Roundtable 2: Energy Efficiency and Demand Management · Roundtable 2: Energy Efficiency and Demand...

Roundtable 2:

Energy Efficiency and Demand Management

• What experiences can serve as best practice examples to

manage demand?

• Which policies are most effective in pushing their employment?

ALEXANDRA LANGENHELD | WASHINGTON, 10.12.2013

Facilitated discussion – regulatory aspects and

market models

• Brief presentation of Agora Energiewende and our activities on

demand response

• Brief introduction to the topic and kick-off discussion on demand

response

• Wrap-up and key take aways energy efficiency and demand response

2 Alexandra Langenheld | Washington, 10.12.2013

Electricity Transitions in Europe and the United States – Demand Response

Agora Energiewende – a Snapshot

• Agora Energiewende: a Berlin-based Energy Policy Think Tank, working to enhance

the German Energiewende, led by former secretary of state

• Our ultimate goal: to support decision-makers to set the course towards achieving

Germany´s long-term energy targets through convening dialogues and commissioning

research

• We are driven by the question: What concrete legislation, initiatives or measures are

required to make the Energiewende a success in Germany

• We are independent and non-partisan



Agora Energiewende – a Snapshot

• A key component is our Council of Agora: a high level group of stakeholders that

meet regularly under Chatham House Rules and engage in constructive dialogue on

fundamental elements of the Energiewende

• Members include: Ministers, Vice-Ministers, Parlamentarians (German and European),

presidents of Federal Regulator (Bundesnetzagentur) and Federal Environmental

Agency (Umweltbundesamt), CEOs from energy intensive industry and many more

multiplyers and decision-makers



Key Decision Makers Come Together

in the "Council of Agora Energiewende"

German

Government

Federal

States

Government

European

Union

National

Authorities

Labour

Unions

Environ-

mental NGOs

Consumer

Protection

Grid

operator

Energy

Intensive

Industry

Renewable

Energy Industry

Energy

Utilities

Municipal

Research

Franz Untersteller, MdL (Grüne)

State Minister for Environment, Climate and

Energy, Baden-Württemberg

28 Members

Hildegard Müller Chair of the executive board

German Association of Energy and

Water Industries (BDEW)

Prof. Dr. Ottmar Edenhofer

Deputy Director, Potsdam-Institute for Climate

Impact Research (PIK)

Director Mercator Research Institute on Global

Commons and Climate Change (MCC)

Matthias Machnig (SPD)

State Minister for Economy,

Employment and Technology,

Thüringen

Lothar Schulze

Boardmember,

Windwärts Energie

GmbH

Dr. Martin Iffert CEO,

Trimet Aluminium AG

Boris Schucht CEO,

50Hertz Transmission GmbH

Mechthild Wörsdörfer EU-Commission, Head of Unit Energy Policy,

Directorate General Energy (DG ENER)

Stefan Kapferer (FDP)

State Secretary, Federal Ministry for

Economy and Technology

Jochen Homann President, Federal Network

Agency (German

Regulator)

Jürgen Becker (CDU) State Secretary, Federal Ministry for Environment,

Nature Protection and Nuclear Safety



Agora Energiewende – our activities on

demand response

• In Germany´s energy system of the future, the potential for demand response must be

leveraged to have the greatest possible impact:

German Energiewende: carbon-neutral economy by 2050, phase-out of nuclear by

2022 in combination with ambitious targets for renewables and efficiency – „it´s all

about wind and solar“!

Flexibility challenge: coordination of wind and solar power production with rest of

the power system, esp. fossil power plants

Demand response to make a clean and cost-effective contribution to maintain system

balance – but the „right policy architecture“ still needs to be created!

• In order to fully benefit from the opportunities for flexibility and help to create the

necessary regulatory and organizational framework, Agora Energiewende is working on

the following key questions:




demand response

1. What economic potential is there for load management to adapt demand to the

fluctuating power generation from wind and sun?

