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Europe’s leading demand response experts set out an ‘action plan’ for Europe

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The Smart Energy Demand Coalition’s (SEDC) second General Assembly of this year focused on bold initiatives on how to drive forward the demand response industry in Europe

Europe needs an “action plan” for promoting demand response in Europe’s electricity markets was the conclusion of industry experts present at the SEDC’s General Assembly in December. The meeting, taking place in Brussels, was intended to be a frank, no-holds barred discussion on the potential of demand response and the political and regulatory changes required for making the transition to a more sustainable electricity market.

One of the key challenges identified in making the transition from a purely generation-led market to one where demand and generation interact, was the lack of political awareness of the potential and importance of advancing the participation of demand side resources in the European electricity market. “The need for a high-level action plan, initiated at the EU level becomes more pressing as more intermittent renewable sources of energy are integrated into Europe’s energy mix” stressed the SEDC’s Executive Director, Jessica Stromback. This urgency, compounded by the financial crisis and increasingly scarce capital for expensive peaking generation, led some participants to call for a “burning platform” to accelerate the pace of change and move beyond piecemeal regulatory tweaks and lip service to a cohesive and coordinated overarching action plan.

 

There was also agreement that more open and flexible definitions of what constitutes demand response would be needed as well as answers to tough but important questions: ‘Why are so many polluting power plants running at times of high renewable energy production and what alternatives do we have to this?’ And, ‘why is it that the preferred option to solving Europe’s increasingly sharp and inefficient peak consumption spikes is the costly expansion of grid infrastructure?’ Considering that many policymakers are aware of the advantages of demand-side alternatives, these questions would need to be addressed impartially and objectively.

Ultimately, creating a large and vibrant market for demand response will require a sustained policy drive as well as structural changes to the functioning of the European electricity market. While structural reforms should address how grid operators are compensated through the current ROI model that encourages expansions of the regulated asset base, policy and regulatory actions should focus on creating enablers and removing barriers. This should concentrate on key issues such as surplus capacity, inadequate supply, voltage regulation, congestion management, and resolving potential conflicts in the operational needs of distribution system operators and transmission system operators.

However, there was a recognition among participants that institutional action alone would not be sufficient. “While policymakers and regulators have a key role to play in constructing an enabling environment, it is also incumbent on industry to begin taking advantage of existing market structures by devising and offering more granular products and segmenting the market in ways that make commercial sense. At present, commercial buildings and industrial facilities offer huge untapped load shifting potential in Europe and it is this low-hanging fruit the industry to start with” Stromback declared. Furthermore, as more markets around Europe deregulate retail prices and do away with price caps, energy retailers should introduce the new dynamic price tariffs that activate the demand side and reward load curtailment at strategic times.

 

 

The Smart Energy Demand Coalition (SEDC)

The SEDC is an industry group, which represents the requirements of programs involving smart energy demand in order to further the development of the smart grid and ensure improved end-consumer benefits.

The SEDC Vision is to promote the active participation by the demand side in European electricity markets – ensure consumer benefits, increase security of supply and reduce carbon emissions.

The SEDC focus is to promote demand side programs such as, demand response, energy usage feedback and information, smart home, in-home and in-building automation, electric vehicle charging management, and other programs related to making demand a smart, interactive part of the energy value.

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