New VDE Study Calls for Smart Supply Concept for Grids and Electricity Market and Amendments of Regulatory Framework

A new study by the Association for Electrical, Electronic and Information Technologies (VDE) calls for a smart supply concept in order to better integrate electricity producers, consumers and grid operators, achieve synergies and reduce electricity costs.

An intelligent coordination of the grids and market activities using information and communication technologies was a key factor for a successful implementation for the German energy policy shift towards a renewable energy supply, the study concludes. The goal was to generate economic advantages for all electricity market players , i.e. transmission and distribution grid operators, power plant operators, traders, consumers, storage operators and information and communication service providers. The current legal framework was, however,  not conducive for a smart supply system as it lacked incentives for operators of renewable power plants to participate. Hence it was important to revise the Renewable Energy Sources Act (EEG) and other laws so as to tap the “flexibility potential” of generation and consumption, for instance by facilitating virtual power plants for a decentralised energy management that consists of coordinating generation, storage and demand side management, VDE says.

VDE identified five cornerstones for a successful market design of the future:

  1. Renewable power plant operators have to become active market players;
  2. Priority of renewable power will be ensured by the merit order principle given the development of electricity costs in the long-run (rising costs for conventional plants, falling costs for renewable power plants);
  3. Modern forecast tools are the basis for purchasing electricity, schedule management (Fahrplanmanagement) of the suppliers as well as for renewable power plant operators;
  4. Electricity consumers participate actively in the market by making use of variable electricity rates that give sufficient incentives;
  5. Virtual power plants create economic benefits for all participants by acting on different markets, i.e. the intraday and day ahead electricity trade markets, the market for operating reserve, the heat and gas markets and the market for C02 allowances.

The VDE paper contains a case study.

Source: VDE

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