility is often challenging. Hence, independent parties could step in to provide guidance and information about the flexibility options which are available to them. To support and guide industry and SMEs to gain more knowledge about their flexibility potential, Elia Group has set up a programme through which consumers are guided through the energy sector. Monthly information sessions which outline the way to monetise the flexibility of power assets are held. Participants can ask questions and discuss different cases with experts from the Group. Elia Group is also planning to roll out multi-day training sessions about flexibility in 2024.

The associated actions Elia Group is calling for are: ▶[Action 1.5] Empower end consumers to take informed decisions by providing them with information and knowledge about their energy consumption, energy prices and how energy markets are working. ▶[Action 1.6] Independent neutral parties (such as DSOs, TSOs, governmental agencies and consumer, business and industry associations) should provide guidance and information tools for consumers so that they can evaluate their investment decisions and build a flexibility business case.

Figure 31: the Watts.happening landing page

Watts Happening

Simulator

Along with VOKA, in 2023, Elia Group set up several learning networks which focus on the energy transition. The networks provide a peer-to-peer learning experience for participants, through which companies can discuss different topics related to the energy system and their energy use, learn from experts and visit front-running companies. In addition to these information sessions, Elia Group has been building it Watts.Happening tool. In addition to providing users with concrete information about the different flexibility products available to them, this tool simulates the potential financial gains they could make when providing flexibility for the grid. The project’s website, which is aimed at all types of grid users which own flexible assets in Belgium, is www.wattshappening.be.

Flexibility

Documentation

Contact

Find out your flexibility potential by following the steps bellow:

Step 1

Step 2

Step 3

Step 4

Select an asset and add your data

Run the simulation

Find out what the best fit is for your company

Find out what the next steps are to get started

> Access to time-based energy price contracts With a smart meter in place and the right knowledge to hand, consumers will be ready to access time-based energy price contracts that empower them to optimise their energy consumption. There is an important role for energy suppliers to play here. They should propose a wide set of contract types to consumers to enable their flexible behaviour to be valorised and give them full control of their energy consumption and costs. In addition, offering time-based contracts to consumers will confer them a competitive advantage in the market. With the growing need to keep energy bills under control, suppliers that are forward thinking and adaptable in their service offerings are more likely to attract and retain customers. There are multiple types of time-based energy contracts that can be provided: dynamic contracts, time-of-use contracts and fixed rate contracts with a reduction fee based on the value of the unlocked flexibility (see Figure 31).

> Smart grid fees to generate additional value linked to flexibility

By the end of 2023, when the Multiple BRP/supplier service is available for Elia grid users in Belgium, consumers could have different contracts in place for different assets. This differentiation will minimise consumer exposure to risk while harnessing the flexibility of their available assets and optimising its complete financial value. For example: ▶Consumers could sign fully dynamic contracts for their flexible assets, including EVs, heat pumps, solar panels, and batteries. These assets are steerable, and with the help of their service provider, consumers would get the most out of the volatility of the market, charging, heating and discharging their assets at optimal moments without losing out on comfort.

Figure 32: Different type of contracts that valorise flexibility Risk for the consumer

Dynamic contract Price following day-ahead price Dynamic contract with price cap Price following day-ahead price with a price cap to protect the customer from extremely high energy prices

▶Consumers could sign fixed time-of-use contracts for their assets that can be scheduled to work at particular times, such as dishwashers or washing machines. This would allow consumers to set washing cycles to occur at times when prices are lower. ▶Consumers could have fixed contracts in place for their Inflexible assets, like cooking stoves or lights. This means that these will not be affected by daily price fluctuations. Next to the type of contract, consumer awareness can only be raised through detailed, understandable and close to real-time energy invoices. Consumers will be able to reflect on their energy bills and consumption behaviour if they can access detailed and relevant information about their consumption curves. This information should clearly indicate the volume and related price of the electricity they have used during the concerned periods: on an hourly, daily and monthly basis. As an example in Belgium, since 1 April 2022, monthly billing has been obligatory in Flanders. Through these monthly bills, consumers pay for their actual consumption of electricity (based on smart meter data) during the previous month, instead of paying monthly advance payments based on (imprecise) predictions of their behaviour. Having this information to hand means they can quickly adjust their habits by reducing their electricity consumption when energy costs are higher than expected. This means they can avoid unpredictably high energy bills at the end of the year.

Partly fixed, partly dynamic Price consists of a fixed and dynamic part Dynamic time-of-use Flat rate variable price, where the price depends on the wholesale market, but the price is flat over predefined time slots

The associated actions Elia Group is calling for are: ▶[Action 1.7] Suppliers should offer and actively promote a variety of electricity contracts that promote the value of flexibility and meet consumer risk appetites.

Flat rate time-of-use Flat rate fixed price, depending on the time of the day, week or season

▶[Action 1.8] Suppliers should provide transparent, detailed, and close to real-time energy invoices.

Fixed rate with reduction fee Monthly or annually fixed energy contract with a reduction fee when the supplier has access to steering the flexible assets

As a fifth enabler, smart grid fees need to evolve so that additional value linked to flexibility can be generated. The grid tariff structures in Belgium and Germany do not currently encourage the provision of flexibility. Elia Group is calling on all relevant stakeholders to investigate together the impact of smart grid fees on consumer behaviour, including the potential risks and gains. Regardless of their final design, it is important that grid fees do not provide signals which are in contradiction with market price signals in case the grid is not congested.

The associated actions Elia Group is calling for are: ▶[Action 1.9] System operators and regulators should commonly evaluate and implement dynamic grid tariffs to generate additional value linked to flexibility. ▶[Action 1.10] Regulations which actively oppose flexibility incentives which are aimed at industrial players should be removed (cfr. §19 StromNEV, 7,000 hours rule) (see barrier Page 78).

In Germany, at the time of writing, a new regulation (Paragraph 14a of the German Energy Industry Economics Act (EnWG 14a)5), is being discussed and is due to come into force on 1 January 2024. The regulation aims to find a good balance between connecting more steerable devices to the grid and lowering the amount of congestions across the power grid. As more EVs, heat pumps and batteries are connected to the low-voltage grid, the demand for electricity will increase. This could cause overloads across the low-voltage grid, especially when there is a high or fluctuating infeed of renewables. EnWG 14a allows the installation of more controllable devices, by providing the DSOs with a tool to avoid possible overloads in the distribution grid. In line with the act, DSOs are allowed to conclude agreements with suppliers and end consumers to, as a last resort, reduce the consumption of controllable devices to relieve the load across the grid when needed. It is worth mentioning that, in return, DSOs: ▶have to ensure a minimum capacity of 4.2 kW at all times for each grid connection and asset;

▶are not permitted to disconnect an asset or reduce its use to 0 kW; ▶can only use this option for local congestions across their areas and not for other grid areas or voltage levels that may be experiencing congestions; ▶are obliged to install a smart meter at the end user connection point; ▶have to offer reduced grid fees - for example, time-varying grid fees that make electricity consumption more favorable during periods when there is a low amount of grid load, or flat-rate grid fee reductions and percentage reductions to energy prices for separate metering points; ▶have to accept new grid connections and new controllable devices without any delay or refusal based on the pretext of insufficient grid capacity or for other operational, economical or technical reasons. §14a EnWG helps DSOs to utilise flexibility located across their grids while continuing to keep the lights on. However, the use of economic incentives and grid access agreements should take precedence over direct control of individual devices to avoid congestions.

Value for the consumer

5 BNetzA (2023), ‘§ 14a EnWG’, https://www.bundesnetzagentur.de/DE/ Beschlusskammern/BK08/BK8_06_Netzentgelte/68_%C2%A7%2014a%20EnWG/ BK8_14a%20EnWG.html

Providing consumers with access to financial incentives to unlock flexibility will require many actions to be taken by different players:

BRPS

SUPPLIERS

DSOS/MPOs

TSOs

REGULATORS

GOVERNMENTS

EU POLICY MAKERS

MANUFACTURERS

2 ASSOCIATIONS

[1.1] Shape together a Consumer-Centric market design [1.7] Offer and actively [1.3] Increase promote time-based efficiency of the electricity contracts smart meter rollout

[1.2] Set up awareness campaigns for smart meters

In Germany, all [1.8] Provide improved [1.4] MPOs prepare smart energy invoices meter rollout [1.5] Empower and educate end-consumers [1.6] Provide guidance and information tools to build a business case based on flexibility [1.9] Commonly evaluate and implement dynamic grid tariffs [1.10] Remove regulation opposing flexibility incentives

[1.6]

SOLUTION 2: Enabling seamless data access for ESPs

A coordinated approach between top-down regulation and bottom-up initiatives from system operators and manufacturers is needed to facilitate (near-real-time) data exchange. ESPs can then easily access data so that they can flourish. National and EU regulations should facilitate access to data and shape related governance structures. To support the ambitions of the European Green Deal and Digital Decade, several European policies and laws have been proposed and adopted in recent years. Many of these recognise the need to empower consumers by enabling data to be easily accessed and shared, not only at the head (smart) meter level but also behind the meter, which is fully aligned with Elia Group’s consumer-centric vision. In this regard, current EU electricity legislation such as the Electricity Directive and the recent Implementing Act on data access and interoperability are designed to ensure data access at the head meter. Proposed and adopted EU laws specifically tackle data access at the asset level (such as the recast Renewable Energy Directive for batteries and EVs). Finally, data governance is also becoming a topic of relevance. The Data Governance Act will support the set-up and development of common European data spaces across different sectors and the EU Action Plan on the Digitalisation of the Energy System outlines ambitions for a future European Energy Data Space (for a description of these laws, please see Annexe B). The main challenge will be to ensure their coherent and swift implementation at national level. There is an urgent need for Member States to start coordinating the easy access to and sharing of data at the smart meter level. Additionally, there is a need for Member States to start coordinating the access to and sharing of energy-related data from different types of behind-the-meter devices such as batteries, EVs, charging points, etc. It is important to take the services that these could offer - including flexibility services, smart charging services, etc - into account.

