BELGIUM’S TRANSMISSION SYSTEM OPERATOR EYES BLOCKCHAIN FOR DEMAND RESPONSE

In June 2017 – as Europe faced forecasts of (yet another) summer of record-breaking heat waves – the continent’s grid operators were busy planning how to keep the grid balanced and the lights on. Italy, for one, planned to bring shut-down power plants back online to meet demand. For another, Poland planned to import power from Germany, who’s robust solar output aligned well with Poland’s peak.

More recently, as the Winter 2017/2018 season approached – and as Reuters reported in November – attention shifted to how to manage the season’s peak demand. In Belgium, this winter’s peak is expected to surpass 14.1 GW, roughly 40% higher than the ~10 GW of demand from the Summer Outlook 2017. Unexpected and deeper-than-usual cold snaps only stress the grid further.

Whether in response to summer heat waves or winter’s dark chill, when it comes to peaking electricity needs, demand response has figured centrally in the story.

 

Belgium’s electricity grid is evolving and so is Elia, its TSO.

Elia, Belgium’s transmission system operator, has in recent years been gaining attention and recognition for its progressive embrace of demand response. “Traditional” demand response taps a relatively few number of participating big assets. Yet as Elia looks to the future, it increasingly expects to conversely source flexibility from a large number of small assets.

From Elia’s perspective, the future looks increasingly electric and decentralized—distributed generation (e.g., rooftop solar PV), behind-the-meter storage, intelligent home appliances, electrification of assets such as automobiles. Such a future demands an appropriate communication platform, market design that enables near-real-time transactions, and the necessary intelligence (e.g., methods, algorithms) to tap and coordinate millions of assets to extract the most value.

In this way, Elia has been advancing a more-dynamic view of demand-side flexibility in developing and opening its portfolio of balancing products. Such innovation comes at a ripe time for a country whose electricity system is undergoing rapid transformation.

Belgium is amidst a nuclear phase out, with the nation’s remaining nuclear power plants due to close by 2025. In addition, in the wake of a string of recent and anticipated coal- and gas-fired power plant closures, much of Belgium’s new generating capacity in the coming years is expected to come from renewables, supplemented by natural gas and cross-border exchanges via interconnections. The rise of renewables in particular will further amplify the need for balancing products such as demand-side management.

In a recent report, Elia describes another, fundamental shift in Belgium’s grid: the ubiquitous rise of domestic, decentralized, sustainable generation and other technologies—from smart meters to electric vehicles to rooftop solar. To the company’s credit, Elia is committed to “making the energy transition happen” (and has built out a bold vision in support of that goal).

“The grid is getting more complex than ever before,” explains Menno Janssens, head of innovation at Elia. “We used to have a handful of power plants to manage. Now we’re talking about thousands and eventually millions of assets to manage, including variable renewable energy generation such as wind and solar. It’s a mind shift.”

 

Opening market access for demand-side flexibility

As Belgium’s transmission system operator (with more than 8,000 km of lines and underground cables), Elia’s chief mandate is to ensure that production and consumption are always balanced, thus connecting generators, the distribution system, and end users… all while serving as something of a hub for Western Europe. But Elia is also no stranger to demand-side flexibility.

“In 2013 the company began a demand response pilot program for commercial and industrial (C&I) customers that has grown quickly from 260 MW to more than 850 MW providing capacity reserves,” notes REstore, a company that focuses on aggregating and automating customers in C&I demand-response programs. On average, Elia contracts for 300 MW of such capacity in its tertiary balancing market each month. And according to REstore, Elia is among Europe’s leaders for demand response participation in ancillary services markets. Along those lines, in 2016 for the first time Elia contracted fast-acting demand-response resources to supply primary reserve services in the balancing market, again leveraging larger C&I customers with flexible loads.

