Flexible electricity consumption could become crucial to the green transition
Flexible electricity consumption can deliver significant benefits to society when part of the consumption is moved away from the times when the electricity grid is under the greatest pressure. This is the main conclusion of two new reports that highlight why demand-side flexibility can play a crucial role in the green transition.
One report from CIP Foundation examines the structural framework, potential and socio-economic benefits of flexible electricity consumption. Among other things, the report points out that an average household can save up to DKK 11,000 per year by moving its consumption to the times when electricity prices are lowest.
Together with the Alexandra Institute, Mjølner has contributed to the second report, ‘A greener and more flexible electricity consumption’, which takes a closer look at the digital foundation needed to make flexibility possible in practice. Here, we have analysed the digital solutions and technical prerequisites that can activate demand-side flexibility across electric vehicles, solar panels, home batteries and heat pumps.
”Our analysis shows that data is not the challenge for the actors involved. Instead, a fragmented system landscape and lack of integrations create a barrier,”
Providers of flexibility services are already succeeding today in controlling many different flexible devices and are using different technical architectures to handle data and technology challenges. However, the analysis shows that the different flexibility solutions optimise for different parameters.
The control logic of the individual devices is not designed to be coordinated across systems. In short, this creates a home full of devices that each optimise according to their own goals, but not necessarily according to price or the electricity grid’s need for flexibility. When the devices are not coordinated, they may even end up working against each other.
So what can be done?
8 recommendations for robust scaling of demand-side flexibility — in brief
The analysis shows that there is great potential in making it easier to connect smaller, flexible devices to the energy system — for the benefit of both consumers and the electricity grid.
But technical integration cannot stand alone. The recommendations should also be seen in light of three important considerations: digital sovereignty, cybersecurity and the risk of technological obsolescence.
A number of sound principles for technology development can therefore create the foundation for the more technical recommendations:
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Avoid becoming dependent on individual suppliers
Heat pumps, batteries and electric vehicles often depend on manufacturers’ own cloud solutions and closed control systems. This can create dependency on individual suppliers and make solutions vulnerable if the technology, service or supplier changes. The market should therefore support multiple suppliers, open solutions and a real opportunity to switch suppliers.
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Prioritise European and open solutions where possible
European actors and open source solutions can help strengthen digital sovereignty and reduce dependency on individual foreign technology suppliers. However, this requires that the solutions can genuinely be operated and further developed independently – and do not simply resell closed services from others.
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Create better opportunities for local control and disconnection
Devices should, as far as possible, be able to function without a constant connection to the manufacturer’s cloud or remote control. Open APIs, local control options and documented integration interfaces make it easier to retain control, even if a cloud service changes, closes or is no longer available.
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Create greater transparency around technology dependencies
Many consumers, municipalities and other professional actors do not necessarily have a full overview of the dependencies and cyber risks that come with a solution. Independent audits and clear documentation can therefore make it easier to choose robust solutions and avoid hidden dependencies.
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Think beyond the next software update
Many flexible devices have a lifespan of 10–20 years, while software, cloud APIs and communication standards can change much faster. Solutions must therefore be built so they can be updated, maintained and integrated with new systems over time.
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Make it easier to connect solutions
If demand-side flexibility from smaller devices is to be scaled, more common and standardised integration protocols are needed. This will make it easier for suppliers to develop solutions that work across different brands and types of devices.
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Build in security and robustness from the beginning
When more smaller devices are connected and can be controlled flexibly, cybersecurity becomes even more important. There should therefore be clear requirements for access control, data protection, secure updates, network separation and documented system robustness.
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Actively use European standards and initiatives
European initiatives, common standards, data formats and protocols can help create more open and interoperable solutions. The more actors use them, the greater value they create for the market as a whole.
The Danish electricity grid is not an island
When Denmark strengthens demand-side flexibility, we should look beyond our own borders. Many of the technical frameworks and market principles needed to make flexible devices work together with the energy system are already being developed internationally – not least in the EU. It is therefore important that Danish solutions are built to fit into common European tracks, rather than ending up as isolated systems that later need to be rebuilt.
This places demands on the way we design digital services. They must be adjustable and capable of further development as legislation, standards and technologies change. Otherwise, we risk locking ourselves into solutions that quickly become expensive to maintain or difficult to connect with the rest of the market.
At the same time, the analysis points out that the next step is not primarily about more data. It is more about better common rules of play for how devices, control systems, flexibility service providers and the energy system can communicate. Here, standardisation, interoperability and open integration options will be crucial.
“It has been rewarding to work on our part of the report because it brings together several tracks that are often discussed separately: regulation, standards, data and local activation. When you look at them together, it becomes clearer both what is already in place and where the next choices lie. The report also points to several possible directions going forward, including how dynamic price signals can play a role,”
The small electrical devices we have in our homes may end up playing a major role in the electricity grid of the future. But this requires the solutions to be developed from the outset with security, digital control and long lifespan in mind.