System operators should pave the way to a robust, secure and future-proof data ecosystem. As the volume of decentralised flexibility rises, the volume of data to be processed will massively increase and data will become increasingly granular, moving closer to real-time. Today, system operators in Belgium are already data managers and are working together to route and store data in the Real-Time Communication Platform and Flexhub respectively. However, data will also need to be integrated from other sectors (e.g. the mobility or building sectors) as well. We will therefore need a harmonised and interoperable approach to data access to facilitate smooth data flows and market communication processes between different market parties from across the energy sector (and outside of it). A future-proof data ecosystem which respects the roles and responsibilities of different market parties must be created to ensure new use cases can emerge. This ecosystem should be based on the following key features: ▶secure infrastructure which can be used to exchange data, as a first step towards developing a common and open governance framework (an Open Energy Framework which would be similar to the Open Banking Framework6); ▶interoperability and seamless data exchange between different actors, sectors and member states through standardisation; ▶data access, discovery and use in a non-discriminatory, fair and transparent way, via recognised channels; ▶creating trust by respecting European rules related to data protection and privacy, as well as enforcing the authentication of users, the authorisation of use and permission for data access.

6 Open finance framework – enabling data sharing and third party access in the financial sector (europa.eu) 7 This study refers to the barrier on the “Strict Regulation” which is slowing down the provision of flexibility (see chapter on the barriers to unlocking flexibility)

The associated actions Elia Group is calling for are: ▶[Action 2.1] Member States must implement existing EU regulations concerning data access, sharing and governance, at both smart meter and behind-themeter levels. ▶[Action 2.2] System operators must collaborate to create secure data infrastructure. To ensure that data will be shared and to promote communication among diverse market participants and across different sectors, having a standardised approach to data access is crucial. ▶[Action 2.3] Regulation related to data requirements must be reviewed in light of flexibility use cases. Derogations or updates of the MID (EU) and Eichrecht (Germany) legislation regarding embedded meters must be considered7. (see barrier Page 68)

In conclusion, creating a secure data exchange ecosystem with well-defined access rights that supports near realtime data exchange is crucial to allow commercial parties to deliver services to consumers and to enable system operators to efficiently manage the grid.

Enabling seamless data access for EPSs will require actions to be taken by different players:

ELIA GROUP’S CONSUMERCENTRIC DATA SERVICES

BRPS

SUPPLIERS

DSOS/MPOs

TSOs

REGULATORS

GOVERNMENTS

EU POLICY MAKERS

MANUFACTURERS

ASSOCIATIONS

[1.1] Shape together a Consumer-Centric market design

Elia Group has taken on the challenge of improving the way it designs, builds and operates its services for consumers which are directly and indirectly connected to its grid. Its overall ambition is to make these consumers more active in the energy system and ultimately more flexible.

[1.7] Offer and actively [1.3] Increase promote time-based efficiency of the electricity contracts smart meter rollout

[1.2] Set up awareness campaigns for smart meters

In Germany, all [1.8] Provide improved [1.4] MPOs prepare smart energy invoices meter rollout

That is why, Elia Group has started to digitalise its portfolio of data services both in Belgium and Germany. On the Belgian side, based on customer feedback, the focus has been on providing the Group’s direct customers with improved ways to access their data. Through the Group’s new client portal, EPIC, direct customers can easily access their metering data, contracts, etc. and are able to update information on their own. In the 50Hertz operating area, better services are being developed for MPOs and DSOs specifically working in that region. Other data services will be added in the future, such as third party data access management for data which is owned or held by Elia Transmission Belgium and 50Hertz.

[1.5] Empower and educate end-consumers [1.6] Provide guidance and information tools to build a business case based on flexibility [1.9] Commonly evaluate and implement dynamic grid tariffs [1.10] Remove regulation opposing flexibility incentives

[2.1] Implement existing EU regulations concerning data access, sharing and management

[2.2] Build a common European energy data space to create a single market for energy data and support the energy transition [2.3] Derogation or update of metering requirement legislation for embedded meters

Other channels will complement the Group’s data services offer. For example, the traXes portal is being developed in close collaboration with specific customers to give them access to backend resources through APIs. This would mean that, via the necessary permissions and authorisations, customers could start seamlessly interacting with Elia Group’s backend services. Going further, the platform infrastructure could support use cases across different voltage levels, across different regions and behindthe-meter.

[1.6]

S OLUTION 3: Introducing flex-ready devices to provide flexibility in the easiest way possible

In contrast with explicit balancing services, there are no specific technology requirements for assets to be driven by market prices. However, the assets will always have to meet a minimum number of requirements in order to be able to provide flexibility (e.g. ability to change their load based on external signals, have communication interfaces that allow third party access, compatibility with other devices, etc.). Providing flexibility should be a plug-and-play solution. The energy sector needs an European-wide definition of ‘flex-readiness’ to ensure that future-proof devices are deployed. There need to be official requirements regarding what it means for an asset to be smart and steerable. Elia Group supports work that is focused on standardisation and is ready to shape a ‘flex-ready’ label with manufacturers and other system operators. The goal is to come up with a label that could be applied to every asset that complies with certain rules, is able to react to external pricing or steering signals and can change its load or production. In other words, if an asset meets this ‘flex-ready’ criteria, it can be used to provide flexibility. Flexibility requirements are important for the provision of guidelines for manufacturers as they design their products, for consumers as they take their investment decisions and for market parties as they onboard flexible assets. Elia Group believes there are three main requirements that must be fulfilled for an asset to be considered ‘flex-ready’: ▶The ability to modulate: based on an external signal, devices must be able to change their power consumption. Such devices should be able to receive and respond to commands (for example: “Reduce load to 4 kW”). These external signals could either be price signals or steering signals from a central energy management system that manages all the appliances which are connected to them.

▶A communication interface: ‘flex-ready’ devices must have communication interfaces which enable them to interact with other parties (for example, supplier systems or home energy management systems). ▶Metering or (embedded) measurement devices: the device’s electricity consumption must be metered or measured separately from that of other assets at least on a 15-minute basis to be able to track how much electricity has been consumed at different points in time. The resolution and the timing of the data depends on the flexibility service the device is used for. In addition to the requirements that individual assets should meet, interoperability is extremely important for unlocking flexibility at the residential level. Interoperability allows different systems, devices, or components to work seamlessly together. There are different approaches to interoperability. Devices can be designed in such a way that their communication interfaces meet a certain standard to ensure that they can communicate seamlessly with each other. EEBus is an example of this approach8. Another approach is the S2 communication standard that easily coordinates multiple flexible assets while leveraging existing protocols (see box on the right side). Regardless of the approach, the manufacturers of ‘flex-ready’ devices play an important role in ensuring interoperability. It is up to them to develop standards so that assets can be used for the provision of flexibility and ensure compliancy between devices. While work on standardisation is mainly being led by manufacturers themselves, the European Commission has a role to play in coordinating the different asset markets to avoid manufacturers creating closed ecosystems with protocols and standards that are incompatible. The European Commission should facilitate collaboration between manufacturers, support them to open up their protocols and standards and promote common communication standards which are future-proof and interoperable.

S2 COMMUNICATION STANDARD The Environmental Coalition on Standards (ECOS) is an international NGO that collaborates with CEN and CENELEC to develop and advocate for standards that can support the implementation of environmental legislation. They identify interoperability as one of the key features to successfully unlock residential flexibility and worked with CENELEC to develop an interoperable standard (EN50491-2-12), called S2, that leverages the existing protocols to enable flexibility services. S2 enables smart assets and a central energy manager (such as a home energy management system, an aggregator or an ESP) to communicate with each other. The asset only communicates the device’s energy flexibility information of the device, without directly connecting to the central system. The central system decides how to use the asset’s flexibility by sending instructions to the device using the S2 communication protocol. At all times, consumer preferences can override these flexibility instructions. Consumer needs are therefore always guaranteed. The S2 standard is technology neutral and co-exists with existing standards and protects consumers from vendor lock-ins. Hence, it can be used with all smart appliances as well as larger assets which flexibility it most likely to be harnessed from such as heat pumps, EVs, batteries and solar inverters. As the scope of this system is restricted to energy flexibility, it is easy to implement and maintain, and new assets can be easily integrated into it from different manufacturers. The S2 standard is therefore aiming to overcome interoperability issues by providing a futureproof solution.

The associated actions Elia Group is advocating for are: ▶[Action 3.1] EU policymakers should create a Europeanwide ‘flex-ready’ label, alongside the requirements which must be fulfilled to comply with this label. Requirements should focus on an asset’s ability to modulate, an asset’s metering and its communication interface. ▶[Action 3.2] While defining standards for assets, manufacturers must take into account the requirements for steerability that will ease provision of flexibility and energy services, by closely collaborating with system operators. EU policymakers should promote and facilitate collaboration in the development of these standards. ▶[Action 3.3] In Germany, clarity on (the future evolutions of) the SMGW steering obligations need to be provided. (See barriers Page 71)

In conclusion, introducing flexready devices means ensuring that appliances are built in such a way that they are technically ready to be used in a flexible manner. Electrical devices should be designed to be compatible with other devices that are built by different companies, allowing for data to be exchanged very easily. These interoperable assets should be remotely steerable and should be able to interact with the electricity system, allowing their owners (or an energy service provider appointed by them) to use their appliances in a flexible manner.