The potential is even greater when encompassing residential customers. A 2014 study published by researchers at Belgium’s Ghent University found that residential demand-side management could provide more than 4,700 MW of daily flexible capacity. Running a two-day scenario, researchers were able to tap residential demand-side flexibility to reduce evening peak loads by 1,265 MW, more than the generating capacity of Belgium’s largest nuclear station. Though a hypothetical scenario, it offers a glimpse into the possible future for Elia, which is just what the company is thinking.

“Our mission is to balance the Belgian electricity system 24/7/365; for that, we need flexibility. And the more renewables we add to the system, the more flexibility we need,” says Janssens. “Therefore, we’re looking deeper into the distribution grid and looking for opportunities to unlock flexibility, even at the household level.” Adds Sam Hartnett, a member of the Energy Web Foundation team and an associate at Rocky Mountain Institute: “Given Elia’s history as a high-voltage system operator, it’s a pretty remarkable shift. They’re going from only about 30 centralized assets on that grid capable of providing flexibility without technical limitations to now flipping that to look out at the distribution edge.”

 

Leveraging blockchain to expand market participation, lower transaction costs

Now Elia—an Energy Web Foundation (EWF) affiliate—is issuing a request for information (RFI) seeking software developers who could help build a blockchain-based application for automating certain demand-response processes in the grid balancing market. The application will run on Tobalaba, EWF’s blockchain test network.

“We think that blockchain can support our core business, and so we want to test the technology and really be a frontrunner with it. How can we use it to make processes more efficient and bring as many market participants as possible to the table?” says Adrien Gillès, innovation manager at Elia. “In the coming years with consumer grid-edge technologies, everyone will have opportunities to play in the flexibility market. We don’t want to make distinctions between small and big providers.”

That’s something of a revolutionary step; one that blockchain enables. “It’s much harder for a company like Elia to make the shift without something like blockchain,” explains Hartnett, who worked for a demand-response aggregator before joining EWF and RMI. “There’s normally a lower limit to the size of an asset you’d look at, because of the administrative burden and overhead costs of registering the asset, performing measurement & verification (M&V), etc. At a certain point, it’s just not worth your time.”

Blockchain promises to change that. “Now with blockchain, you get automated, inexpensive, high-integrity data for processes that were historically manually intensive with back-office functions,” Hartnett continues. “We believe blockchain will radically simplify and streamline the process, which should open market access to whole new segments previously not part of the equation.”

 

Crawl, walk, run: Elia’s approach to blockchain

For now, Elia’s demand response blockchain foray is focused on the less-often-activated balancing product, aka the tertiary reserve. Within that bucket, Elia is initially targeting only certain processes, in particular registration, measurement and verification, and financial settlement. But by design, that will eventually evolve into day-to-day and even 15-minute-increment participation, Elia hopes, thus using blockchain for other balancing products that are activated much more often than the tertiary products of this RFI. “We wanted to start with a basic pilot project and gradually add more complexity,” says Hans Vandenbroucke, head of Elia’s Belgian Market Model. Though such demand response accounts for a relatively small slice of the pie today, Janssens and Gillès expect it to play a much more significant role in the future as the grid progresses toward transactive energy models.

If—and hopefully, when—Elia does, that should help Belgium’s grid take a big leap toward the vision of an electricity grid rich in domestic, decentralized, clean energy resources. “It’s exciting to see Elia on the leading edge,” says Hartnett. “When a grid operator like Elia introduces a new technology like blockchain and puts a strong foot forward, the whole industry adapts—service providers, aggregators, consumers. They’ve put a flag in the ground for blockchain’s potential to change the market.”

 

For more information, or to receive a copy of Elia’s blockchain demand response application RFI, please contact elia-rfi@energyweb.org.

Peter Bronski (peter.bronski@energyweb.org) leads marketing and communications for Energy Web Foundation, and is the founder of Inflection Point Agency and an alum of Rocky Mountain Institute and Panasonic.

Image Credit: Dimitris Kamaras | Flickr (CC BY 2.0)

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