EDITOR’S NOTE: Alliander has evolved its approach to its markets as it has updated its business model for a new era. Pallas Agterberg, the utility’s director of strategy, will explore the company’s execution of it vision at the Empowering Customers and Cities gathering in Chicago November 4-6.
The fundamental change in the power system is there. The price of solar power and storage will continue to fall, triggering soaring demand for sustainable solutions.
Three years ago, Dutch distribution grid operator Alliander, serving over 3 million customers, developed a new strategy to deal with the energy transition. They figure that continuation of the uptake of solar, heat pumps and electrical vehicles would lead to power spikes urging the grid operator to at least double its physical power distribution network
The technology is ready to retrofit residential, commercial and retail spaces into energy generating systems. But power control systems are designed for top down energy flows, with a handful of power generators.
In coming years, energy usage and power generation will no longer follow the historical load profiles. The traditional reaction of a grid operator is to add new controls to a centralized system, such as demand side management tools or remote control of usage. This could mean switching off renewables, limiting charging of EVs or even denying access to the grid.
To make things worse, the current grid-management results in unnecessary upgrading of grid capacity. Investments would rise and tariffs will soar. As a result, the grid operator will be the limiting factor in empowering customers and cities. Classical load profiles and grid management systems fail to facilitate the upcoming dynamic and sustainable energy system.
Solar power will eventually get so cheap that it will out-compete fossil-fuel plants. Rooftop solar and storage will be cheaper than electricity from the grid, making consumers into prosumers or even pushing consumers off-grid.
Alliander started exploring an alternative to extending the top-down controls. Decentralized power systems require a new approach comparable with the way the Internet works: an open system that is highly adaptive and flexible.
The positive upside is there is no outage of the Internet. To enable decentralized control of the power system, one needs to empower the power grid users to make their own choices. If the empowered users can make money by proactively shaping their load profiles, they will create a good working system. In other words, it will create prosumer-centric markets.
Alliander sees three new markets and supports the development of these markets.
The first market is the design, build and operation of the installations, like solar, batteries, heat pumps and appliances. Alliander provides support to select installers and gives insight in prize and quality.
The second is for managing energy in buildings. Alliander created “the money” by developing a trading platform that makes 15-minutes based settlement, intraday and balance markets accessible for household-size users. Then it opened up the data from smart meters. Now third-parties create services for load shifting and peak management, using their own energy instead of buying it from the grid.
And finally, the third market is for peer-to-peer energy exchange. Alliander developed the tools for a new type of "supplier" contract that enables households to buy and sell to each other, based on this new trading platform.
As a result, Alliander turned load shifting and peak shaving into a business case. To optimize these business cases, more flexible tariffs such as time-of-use tariffs will be developed.
In order to support acceleration of the transition towards sustainable energy, Alliander supplies open data for decision makers and market-players to optimize their own strategies and has developed new services such as the management of microgrids and charging infrastructure.
Nonetheless, more than 80 percent of usage of the grid has not changed and Alliander still has its main focus on the traditional system. But what Alliander did do is add a new type of system management by creating markets for energy management and energy exchange. These two, the traditional system and the decentralized market, help Alliander minimize their grid investments.
Let’s see to it that the customer will be in charge and will have full access to sustainable energy solutions. They can take full advantage of clean energy, make money and be an active participant in grid management.
Pallas Agterberg is Alliander director of strategy.