We all remember the media hype of COP21, the agreement on climate change that took place in Paris in 2015, had. My question is who knows about the “Winter Package” approved on November 30 by the European commission? A package containing eight legislative proposals under the heading “Clean Energy Packaging” (known as C.E.P.), with the intention of carrying out a transformation on the European Energy System. A transformation that will lead to a Europe Union of clean energy, which main axes are in the following order of relevance:
- Prioritize energy efficiency;
- Ensure the European Union’s leadership in renewable energies;
- Make the consumer the key-element of the policies.
These proposals provide the elements for a full action up to 2030 of EU on climate and energy material framework. A well-received package by the energy sector as the previous packages on energy and decarbonisation was perceive as incomplete.
Those are still proposals that have to be approve by the European Parliament and by the Council. On February 27th of 2017, our climate and energy commissioner, Miguel Arias Cañete, emphasized the importance that the commission along with the council and the parliament should work together to agree in the new framework of the legislative proposal before the end of 2017. A short time to modify and accept those proposals, which can increase by 1% the GDP in the following decade and create 900,000 jobs.
The aim of these proposals is not only to demonstrate that the transition to clean energy is the future of the sector but that consumers will be active agents. According to the press release, the European Commission state: “In the future, all consumers in the EU will have a greater supply alternatives, access to reliable energy price comparison tools and have the possibility to produce and sell its own electricity.” A reasonable proposal because, theoretically, it is necessary that all agents make optimal decisions to have an efficient system.
Now, with this statement, what does it mean to be an active agent in energy for a consumer? A clear implication is that being an active agent involves managing actively the demand. Currently there are two categories of demand participation:
- Top-down: the energy industry reduce its energy consumption and improve its energy efficiency. This is an active demand management where energy companies seek to reduce or eliminate demand. The mechanism is based on quantity signals. In the case of Spain, there is the interruption service that allows the system’s operator to optimize the networks by controlling the demand of specific consumers (usually energy-intensive industries);
- “Botton-up”: customers actively participate/decide the management of their consumption in order to achieve greater efficiency and therefore obtain economic benefits on their invoice. This is a demand response where final consumers make changes in their electricity consumption in response to signals sent by system or market’s operators. The mechanism use price signals. In the case of Spain, a combination of tariffs and hourly prices encourages consumers to change their consumption. Meaning that consumer contract discriminatory tariffs or design productive processes that take advantage of the off peak hour.
Therefore, the active consumer would fall into the second category: the “Demand Response” action. The type of demand response varies by consumer:
– In industries such as water misalignment companies that have accumulation capacity can actively modification their energy demand.
– In commercial and residential sectors, the active management of their demand passes through air conditioning equipment (they are the most flexible to manage and the ones that consume more energy); by unattended appliances (washing machines, dishwashers, intelligent thermostats, etc.) and by the electric vehicles (they allow a modulation of their full load with V2G technology).
Framework for Consumer Empowerment
However, it seems that currently only large customers have implemented demand management mechanisms, although the use of them does not dependend on them (the system operator requests the interruption service). For the rest of consumers it seems a management tool with advance planning and not in real time. An opposite aspect to the marginal system price, which is in real time. Hence, the Clean Energy Package (C.E.P.) has included several articles to force the development of a framework for consumer empowerment to allow them to actively manage their demand and reduce their energy bill.
In article 16 of the electricity directive of C.E.P, active consumers is recognise, known as “prosumers” (producers and consumers). Through this article, the European Commission gives to the final customer the right to generate, store, consume and sell self-generated electricity. A right that should not be subject to disproportionately burdensome processes subject to network access charges that reflect costs, transparent and non-discriminatory. It includes that the process of connection to the network is simple for units of 50 KW (first notification to the distributor). A consumer figure that will promote distributed generation.
Under this directive, the real decree of self-consumption 900/2015 needs to be rewrite. It is a decree that does not justify in a transparent way the charges associated with the costs of the electricity system and charges for other system services (backup rates). A decree that does not favour the installation of accumulation batteries nor the oversizing of the self-consumption facilities. As a result, the Spain “prosumer” is impoverished compared to other countries (like our Portuguese neighbours): it has no margin to decide when to consume the self-generation nor to sell its surplus. That is to say, there is no adequate incentives’ system for the “prosumer” to participate actively.
Another issue to legislate is the simplification of requirements and the administrative process to be self-consumer. An issue that affects the distribution sector. Here is the great challenge for the Spanish System because communication and data technology is required to start implementing active participation of consumer’s side. The consumer needs to know their hourly consumption almost real time to be able to act. A technology that starts with smart meters (telemetering).
The distribution sector, used to a conventional generation with a foreseeable production process, has considered a passive demand while only focusing on ensuring to evacuate generation. That is, the networks were designed two critical situations: maximum demand with minimum generation, and maximum generation with minimum demand. A situation that continued to occur with the entry of renewable energy (little manageable) but has been changing with the emergence of distributed generation (cogenerations).
Although it seems that Spain must make great changes to adapt to the CEP, not everything looks bad: In Spain there are already more than 60% of the low-tariffs with smart meters, and distribution companies are giving access through their web portal. The distribution sector will change from “Distribution System Operator” to “Distribution System Optimization”, since being smart grids is their natural next step. Moreover, in Spain, concretely Barcelona, there is already evidence of power generation among small customers. Gas Natural carries out a new demand aggregator service with Atos, which will make it possible for the final customer to participate in electric markets.
The beginning has started thanks to the technology, but many gaps need to be defined, especially at the regulatory level, so that both the Spanish electricity system and the active consumers can coexist. Who knows, maybe ten years from now people will use the electricity app like whatsaop or Wallapop to turn appliances off the bar or sell their batteries’ power in peak demand.
Marta Merodio | Energy Consultant