8 EEBus (2023), ‘Empowering the digitalisation of Energy transition’, https://www.eebus.org/

Introducing flex-ready devices to provide flexibility in the easiest way possible will require actions to be taken by different players:

BRPS

SUPPLIERS

DSOS/MPOs

TSOs

REGULATORS

GOVERNMENTS

EU POLICY MAKERS

MANUFACTURERS

ASSOCIATIONS

[1.1] Shape together a Consumer-Centric market design [1.7] Offer and actively [1.3] Increase promote time-based efficiency of the electricity contracts smart meter rollout

[1.2] Set up awareness campaigns for smart meters

[1.6]

2.1] Implement existing EU regulations concerning data access, sharing and management

[3.1] Create a European-wide “flex-readiness” label

[3.2] Develop standards incorporating provision of flexibility

[3.2] Develop standards incorporating provision of flexibility [3.3] In Germany, clarity on the SMGW steering obligations

SUCCESS STORIES

SUCCESS STORY #1

What can we learn from other countries? Examples and best practice from other countries are extremely valuable. This is why it is important to take a deeper look at how adequate regulatory frameworks can facilitate the flexibility value chain and overcome barriers that are still present in Belgium and Germany.

This chapter explores what is already happening today in the field of flexibility. Interesting examples from other countries, energy service providers that are putting flexibility to work despite the barriers in place, and companies that are integrating flexibility provision into their business roadmaps are all highlighted below. Each example serves as an input for the solutions proposed in this study and is tagged with its corresponding solution category: financial incentives; seamless data access; and flex-ready devices.

ITALY FINANCIAL INCENTIVES July 2010, time-of-use contracts were introduced by the Italian Regulatory Authority (ARERA) as the default contract for residential end users. Their aim is to implicitly encourage consumers to use their energy-intensive assets during off-peak periods when electricity is less expensive. These contracts are relatively easy to understand and are not very risky for end consumers, but still encourage them to shift their consumption in time. Currently, 20 million households have a ToU contract. Italian ToU contracts involve three time slots (F1, F2 and F3) which are set by ARERA and have a flat price rate. Suppliers offering energy contracts set the prices for each predefined time slot. ▶The first time slot (F1) covers peak hours which occur during the working week from 8:00 to 19:00, excluding national holidays. ▶Slots F2 and F3 cover all remaining hours; in other words, off-peak hours when electricity is cheaper. The most common tariff, called ‘bi-oraria’ charges the same price for F2 and F3. □ The second time slot (F2) covers Monday to Friday during the hours of 7:00 to 8:00 and 19:00 to 23:00 and Saturday from 7:00 to 23:00, excluding national holidays. □ The third time slot (F3) covers Monday to Saturday from midnight to 7:00 and from 23:00 to midnight, and all day on Sunday and public holidays. End consumers receive a breakdown of their consumption within each time slot as part of their electricity bills. Studies have shown that these contracts have a limited impact on load curves, as the price difference between peak and off-peak hours is currently very low. This is mainly due to grouping of hours into each slot that do not reflect the market price evolution.

Because of this, the price of off-peak hours is sometimes even higher than the price of peak hours. ARERA has proposed modifications to the current ToU tariff structure to make it more efficient. In line with this, the strength of the price signal would be increased, potentially via a new ‘critical’ time period that would represent a huge increase in electricity prices for short periods of time. Even though the price signal could be improved, Italy is a good example of how consumers can take a more active role in shaping their energy consumption and costs.

Key takeaways ▶Price variations and peaks must be high enough to trigger behavioural change. ▶In areas where ToU tariff structures are applied, time slots must be carefully designed so that they do not dampen high price peaks.

Figure 31: Predefined time slots by ARERA F1, F2, F3 time slots 7:00 8:00 Monday until Friday

19:00

7:00

Saturday

Sunday and national holidays

23:00

F3 23:00

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PORTUGAL FINANCIAL INCENTIVES

NORWAY FINANCIAL INCENTIVES SEAMLESS DATA ACCESS

EUROPEAN COUNTRIES SEAMLESS DATA ACCESS

Portugal’s market design enables EV charging service providers to incorporate time-varying elements into their pricing strategies. This encourages off-peak charging to occur at public and private stations, allowing EV drivers to save money by charging their vehicles during less costly periods.

Norway is often viewed as a front-runner in terms of decentralised flexibility. The country seems to have already tackled most of the barriers addressed in this report.

This is made possible through a central operating platform, which is managed by the state-owned company Mobi.E. This platform oversees all transactions and displays them in real-time. EV drivers pay for the electricity they charge their car with in line with their contract with their chosen e-mobility service provider, regardless of the operator of the public charging station. The former is responsible for energy procurement, pays the charge point operator for the use of the charging station and pays a fee for grid usage. This concept, known as energy roaming, was introduced in Portugal as early as 2010 and has been instrumental in promoting the use of electric vehicles in the country. Energy roaming makes it easy to introduce smart charging at public and private charging points, but there needs to be clear regulation in place to make the business case attractive for charging point operators. In Germany, a similar approach exists: virtual balancing areas. The main difference between the two approaches is that several virtual balancing areas are permitted in Germany, whilst there is just one state-owned platform in Portugal.

Key takeaways ▶A state-owned platform which displays and, possibly, acts on all transactions in real time can drive flexibility. ▶The platform in question must share master data to make it easy for ESPs to access this.

a) The Norwegian retail market is competitive: over 140 suppliers were licensed in 2021 and 75% of households have an electricity contract tied to hourly day-ahead prices in 2023. b) Retail data communication is in place: the rollout of smart meters carried out by DSOs up until 2019 carried a 100% success rate, and there is a data platform in place which is managed by Statnett, the Norwegian TSO, allowing data exchange between SOs, suppliers and ESPs. c) Consumers are engaged and responsive: consumer assets are highly electrified mainly for space heating and EV charging. Suppliers and third-party actors offer a range of smart demand management equipment to end consumers, including cell phone apps and hardware that allows real-time demand monitoring to occur. The Norwegian power system is dominated by hydropower, and hydropower plants with reservoirs, along with power-intensive industrial players, are the most prominent flexibility resources connected to the transmission grid. However, the need for flexibility from other resources is increasing in terms of volume, time frames (response time, duration of activation periods – seconds versus hours or weeks), and geographical distribution. Due to the larger share of solar and wind power in the energy mix, Norway will either have to store more energy using batteries or hydrogen (for example), or they will need to encourage a shift towards consumption following production.

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Smart demand management is key for the latter; this begins with consumers having access to price information as well as automatic systems which make their consumption flexible without any negative impact on their levels of comfort and/or without any manual effort from consumers.

Some countries have been developing their own data hubs to facilitate market processes between different parties. Depending on the decision taken by national regulators, these hubs are owned by TSOs, DSOs or in a joint ownership. Figure 32 includes some examples of this.

Statnett see the potential for distributed flexibility resources to participate in balancing markets increasing as household demand management systems get smarter (e.g. as remote control systems allow price-sensitive charging of EVs to occur). However, low voltage flexibility is barely present in balancing markets today, and there are still barriers to overcome before this flexibility can be used at scale. This is mainly due to the challenges of developing technologies and business models that are compliant with balancing market requirements (which were originally developed for hydropower generation). Statnett is working to make it easier for consumers to participate in and see the profitability in balancing markets. Their goal is to ease the use of flexibility across all grid voltage levels.

Key takeaways

Key takeaways ▶A competitive retail market and transparent information is key for consumer engagement. ▶The participation of consumers in implicit flexibility is an important step, and can serve as a gateway for them participating in balancing markets.

▶Collaboration between system operators is essential to ensure smooth data access. □ Centralising the data hub functionality ensures progress happens evenly across all grid zones and voltage levels. □ An agreed process for sector-wide governance is a necessary prerequisite for avoiding duplication of effort and create clarity. ▶Synergies need to be found between regulated and non-regulated businesses to create data hubs, benefitting actors from across the whole energy system. Electralink provides additional services (on a commercial basis) such as tools which new energy suppliers can use to build their digital customer interface. Figure 32: Ownership of data hubs in european countries

Ownership

Estfeed (Estonia)

Electralink (GB)

Elhub (Norway)

MFFBAS (Netherlands)

TSO

DSOs

TSO

TSO and DSOs

Live since

2013

1995

2019

2015

Governance and decision

TSO mandated by law

Electralink, private company owned by DNOs, regulated by OFGEM

Regulator NVE is in charge of the Elhub project at a superior level; NVE makes all binding decisions regarding Elhub for Statnett, DSOs, suppliers and third-party service providers. TSO, Statnett is responsible for operational implementation.

