Demand Response: EU Policy Perspectives

The Paris Agreement adopted on December 12, 2015, within the United Nations Framework Convention on Climate Change by 195 member countries, marks a direction change in global energy policy. It establishes the measures to contribute to EU’s greenhouse gases (GHGs) emission reduction throughout the adaptation and resilience of ecosystems, with the purpose of mitigating global warming. It will come into force in 2020 when the Kyoto Protocol expires.

On November 30, 2016, the European Commission presented the fourth energy package, called Clean Energy Package for all European, commonly known as the Winter Package. Although, the third energy package was, and is still, a useful tool to fulfil with the 20-20-20 objectives, the immediate future of fighting against the climate change required a far-reaching update. To give effect to the commitment achieved with the Paris Agreement, the EU must undertake a revolutionary process of decarbonization of the economy, that can only be carried out through an extensive electrification process, which will change economy and citizens habits.

The package of directives and regulations, which are at the latest stages of negotiations between the European Parliament, the Commission and the Committee, has several fundamental pillars on which the energy transition process is based. Among those, we would like to highlight two of them. On one hand, a strong boost to the renewable energies, that would take over contaminating energies with the objective of reducing CO2 emissions and other GHGs, and on the other hand, the leading role granted to the consumer in the electricity sector. It is not a minor issue, as it implies to act both from the supply side, modifying significantly the energy mix, as from the demand side, in the consumer himself, who will have capabilities never before seen.

If we aim to the success in a massive introduction of renewables energies, we have to focus our efforts on the development of  large-scale storage, an implementation of smart grids, a change from the current centralized model of large generation plants located in many cases far from the consumption centers to a distributed generation close to consumption points. Here, the enormous expansion that we should see regarding self-consumption, both individually and collective, achieve special relevance. Therefore, the border between the consumer and the generator will begin to disappear, this will be a disruptive change in European society. Finally, the use of smart meters along with its high potential will facilitate a digitalization process, in which, the client will have access in real time to invaluable information about generation, consumption, prices and time slots when it is it is more economically attractive to consume or even stop doing so. With that in mind, we reach the importance of Demand Response and its flexibility, that enables to balance the system and to match the generation curve (increasingly renewable) with the demand curve. The figure of the demand aggregator will have special relevance in this scenario because it will allow the end consumer to act in the wholesale electricity market and in its ancillary services, generating benefits to the system itself and, at the same time, it will stimulate the final consumer with beneficial price signals.

In this context, the RESPOND project that is been carried out, aims to find energy efficient solutions for homes with the participation of interdisciplinary partners committed with the creation of capacity, technology and tools that will benefit energy suppliers and consumers through a Demand Response tool, and will try to develop an interoperable energetic solution for homes, buildings and neighbours. For that purpose, how the consumers are able to adapt to price signals, the percentage of renewable generation, weather forecast, etc, modifying their consumption habits, are being explored and investigated. The solution will be tested in three pilots in three cities with different climate and socio-economic situation: in Madrid (Spain) the Demand Response opportunities found are related, among others, to solar thermal technology, making the most of it in the warmer hours, in Aarhus (Denmark) the tests have to do, among others, with electricity from photovoltaic technology, and in the Aran Islands (Ireland) there will be the possibility, among others, of contrasting the efficiency of several technologies for heating.