Twin bodies BAS (a company owned by the TSO and DSOs) and MFF (an association of companies in the energy sector) provide sector-wide forum for decisions and supervision

Data stored

metering data (production, consumption) and meter data (incl. contract data), data from external sources eg. weather, market price

metering data (production, consumption) and meter data (incl. contract data), supplier data, balancing and settlement data

metering data (production, consumption) and meter data (incl. contract data)

metering data (production, consumption) and meter data (incl. contract data), supplier data, balancing and settlement data

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THE NETHERLANDS FLEX-READY DEVICES

SPAIN FINANCIAL INCENTIVES SEAMLESS DATA ACCESS FLEX-READY DEVICES

In the Netherlands, transmission and distribution system operators are collaborating to enable information exchange and data flows between OEMs, suppliers, CPOs, ESPs, DSOs and TSOs. It was in this vein that ElaadNL was formed. The latter is a knowledge and innovation centre which focuses on the smart and sustainable charging of EVs. It’s a joint initiative by Dutch TSO and DSOs. Increasing electrification, along with a higher influx of renewable production, will increase peak consumption levels across the grid. ElaadNL has demonstrated that in a residential neighbourhood, natural EV charging (without any nudges towards system-oriented operation) can become problematic for the grid’s operation. Continuing the electrification, without tapping into the intrinsic flexibility potential of EVs (and other flexible assets) is simply not a possible option. System operators are responsible for maintaining the balance of their grids, in line with ensuring the reliability, affordability and sustainability of the electricity they transport to consumers. To achieve this, smart charging, adapting the charging behaviour of EVs to an external signal, needs to be customer friendly and affordable. Smart charging should, on the whole, be driven by the free choice of consumers, which means that the right signals need to be available to them. System operators in the Netherlands have 3 instruments at their disposal to stimulate smart charging: 1. Network tariffs;

operational limits of the system being reached, congestion management is then activated. The system operator actively calls for market parties to adapt their load across the grid, to bring the grid back within the ‘safe zone’. Here, too, smart charging allows these market parties to adjust their load. If the situation across the grid remains critical after the use of these 2 instruments, grid shield can be activated as a last resort. This consists of a direct intervention to protect the grid, limiting the consumption of specific assets. This is a last resort measure and is only to be used in emergency situations. The project ‘Slim Laden voor Iedereen’ (Smart charging for everyone) aims to increase the share of smart charging cycles from approximately 5% in 2021 to a target of 60% by 2025 in the Netherlands. To achieve this ambitious target, they explore the creation of an attractive offer for consumers - a nation-wide rollout of grid-conscious charging by encouraging users to adopt smart charging. This goes hand in hand with the ‘Nationale Agenda Laadinfrastructuur’ (National Agenda for Charging Infrastructure), and is a collaboration between system operators (through ElaadNL), national and local governments and research centers, aiming at nation-wide availability of safe and smart charging. Cost and climate are considered to be the most important push factors for smart charging, and consumer willingness for smart charging is high. As long as ease of use and peace of mind are guaranteed, therefore, smart charging should become the norm.

2. Redispatching;

Key takeaways

3. Grid shield: mandatory congestion management.

▶ Collaboration between system operators is crucial.

The first instrument aims to ‘guide’ the behaviour of consumers by sending them the right signal. Smart charging plays an important role in adjusting the load, so avoiding the need for further intervention. If guiding consumer behaviour is insufficient and does not avoid the

▶ Smart charging needs to be customer friendly and advantageous for consumers.

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In 2014, a regulated dynamic energy price contract was introduced in Spain as the standard supply contract for residential consumers. The success of dynamic pricing for electricity in Spain, specifically the Voluntary Price for Small Consumers (PVPC), can be attributed to several key factors. Spain established a clear regulatory framework for smart metering in 2007, mandating remote management and time-of-use capabilities. This early regulatory clarity provided a solid foundation for what was to come next. Spain’s proactive approach, including preparations and partnerships which were kicked off in 2010, ensured that the necessary infrastructure and technology were in place for the rollout of smart meters. The first smart meter rollout, which began in 2010 and reached almost 100% of affected consumers by 2018, allowed the precise and near real-time tracking of energy consumption to occur. Choosing the DLMS/COSEM protocol for communication enhanced interoperability between assets developed by different industry players, facilitating the seamless integration of assets into the grid. The creation of the PRIME Alliance in 2009 promoted multivendor interoperability and compatibility in line with set standards, fostering collaboration among key industry stakeholders. Introducing the PVPC in 2014 made dynamic pricing accessible for a broad range of consumers and was aligned with broader efforts to encourage energy flexibility.

Key takeaways ▶Price incentives for consumers via dynamic pricing can be successfully attained by implementing smart metering, standardising communication protocols, fostering collaboration, and providing consumer accessibility.

Spain’s success stems from early regulatory changes, the adoption of proactive measures, the timely deployment of smart meters, the standardisation of communication protocols, collaboration across the energy sector, and consumer accessibility. Together, these have led to a more efficient and flexible energy market.

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Flexibility is a win for everyone, which is why many companies have already made it work Despite the barriers that still exist in Belgium and Germany, many pioneering companies are trying to unlock and valorise flexibility. Innovative companies which are active in Belgium and/or Germany are listed below. These have found workarounds and innovative solutions to provide financial incentives to consumers, access and utilise consumer data and/or integrate flexible devices into the system.

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OCTOPUS ENERGY FINANCIAL INCENTIVES

ANBW FINANCIAL INCENTIVES

DECARBON1ZE FINANCIAL INCENTIVES

Among the different innovative suppliers that are starting to offer ToU tariffs, the global energy supplier Octopus Energy stands out. Its headquarters are in the UK. Elia Group signed an agreement with them in 2021, agreeing to collaborate on the development of consumer-centric energy flexibility services. The smart meter penetration rate in the UK is 57% . The country has a very competitive retail market: in 2023, 68 registered suppliers were in operation. Octopus offers a variety of innovative offers or beta tariffs to its customers, in line with their asset(s), risk appetite (ie. if they would prefer having a dynamic tariff or a flat tariff) and the ability to manage their asset(s) remotely. Some consumers are very engaged in the energy sector, and are keen to directly manage their interactions with electricity markets. They wish to receive a highly dynamic price for their electricity, and they want to use electricity when it is cheaper (when it is abundant) and “green”. More broadly, at the system level, dynamic price signals can also nudge consumers towards avoiding using electricity when it is more expensive, scarce and “dirty”. An ‘Agile’ tariff is available to these customers; this provides day-ahead prices for 48 half-hourly prices. The tariff is based on the day-ahead wholesale market price and grid fees. In addition, it provides consumers with a level of protection against significant volatility, as it is capped at 100 p/kWh. To enable consumers to learn from their consumption patterns, Octopus provides a billing dashboard which displays the household load and unit rate for each of the 48 periods of a day. Another of Octopus’ tariffs, the ‘Cozy Octopus rate’, is a variable static ToU tariff (it is an electricity tariff with peak, off-peak and shoulder prices depending on the time of day) for heat pump owners. It is made up of:

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▶a day rate, set at the standard variable determined by Octopus; ▶two periods of cheap rates between 04:00 - 07:00 and 13:00 - 16:00 every day, which are 40% cheaper than the day rate; ▶a peak rate between 16:00 - 19:00, which is 60% above the day rate. The “Octopus Go Intelligent tariff” is a smart tariff with peak and off-peak pricing. Customers benefit from a cheap night rate for their EV and home energy use between 23:30 and 05:30. Outside of these hours, Octopus charges the standard variable rate. The most sophisticated tariff, and the one that creates the most value for consumers, is the ‘Intelligent Octopus tariff’. This has been launched in the UK, Texas, New Zealand and Germany, and will be launching across other areas in the near future. In the UK, Octopus provides consumers with very low-cost electricity whenever Octopus is managing the device, as well as low-cost electricity for overnight periods (amounting to around 25% of the day rate). By managing the devices directly, Octopus is able to procure very cheap green electricity for the devices, and Octopus allows these devices to participate in a range of TSO and DSO markets.

ANBW is a Dutch energy retailer that has over 100,000 customers who hold dynamic hourly tariffs. ANBW recently investigated the impact of these tariffs on the cost savings of these clients and on their consumption behaviour. A comparison of the hourly dynamic tariff and the average Dutch energy tariff between 2019 and 2023 shows that the dynamic tariff was cheaper 85% of the time. When combined with adequate consumption shifts away from peak hours and smart devices that automatically optimise their energy consumption, this can lead to interesting annual cost savings for households. ANBW calculated that an EV owner in the Netherlands can save up to €640 per year by smart charging in combination with the ANBW dynamic tariff. These price incentives for consumption shifts from dynamic energy tariffs were leading to a significant change in consumer behaviour.

During the timeframe of this study, consumers used up to 31% more cheap electricity during the down hours during the day, and used 19% less electricity during expensive, peak hours compared with an average Dutch household. This clearly shows that dynamic pricing is an effective tool to shift consumption.

Key takeaways ▶For consumers, financial and environmental benefits are important nudge factors. ▶Via a dynamic contract, based on wholesale prices, EV owners can generate financial benefits. *Source: Resultaten-ANWB-Energie-oktober-2023.pdf

Decarbon1ze, a Berlin-based start-up, was funded by serial entrepreneurs in 2021. The company was the first player in the market to implement a ‘virtual balancing area’: the German incarnation of the ‘Exchange of Energy blocks’ from the CCMD. This allows energy blocks to be allocated behind a head meter to different suppliers. This has enabled the company to explore two innovative use cases, as follows. Firstly, the virtual balancing areas give consumers the freedom to choose which suppliers they wish to use to charge their EVs at semi-public charging points. Consumers can use their favourite suppliers as they move around. They are also able to use the solar energy they produce at home. Secondly, the company is exploring how individual assets can be separately supplied with electricity in consumer homes: their heat pumps could be charged via one supplier, whilst the rest of a consumer’s household assets could be charged via another. While the use case related to heating is still in a pilot phase, the virtual balancing project is already a fully operative process.

Key takeaways ▶The concept of allowing multiple suppliers behind the meter has advantages for both consumers and ESPs.

Key takeaways

□ Non-flexible loads can be separated from flexible loads to reduce the risk for consumers and their exposure to volatile market prices, while still unlocking and valorising their flexibility.

▶Offering different rates depending on the risk appetite of end consumers is a supplier strategy to onboard a more diverse customer base and gain greater access to residential flexibility.

□ Suppliers and/or BRPs that offer specialised services can more easily enter into the market, without having to take on responsibilities that do not fit their business model.

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1KOMMA5° FINANCIAL INCENTIVES

TIBBER FINANCIAL INCENTIVES SEAMLESS DATA ACCESS

SAINT-GILLES ENERGY COMMUNITY FINANCIAL INCENTIVES SEAMLESS DATA ACCESS

ESFORIN FINANCIAL INCENTIVES

SEAMLESS DATA ACCESS

The German company 1KOMMA5° wants to move households away from the use of fossil fuels. To this end, 1KOMMA5° installs solar systems, heat pumps, electricity storage and charging infrastructure for EVs at customer homes and ensures the long-term optimised operation of these systems via its own software: the Heartbeat. This energy management software ensures that consumers use large amounts of the electricity they produce, surplus electricity is sold on the market when prices are high, and any remaining needed electricity is purchased at moments when prices are low. Through its software, 1KOMMA5° enables asset interoperability, since already 15 manufacturers of batteries, heat pumps and EVs enable its use. 1KOMMA5° holds several market roles. As competitive MPO, 1KOMMA5° installs smart meters. As a supplier and BRP, the company can offer customers attractive electricity tariff models. As an FSP, 1KOMMA5° takes care of the optimised deployment of the flexible assets, making flexibility provision as easy as possible for customers. The latter saves money and reduces their CO2 footprint.

Key takeaways ▶Coordination between market roles along the value chain needs to occur to ensure access to consumer data and provide financial incentives to consumers. ▶The smart meter rollout in Germany can be accelerated by independent parties who take on a MPO role.

Tibber is a digital energy supplier that operates in Norway, Sweden, Germany and the Netherlands. Their goal is to change the way consumers buy and consume electricity. By providing dynamic tariffs to their consumers in combination with an application that allows them to steer assets, they give people the tools to consume less in a smarter way. “At Tibber, we believe that smart energy consumption means efficiently steering consumption in line with grid stability. With increasing volatility on the production side, we need more flexible consumption which makes use of energy when it is being produced. With flexible resources like car batteries or home storage, more assets are available to support the grid at critical moments (when there are electricity shortages or an over-supply on the grid) which the electricity provider can offer with customer approval, in turn making financial rewards accessible to them. Empowering customers to benefit from fluctuating electricity prices, e.g. by charging their EVs when prices are lower and, therefore, when the energy mix is greener, is already playing a pivotal role in the energy transition. Smart charging is one of our core functions in the app, helping customers to save money while avoiding peak hours, and thus stabilising the grid. Looking to one of our founding countries – Norway - it is apparent that the establishment of a digital infrastructure and the installation of smart meters in every household in 2017 has unlocked major market potential. Even though the German market is lacking smart meters, Tibber has always put consumers first and has developed a solution for digital meters: the Tibber Pulse. This is an electricity tracker for live consumption values making hourly billing accessible – as long as there are no smart meters available.”

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Key takeaways ▶Access to financial benefits nudges the consumer towards adopting dynamic behaviour. ▶Access to granular data is essential for correctly rewarding consumers who engage in dynamic behaviour.

The local council of St Gilles has equipped the roofs of its building with around 300 kWp of PV panel capacity. It is planning to install a second round of PV panels (amounting to around 240 kWp) in early 2024. To let residents benefit from the resulting energy, the council is exploring the possibility of redistributing the energy it produces via these panels through energy sharing. This would provide residents with local green energy at lower cost to fulfil part of their consumption needs. Furthermore, the project is raising awareness amongst residents of the importance of the time of use of their consumption, and incentivises consumers to shift the time at which they use large appliances to moments where local, clean and cheaper energy is available. Based on the St Gilles case, a number of necessary steps has been identified to establish an energy community. As a first step, a community of consumers needs to be established near the solar panels. To do this, a community organiser can be employed. In the case of the council of St Gilles, the panels were financed through resident contributions. The participants for the scheme can then beselected from amongst the residents who donated money for the solar panels. Based on the possible participants in the energy scheme, a choice needs to be made regarding the scope of the energy sharing. The current technical regulation in the Brussels Capital Region allows consumers to have their grid fees reduced depending on how close they live to the solar panels. A trade-off thus has to be made between extending the perimeter of the scheme (so increasing the demand that can be included) and maximising benefits (reduced costs) that can be allocated to scheme participants. The priorities of the energy community in question will decide what balance between the two is optimal.

Once the perimeter of the community has been set, and the participants have all been established, the method for allocating energy can be determined. The surplus energy that is produced is split into a certain number of segments, based on a repartition key. These repartition keys are applied on a quarter hourly basis, allocating the available energy to the community participants, matching their consumption. Energy cannot be transferred in time, meaning that signals are sent to participants by offering local, green and cheaper electricity at certain moments in time. This incentivises participants to adapt their consumption patterns in line with these signals, showing in a transparent and understandable way that the time off use of energy consumption matters, both environmentally and financially. Participation in such energy sharing schemes is only possible when quarter hourly data is available, meaning that smart meters are a necessary component for consumer participation. The quarter hourly values for each of the participants are stored by their DSO, providing an insight into their consumption patterns. Furthermore, the supply of this energy via the energy sharing scheme is split from the so-called complementary volume delivered by the supplier, providing a simplified example of a supply split.

Key takeaways ▶For consumers, financial and environmental benefits are important nudge factors. ▶Seamless data access is needed to provide accurate billing and send the right signals to consumers. ▶An acceptance of dynamic behaviour and smart meters means their possibilities and benefits should be highlighted to consumers.

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SEAMLESS DATA ACCESS

ESFORIN (Energy Services For Industry) is the leading independent market provider of asset-backed flexibility trading in European short-term electricity markets. ESFORIN offers tailored algorithmic solutions for industry and utilities and it also supplies renewable energy and batteries to consumers. Despite the (often technical) barriers that are in place, ESFORIN can harness flexibility from its customers and trade it profitably on electricity markets. ESFORIN relies on a smooth power schedule adjustment process between a customer’s BRP and itself. One challenge is that there is no framework in place for such a process in Germany. However, ESFORIN successfully manages to establish bilateral agreements with BRPs. Additionally, ESFORIN reports a need to improve the design of the interim StromNEV 19.2. regulation so that customers can be certain that their system-serving behaviour will not be financially penalised.

Key takeaways ▶Having seamless access to data is a key catalyst for unlocking flexibility potential while making sure that consumers are not penalised financially. ▶A framework for BRP coordination is important for providing adequate incentives and valorising flexible asset use.

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SMAPPEE SEAMLESS DATA ACCESS

SONNEN FINANCIAL INCENTIVES

OCTAVE FLEX-READY DEVICES

NIBE FLEX-READY DEVICES

Octave is a Belgian cleantech scale-up which specialises in the provision of second-life batteries. Octave offers a modular battery energy storage solution which is perfectly suited for behind the meter applications at SMEs and industrial sites. The system comes with a comprehensive service package including monitoring, battery swapping and optimal control.

Nibe offers a feature called “Smart Price Adaptation” that allows the compressor of a heat pump to modulate its speed (yellow line in the chart below) in line with a dynamic price signal (blue line in the figure below), while keeping the room temperature (black line) almost constant. Energy is stored and in this way, customer comfort is not impacted, while the heat pump can be steered based on market inputs, received by the asset’s cloud service.

Smappee, a global cleantech company founded in Belgium, is dedicated to helping businesses and customers save energy and money by optimising their energy usage. Smappee’s smart energy solutions measure the real-time usage in a building, including appliances, from one central place. This provides clients with detailed insights, empowering them to save energy. Smappee’s system utilises the data to optimise energy flows and reduce costs. Over the years, the company has also established itself as a leader in smart charging infrastructure built around its advanced AI-driven energy management technology, making it possible for customers to reliably charge their appliances with renewable energy and at the lowest hourly rates. “Our systems manage the complex mix of user and business requirements and preferences such as comfort and productivity in conjunction with the dynamic hourly day-ahead prices while optimising the use of their local sustainable energy. Accessing and integrating this data with our AI driven load management system is key to maximising flexibility provision and optimising customer benefits. We provide smartness and flexibility to grid operators by controlling this giant virtual power plant and managing millions of assets from our homeowners and businesses. We are proudly driven by our mission to accelerate the energy transition.”

Key takeaways ▶Access to (real-time) data is essential to develop flexibility services and optimise consumer energy usage and empower consumers to save energy costs.

FLEX-READY DEVICES

Sonnen is an innovative player that supplies flexibility to the grid in multiple countries including Germany, Belgium, Italy, Spain, the UK, the US and Australia. The company acts as a storage provider and also as an energy supplier. It offers intelligent energy management systems for residential consumers and allows them to join the sonnen virtual power plant (sonnenVPP) in a growing number of markets with the aim of providing everyone with clean and affordable energy.

“We strongly believe that it makes little sense to use virgin batteries for stationary energy storage. Battery packs that are considered end-of-life in electric vehicles have in most cases a remaining usable capacity of over 80%, and we cannot let it go to waste. Our mission at Octave is to give a second life to batteries from electric vehicles and repurpose them into a source of much-needed sustainable energy storage.”

Even though prequalification process for many small flexible assets is still a lengthy task, Sonnen has already successfully prequalified thousands of decentralised residential batteries all over the globe and has tested monodirectional EV chargers for FCR delivery in Germany. Their asset pool can be used for multiple flexibility purposes: FCR and spot optimisation - depending on what is most beneficial for end consumers. The sonnenVPP includes around 25,000 customers which corresponds to 250 MWh.

Octave offers services for the day-ahead and imbalance price steering of these batteries, as price volatility in these markets offer up great opportunities. An example of their projects is Bermabru. Bermabru is a wholesale furniture store that invested in a battery cabinet with a storage capacity of 121 kWh. The battery will be steered to increase the consumption of locally produced solar PV power and limit peak consumption in combination with an imbalance arbitrage service offered by Yuso. Yuso will take over the control of the battery when it detects an opportunity to capture an imbalance price swing and share the revenues with Bermabru.

Depending on the market, different products are applied. In Germany, both spot optimisation, peak shaving and FCR are delivered. In other countries, parties use sonnen’s intelligent VPP software to steer their pool of sonnen batteries in response to market signals. With many battery owners and an increasing number of flexible assets, more and more markets are emerging which hold a great deal of potential. The energy transition must not be slowed down by grid bottlenecks. Sonnen’s virtual power plant is a tool to intelligently integrate batteries, PV systems, electric vehicles or heat pumps into our power grids.

Key takeaways ▶The prequalification process for assets can be a lengthy task. Making it easier can speed up the penetration of flex-ready assets.

In Flanders, Belgium, Nibe was able to perform a pilot test in a residential household with a dynamic Engie contract based on the day-ahead price. The heat pump helped the household reduce their energy bill by up to 10% compared with a standard fixed contract. Even though Nibe has been offering steerable heat pumps that can react to energy prices since 2011, in Belgium, the

Key takeaways ▶Assets entering the market now should be flex-ready, since they are likely to be called upon to operate in a flexible way during their lifetime. ▶Providing flexibility needs to be easy and comfortable for consumers. ▶Consumers need to access the financial benefits that are generated by the dynamic behaviour of their assets.

Figure 33: Example of a price signal and both indoor and outdoor temperature profiles.

Key takeaways ▶Assets can be repurposed to be flex-ready and be given a second life as flexibility providers.

▶Different products can be applied to optimise the fit between an asset and consumer preferences.

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Smart Price Adaptation feature is only utilised by a minority of their customers. If more customers could access dynamic contracts from Belgian suppliers, the users of the Smart Price Adaptation feature would increase.

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Industrial companies already valorising their flexibility Many industrial companies have been able to combine their high-quality products with the flexible operation of their processes. Enabling seamless data access can then pave the way for them to operate their processes in a dynamic way and reduce their operational costs.

SUCCESS STORY #18

INDUSTEEL SEAMLESS DATA ACCESS FLEX-READY DEVICES Industeel, a subsidiary of ArcelorMittal, produces hot rolled and forged steel plates, ingots and formed pieces. Industeel has 6 production facilities in Belgium and France, 3 plate mills (Charleroi, Chateauneuf and le Creusot), 2 forming workshops (Sain-Chamond, Dunkirk), a research and development centre and 2 services centres. All plate mills produce steel via electric arc furnaces, using highpower electric arcs to melt steel scrap. These electric arc furnaces constitute an important share of their electricity consumption across their sites, and, given their high power, carry an important flexible potential. The Charleroi site in particular is an interesting case. Industeel Charleroi is directly connected to the highvoltage transmission grid. They act as their own balancing responsible party and have direct access to wholesale electricity markets. Industeel purchases electricity on the future/forward market, the day-ahead market and the intraday market. Remaining imbalances are settled with the imbalance price. Industeel Charleroi adapts the consumption of its electric arc furnace in line with the imbalance price and their already purchased electricity volumes, which has a large impact on the final cost of their energy. The high-power furnace is slightly over-dimensioned for its current levels of steel production, meaning that the furnace’s capacity is more powerful than it needs to be for the site’s intended steel production. This allows the furnace to be operated with a high degree of flexibility: the site can adapt its consumption in line with

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the current position of Industeel (whether it is short or long compared to the contracted volume and current consumption levels) and the imbalance price. Industeel has developed an in-house operational tool that integrates the minute-by-minute estimate for the imbalance price, the volume of energy has already been contracted through other markets and the consumption of the site. This serves as a support for the decisions taken by the furnace operators. When imbalance prices are low or even negative, the furnace can be powered up, in case of high prices it can be powered down. An important catalyst in the development of this tool was the integration of data from different sources. The tool combines data related to onsite consumption, forecasts relating to onsite energy production, the prices and volumes of energy that has been contracted, and minute-by-minute estimates of the imbalance price provided by the TSO. Significant effort had to be put into automating the collection and harmonisation of the data from different sources. Seamless data access therefore enables a high-performance control system for the provision of flexibility.

Key takeaways ▶Having seamless access to data is a key catalyst for unlocking the flexibility potential of an asset. ▶Reducing operational costs and having access to financial benefits are the main motivations for industrial players to provide flexibility.

SUCCESS STORY #19

SUCCESS STORY #20

NOBIAN SEAMLESS DATA ACCESS FLEX-READY DEVICES

SIEMENS SEAMLESS DATA ACCESS FLEX-READY DEVICES

Nobian is a leading European company that produces essential chemicals for industry. With their integrated value chain and modern production sites in the Netherlands, Germany and Denmark, they excel in the safe and reliable supply of high-purity salt, chlor-alkali, chloromethanes and hydrogen. Their site in Bitterfeld is in the 50Hertz control area. they therefore perform chlor-alkali electrolysis with membrane technology. Nobian is an energy-intensive company, and electricity costs make up a significant part of their production costs. Within a certain bandwidth, they can operate their production processes flexibly and without major restrictions - a benefit they also deliver for balancing power markets. To offer more flexibility, they require several developments and/or changes to be made: ▶Technical: They need to learn more about how their equipment responds to flexibility. Originally, their assets were designed to be continuously operated. It is unclear how flexible operation influences their equipment, in particular in the long run. ▶Commercial: Additional investments are required to provide further flexibility. As a producer of essential chemicals, they are very focused on ensuring certainty of supply for their customers. ▶Customers: Their production is closely linked to the demand patterns of their customers, and they can only shift their production processes by a few hours. ▶Regulatory: The current regulatory set-up, including grid fees, is geared towards base load usage. This regulatory set-up should be modified so that it supports flexible usage.

Given their intense energy use, they are keen to minimise their energy costs as much as possible. During the energy crisis in 2022, energy markets experienced extreme pricing and price volatility. During this crisis, they were able to partly reduce their production for a limited amount of time and shift their production processes to times when electricity was cheaper. In this way, they were able to optimise their energy costs. They are able to behave as a system-serving industry with some amount of flexible production to absorb variations in the supply of renewable energy. As part of their sustainability initiative “Grow Greener Together”, they are aiming to use 25% of their production capacity to stabilise the grid by 2023. They are also investigating further possibilities to maximise the flexibility of their plants, depending on the individual technical circumstances of the different sites. Will that be enough? The energy crisis has shown that making industrial energy consumption flexible is vital for stabilising the grid. As the share of renewables rises, the need for industry to operate flexibly will keep increasing. This situation requires commitment from all parties involved to create a stable and secure environment that allows industry to invest in plants and software for further improvements.

Key takeaways

Siemens has analysed, automated and forecasted the power requirements (load profiles) of thermal, mechanical and electrochemical production or production-related processes in four of its Berlin plants (dynamo, gas turbine, measuring device and switchgear plants). Siemens was interested in the possibility of saving money during times when energy prices were low. They decided to explore this as part of the WindNODE project, which was carried out in 2019 (50Hertz also took part in this project). Siemens therefore tested out how energy-intensive processes could be shifted to times of high renewable electricity supply in its plant that produces ceramic tiles for gas turbines. Siemens began by identifying different categories of flexible processes within their production line. They categorised them according to their power and how far they could be shifted as follows:

To establish these categories, Siemens registered the individual electricity consumption of each of its machines. Siemens installed measuring devices that could control the power input of these machines. It then integrated the resulting data and controls into the energy management system of its plant. The software is available for its energy manager to support their decisions: it will show the manager the expected cost savings of each of the processes if they are activated within a certain time frame (when electricity costs are high or low).

Key takeaways ▶Introducing flexible assets, and being aware of their possibilities and limitations, is the first step. ▶Having seamless access to data is a key catalyst for unlocking flexibility.

a) mid-range processes: processes which can be brought forward or delayed by a number of hours and hold a medium level of power consumption; b) long-running processes: low power processes whose operation can be brought forward or delayed by several hours or even days; c) top-class processes: high-consuming processes which can be brought forward or delayed by a few minutes.

▶Introducing flexible assets and ensuring trust in the reliability of the process (meaning that the quality of the final product is not affected, even when providing flexibility) are minimal requirements for convincing consumers to provide flexibility. ▶Having access to financial benefits is the key driver.

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GLOSSARY Adequacy

System’s ability to meet the demand for electricity at all times. It ensures that there is a sufficient and balanced supply of electricity to meet the needs of consumers, taking into account factors like increasing electrification, seasonal variations and events happening abroad1

Balancing

Balancing means all actions and processes, on all timelines, through which TSOs ensure, in a continuous way, the maintenance of system frequency within a predefined stability range2

Balancing responsible party

BRP

A Balancing Responsible Party corresponds to a market participant’s, or its chosen representative’s, responsible for its imbalances in the electricity market3

Distribution system operator

DSO

The DSO is responsible for operating, maintaining and, if necessary, developing the distribution system in a given area and, where applicable, its interconnections with other systems, and for ensuring the long-term ability of the system to meet reasonable demands for the distribution of electricity3

Energy service provider

ESP

The ESP offers auxiliary energy-related services to Active Customers. These services include insight services, energy optimization services, and services such as the remote maintenance of flexible assets3

Fast flexibility Metering point operator

Capacity which can be regulated up or downward close to-real-time1

MPO

Ramping flexibility Renewable energy sources

Capacity which can be regulated up or downward in a timeframe of 5 minutes1

RES

Slow flexibility Smart Meter Gateway Administrator

In this report, the term is mainly used for solar power, offshore wind and onshore wind. Capacity which can be started or shut down in intraday (until a few hours ahead)1

SMGWA

Supplier Transmission system operator

A party responsible for installing, maintaining, testing, certifying and decommissioning physical meters4

The Smart Meter Gateway Administrator is responsible for the safe technical operation of intelligent systems. Its tasks are the installation, configuration, administration, monitoring, maintenance and the technical information connection of meters and other devices connected to the Smart Meter Gateway. The role of the Supplier is to source, supply, and invoice energy to its customers. The Supplier and its customers agree on commercial terms for the supply and procurement of energy3

TSO

The role of the transmission system operator (TSO) is to transport energy in a given region from centralized Producers to dispersed industrial Active Customers and Distribution System Operators over its high-voltage grid. The TSO safeguards the system’s long-term and short-term ability to meet electricity transmission demands. The TSO is responsible for keeping the system in balance by deploying regulating capacity, reserve capacity, and incidental emergency capacity3

1 Elia (2023), ‘Adequacy and Flexibility Study for Belgium (2024-2034)’ 2 Electricity Balancing Guideline (EB-GL) from the European Commission 3 USEF - The Framework Explained 4 ENTSOe – Role Models

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ANNEXES Annexe A: Simulating dynamic behaviour – A case study EV charging

Baseload profile The base consumer profile, used for this case study, was selected out of the available, anonymized consumption profiles, as provided by the Flemish Distribution System operator Fluvius1. Profile 17 was used as its estimated (estimated solar self-consumption in addition to the given grid consumption) consumption, lay close to the average electricity consumption of a Belgian household (3500 kWh/yr). Results Electricity

kWh

Grid consumption

2502.39

Auto consumption

1094.96

Injection

3284.87

Overall consumption

3597.35

The consumer is assumed to drive a Battery EV, and to have a 7kW, modulable home charging system. They are out of the house during weekdays, between 8 and 18, as they use the car for their home-workplace commute. During the weekend the car is expected to be plugged at moments of low price. On average the EV consumes about 49 kWh per week (7 kWh/ day)2, which corresponds to about 325 km/ week. The battery size is assumed to be 75 kWh, with a minimal state of charge of 20%.

PV production Based on the injection profile related to profile 17, about 4.8 kWp is estimated to be installed at the residence. Scenario’s with and without local solar production were simulated for each of the flexible assets (EV, Heat pump and home battery).

During weekdays the EV is expected to be unplugged between 8:00 and 18:00, as the consumer is assumed to be out of the house at that time. Outside of these time the power of the charger is assumed to be modulable between 0 kW, and the maximum power of the charger 7 kW.

3 different profiles are considered for EV charging:

During the entire operation the state of charge of the battery is assumed to remain above 20% of its capacity, with a maximum of 100%.

EV connected to the home charging station 8

6.16

The consumption of the flexible asset is added on top of this base consumer profile, depending on the charging strategy or profile.

Profiles

Figure 34. Power limits for the home EV charging station on a weekday.

7 Available chargin power [kW]

Consumption peak [kW]

Charging infrastructure and driving behaviour

Constraints

▶Natural charging: considering that the EV starts charging, at full power, at the moment the EV owner returns home, ie. at 19:00, and this every day. ▶Delayed charging: the charging session is delayed until 22:00, when the night rate kicks in. Charging still happens every day. ▶Smart charging is also simulated, minimizing the total charging cost for the EV owner, all the while remaining within the limits of availability (away between 08:00 and 18:00) on weekdays, available charging power, and state of charge requirements on the battery. This is done on a weekly basis, meaning that charging the vehicle could be postponed to a following day - if the state of charge of the battery remains acceptable- if there’s benefit in this. Vehicle-to-grid is not considered.

Heating through a heat pump Heating infrastructure and spread over the year It is assumed that 4000 kWh of electricity is consumed over the year to operate the heat pump. Assuming Seasonal Coefficient of Performance of 3.5, this equates to around 14 000 kWh of annual heat demand, for the residence. This demand is distributed over the year following heating degree days, a measure indicating the need for heating on that particular day, depending on, amongst others, the outside temperature. The distribution for 2021 is shown in Figure 35. Figure 35. Distribution of the electricity consumption related to heat pump operation over 2021. Daily heating consumption [kWh] 45 40 35

6 Consumption [kWh/day]

Persona

5 4 3 2 1

30 25 20 15 10

0 00:00

03:00

06:00

09:00

12:00

15:00

18:00

1 Fluvius (2022), 100 geanonimiseerde 15’ verbruiksprofielen elektriciteit; https://opendata.fluvius.be/explore/dataset/1_50-aanlevering-dmk-e-kwartierwaarden/information; Last accessed on 10/09/2023

21:00

00:00

5 0 12/15/2020

2/3/2021

2 Elia (2020), Accelerating towards net zero; https://www.elia.be/en/news/press-releases/2020/11/20201120_publication-vision-paper-on-e-mobility; last accessed on 01/09/2023

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/25/2021

5/14/2021

7/3/2021

8/22/2021

10/11/2021

11/30/2021

1/19/2022

Constraints

Battery operation

The heat pump operation is limited by the heat pump power, and a demand per hour, needed to ensure the necessary comfort. A natural, and preheated profile are described in the Adequacy and Flexibility study for Belgium3 as are the limits for flexibility in a smart heating, as shown in Figure 36 for 21/12/2021.

A 2 kW battery with a storage capacity of 4 kWh is considered, only in combination with the PV system described above.

F igure 36. Limits for heating consumption Heating consumption [% of daily consumption]

Limits of heating consumption

The operational constraints are set by the battery power, and the state of charge of the battery. During the entire operation the state of charge of the battery is assumed to remain above 20% of its capacity, with a maximum of 100%.

▶Natural charging: The battery charges when excess PV production is available. When it’s not and the consumer requires more electricity, the battery is discharged first, before resorting to the use of electricity for the grid

6% 5% 4%

▶Smart charging is also simulated, minimizing the total cost of electricity consumption for the residence, all the while remaining within the battery’s operation limit. Here, electricity from the battery can also be sold back to the grid.

3% 2% 1% 0% 03:00

06:00

09:00

12:00

15:00

18:00

21:00

00:00

Time of Day

Contracts and prices Three different price structures are considered6:

Profiles

▶A single level, flat rate contract,

▶Natural heating: Following the natural heating profile, as described in in the Adequacy and Flexibility study for Belgium4

▶A classic, flat time-of-use contract, ie. with a day/night structure.

▶Pre-heating: Following the pre- heating profile, as described in in the Adequacy and Flexibility study for Belgium5 ▶Smart charging is also simulated, minimizing the total heating cost for the residence, all the while remaining within the comfort restrictions (see above) limits of available heating power. This is done on a daily basis, as the daily demand, based on the heating degree days must be met.

▶A dynamic contract, based on day-ahead market prices.

The considered day/night contract, have a similar formula to calculate both the high and low price level: c€ [ kWh ] =2.9742+0.982*Endex101

pricehigh

c€ [ kWh ] =3.7702+1.236*Endex101

For the calculation in 2023 the average commodity price was estimated at 14.676 c€/kWh for the low price level and 18.577 c€/kWh for the high price level. On top of this 2.241 c€/ kWh are added for purchasing guarantees of origin. Gridfees, taxes and levies are added to this price to arrive at the full electricity price. Fixed, yearly administrative costs amount to €55.3.

A single level, flat rate contract is considered, the commodity price level is calculated based on a weighted average of the Power Base Load futures (Endex 101), and is adjusted every quarter (three months), following the formula below: c€ [ kWh ] =3.6882+1.155*Endex101

Results For each of the above described persona’s, the benefit of switching from a single level, flat rate contract to a dynamic contract was estimated for 2023. In Figure 37, one can observe that, especially for an electric vehicle, significant savings could be made in 2023 by opting for a dynamic contract, rather than a flat rate contract. Savings with rooftop PV are higher, compared to without. This can be explained by the fact that the steering of the assets can include the presence of cheap local production (from the PV panel), and thus has an additional lever to reduce costs.

The dynamic contract is based on the day-ahead (Epex Spot) market prices, the hourly price is calculated as follows: c€ [ kWh ] =0.2040+DA price

On top of this 2.241 c€/kWh are added for purchasing guarantees of origin. Gridfees, taxes and levies are added to this price to arrive at the full electricity price. Fixed, yearly administrative costs amount to €100.70.

EVs show the largest savings potential for the persona’s described above, as the operation of heat pumps is more constrained due to comfort requirements. The impact of solar PV on a residence heat pump is also smaller, as a large portion of the consumption occurs during winter time, when solar production is lower. The volume and capacity of the home battery system described here is also smaller than the battery system of an electric vehicle, explaining the difference there.

Figure 37. Case study of the benefit of smart consumption for an end-user in case of 3 different personas in 2023.

Benefit of a dynamic tariff with smart charging We calculate the benefit of a dynamic tariff for 3 personas in 2023: Asset options

EV Owner

• 7 kW charger • 2500 kW/yr

Dynamic contract

pricedynamix

Flat rate contract

price

Day/Night contract

pricelow

Profiles

00:00

Constraints

For the calculation in 2023 the average commodity price was estimated at 16.594 c€/kWh. On top of this 2.241 c€/kWh are added for purchasing guarantees of origin. Gridfees, taxes and levies are added to this price to arrive at the full electricity price. Fixed, yearly administrative costs amount to €55.3.

Heat pump owner

• 4 000 kW/yr • Following HDD

Home Battery Owner

Results

• With rooftop PV 1

540€

• Without rooftop PV

320 €

• With rooftop PV 1

250€

• Without rooftop PV

200 €

• With rooftop PV 1

190€

• Battery volume 4 kWh • 2 kW battery

4.87 kW rooftop PV

3. Elia (2023), ‘Adequacy and Flexibility Study for Belgium (2024-2034)’ 4. Elia (2023), ‘Adequacy and Flexibility Study for Belgium (2024-2034)’ 5. Elia (2023), ‘Adequacy and Flexibility Study for Belgium (2024-2034)’ 6. Note that cannibalisation effects on the price are not taken into account.

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Annexe B: EU policies and legislations To support the European Green Deal and the Digital Decade ambitions, several European policies and legislations have been proposed and adopted in recent years. In particular, many of these recognise the need of empowering consumers by enabling access and sharing of data, not only at the head (smart) meter level but also behind the meter, which is fully aligned with Elia Group’s consumer-centric vision. In this regard, current EU electricity legislation such as the Electricity Directive and the recent Implementing Act on data access interoperability are designed to ensure access of data at the smart meter (at the connection point). However, recently entity offering energy-related services to final customers, such as suppliers, transmission and distribution system operators, delegated operators and other third parties, aggregators, energy service companies, renewable energy communities, citizen energy communities and balancing service providers, as far as they offer energy related services to final customers; proposed and adopted EU legislations are specifically tackling data access at the level of assets such as batteries and EVs (recast Renewable Energy Directive), publicly accessible recharging infrastructure (Alternative Fuels Infrastructure Directive or AFIR), building’s systems including building management systems, private recharging points and meters (proposed review of the Energy Performance in Buildings Directive), submeters and embedded meters attached to assets providing flexibility services (proposed Electricity Market Design Reform), and of any connected product (Data Act). Finally, data governance is becoming a topic of relevance in particular in regard to the development of European data spaces for different sectors (Data Governance Act), in particular of a future European Energy Data Space (announced in the EU Action Plan on Digitalisation of Energy).

The Electricity Directive (Directive (EU) 2019/944) ▶Regarding smart meters (Article 20) it describes that validated and non-validated shall be made easily and securely available and visualized to final customers at no additional cost. It also mentions that if the final customer requests it, data on the electricity they fed to the grid and their electricity consumption data should be made available to them (in accordance to the implementing acts described in Article 24) or to a third party acting on their behalf, at no additional cost and in accordance to their right to data portability under Union data protection rules. ▶With regard to data management (Article 23), it describes that when laying down the rules regarding data management and exchange, Member States shall specify the rules on access to data of the final customer by eligible parties, with data being understood to include metering and consumption data required for customer switching, demand response and other services. It also mentions that Member States shall organize the management of data to ensure data access, exchange, protection and security, and that no additional cost shall be charged to final customers for access to their data or for a request to make their data available. ▶Finally, on data access interoperability (Article 24), it describes that Member States shall facilitate full interoperability of energy services within the Union, and that the European Commission shall adopt, by means of implementing acts, interoperability requirements and non-discriminatory and transparent procedures for access to data referred to in Article 23(1).

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Implementing Act on interoperability requirements for access to metering and consumption data (Commission Implementing Regulation (EU) 2023/1162) ▶In terms of scope (Article 1), it lays down interoperability requirements and rules for non-discriminatory and transparent procedures for access to electricity metering and consumption data by final customers and eligible parties in accordance with Directive (EU) 2019/944. It also establishes a reference model for metering and consumption data that sets out the rules and procedures that Member States shall apply to enable interoperability. ▶In terms of who can request access to final customer data, it defines „eligible parties“ (Article 2(6)) as any entity offering energy-related services to final customers, such as suppliers, transmission and distribution system operators, aggregators, energy service companies, renewable energy communities, citizen energy communities and balancing service providers, amongst others. ▶Regarding the reporting of national practices (Article 10), Member States have to provide the reporting of their national practices to the Commission no later than 5 July 2025 (Article 10 §4).

The proposed update to the Electricity Regulation (within the EMD reform, COM/2023/148 final) ▶In terms of dedicated metering devices (new Article 7b), it instructs Member States to allow TSOs and DSOs to use data from dedicated metering devices (device attached or embedded in an asset) for observability and settlement of demand response and flexibility services, including from storage systems. It also mandates Member States to establish requirements for a dedicated metering device data validation process, to check and ensure the quality of the data. The updated Electricity Regulation, will be applicable in all Member States at the date of entry into force.

The recast of the Renewable Energy Directive or RED (Directive (EU) 2023/2413) ▶Regarding domestic and industrial batteries, as well as electric vehicles (Article 20a(2)), it describes that Member States shall ensure that manufacturers of domestic and industrial batteries enable real-time access to basic battery management system information (including battery capacity, state of health, state of charge and power setpoint) to battery owners and users as well as third parties acting on their behalf with explicit consent, at no cost. Member States shall also adopt measures to require vehicle manufacturers to make available in-vehicle data (the battery state of health, battery state of charge, battery power setpoint, battery capacity) as well as the location of EVs, to EV owners and users, as well as to third parties acting on their behalf, at no cost. The recasted RED should be transposed by 18 months after the entry into force.

Alternative Fuels Infrastructure Regulation or AFIR (Regulation (EU) 2023/1804) ▶Regarding data from publicly accessible recharging infrastructure (Article 20(2)-(4)), it obliges operators of publicly accessible recharging points, by 1 year after the date of application of the regulation (date of application is 6 months after entry into force), to ensure availability of certain static and dynamic data. Each operator shall set up an Application Programme Interface (API) that provides free and unrestricted access to such data, and shall submit information on that API to the national access points. In addition, by 31 December 2024, Member States shall ensure that the data referred to in paragraph 2 of this Article are made accessible on an open and non-discriminatory basis to all data users through their national access points ▶It also mandates the Commission, by 31 December 2026, to establish a common European access point (Article 20 (5) to function as data gateway to the data form the different national access points.

▶The Commission is empowered to adopt delegated acts to adapt the list of data types advanced in this Regulation (Article 20(6)) and to adopt implementing acts on detailed procedures enabling the availability and accessibility of the data (Article 20(7)).

The revision of the Energy Performance in Buildings Directive or EPBD (Proposal COM/2021/802 final) ▶With regard to data exchange (Article 14) it describes that Member States shall ensure that building owners, tenants and managers can have access to their buidlings system’s data, and that at their requrest this data is made available to a third party (data shall include amongst others data related to building automation and control systems, meters and charging points for emobility), at no additional cost. It also describes that the Commission shall adopt implementing acts detailing interoperability requirements and non-discriminatory and transparent procedures for access to the data.

The Data Act (Proposal COM/2022/68 final) ▶With regard to connected products and related services (Article 3) it requires that these are designed and manufactured in such a manner that the product data and related service data, including the relevant metadata necessary to interpret and use the data are by default, easily, securely, free of charge, directly accessible to the user. This provision will apply 12 months after the date of application of this Regulation (date of application is 20 months after entry into force). ▶When the date is not directly accessible to the user, data holders shall make available this data (Art. 4), as well as to a third party upon request of the user or by a party acting on his behalf (Art. 5).

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The Data Goverance Act (Regulation (EU) 2022/868) ▶It seeks to increase trust in data sharing, strengthen mechanisms to increase data availability and overcome technical obstacles to the reuse of data. ▶The Data Governance Act will also support the set-up and development of common European data spaces in strategic domains, involving both private and public players, in sectors such as health, environment, energy, agriculture, mobility, finance, manufacturing, public administration and skills. ▶The Data Governance Act is applicable as from 24 September 2023.

The EU Action Plan on the Digitalisation of the Energy System (COM/2022/552 final) ▶Addresses the need and implementation plan for EU energy data spaces, starting no later than 2024. ▶It announces the set-up of a “Data for Energy” (D4E) working group, that will support the EC in developing and rolling out a common EU energy data space so the governance and the main building blocks of this data space is designed and managed in partnership. The D4E will focus on developing of EU high-level use cases for data exchanges in energy such as flexibility services for the grid and smart and bidirectional charging. ▶Recently, the Commission Decision of 18.9.2023 setting up the group of experts on Smart Energy (C(2023) 6121 final), mentions within this group’s tasks to provide assistance and frame recommendations to the Commission on topics such as promoting connectivity, interoperability and seamless exchange of data between different actors along the energy value chain as well as developing a governance structure for facilitating the data exchanges within the energy sector. The D4E working group is expected to be set-up as part of this Smart Energy Expert Group.