The cost-benefit ratio of options for shifting demand varies greatly. Load management

should therefore first be implemented in sectors with highest potential, such as

industry, and those regions that are increasingly affected by power plant or grid

congestions – in order to balance out temporary regional electricity shortages or

surpluses. Agora Energiewende has currently a project in the works to identify

potential and costs of demand response in the context of the specific situation of

southern Germany (power system reliability under stress due to nuclear phase-out,

adequacy challenge, transmission challenge).

Key questions and set-up of case study:

Contribution of load management to reducing peak demand in southern Germany

Focus on industrial and commercial processes

In a first-ever undertaking: analysis of potential, costs, barriers and necessary

economic incentives for the south



• On behalf of Agora Energiewende, project director:

Alexandra Langenheld, [email protected]

• In cooperation with Ministries of the Environment of Baden-Württemberg and Bavaria

• Authors: Fraunhofer ISI and Forschungsgesellschaft für Energiewirtschaft

• Supported by industry and trade associations, electricity utilities, network operators and regulators

• Download under: http://www.agora-energiewende.org/topics/efficiency-and-load-management/

• Follow-up: Pilot activities and National DR Action Plan, as study had major impact on discussion on national level on future market design

Alexandra Langenheld | Washington, 10.12.2013 8


Case Study: Load management as a way of

covering peak demand in southern Germany

mailto:[email protected]



http://www.agora-energiewende.org/topics/efficiency-and-load-management/












demand response

2. Under what conditions can the potential of load management best be tapped?

In a first step to improve Germany´s current framework for load management, Agora

Energiewende is examining various existing regulations and mechanisms, such as for

grid tariffs and ancillary services, as well as prequalification criteria and conditions for

bidding.

3. What does a future market design for load management look like?

The existing energy-only market sends insufficient signals to make load management

an equivalent alternative to generation. Looking ahead we want to contribute to

creating a market model that allows participation by consumers in market activities.

What kind of economic incentives are necessary to reap the benefits and what does a

future market design look like?

How need the rules of the electricity market be changed, that allows for a non-

discriminatory market access for demand-side resources to actively participate?

We can learn from US experience!



DR in California and Germany: lessons to learn

from each other´s experience

• Workshops with CEC, CPUC, CAISO, PG&E, SMUD, EnerNoc, UC Berkeley, LBNL,

Stanford University and other stakeholders and observers of Californian and US

American electricity market, October 2013

• Discussion on regulatory and organizational framework for demand response

• Facilitated by German Consulate in San Francisco under Transatlantic Climate Bridge

• In cooperation with Institute for Applied Sustainability Studies and German Environment

Ministry

• Follow-up: both states eager to unlock their respective DR potentials and to get more

participation of DR to deal with more frequent and shorter events; moment for

cooperation timely as policy/rulemaking currently ongoing in CA and DE

Transatlantic Strategic Dialogue of Worldwatch Institute



Facilitated discussion – regulatory aspects and

market models

Why care?

1. Consumer revenue:

In the US over 2 billion Euros direct revenues from DR (bill savings, avoided

investments, primarily within balancing, capacity markets)

Source of revenue could also be made available in Europe!

2. System benefits:

Several benefits to electricity system: increased efficiency of asset utilization,

supporting greater penetration of renewables on the grid, easing regional capacity/

congestion issues, reducing required generator margin and costs of calling on

traditional reserves, including associated environmental benefits

System benefits could be made available in Europe, too!

3. Increased efficiency:

In the US 29.5 GW of demand-side resources under control and available to market

participants, reducing need for peaking plants and increasing efficiency; Canada,

Australia, South Korea, Japan also have significant levels of participation

Resource could also become available within European markets!

(SEDC 2013: A Demand Response Action Plan for Europe)



Facilitated discussion – objective of this

roundtable

• To discuss overarching guiding principles for market participants and policy makers as

they gradually re-design the electricity market regulation in a way that accounts for

requirements of enabling demand response and other flexibility resources:

Key question being: How to fully open electricity markets to consumer

participation, that allows for a non-discriminatory market access and demand-side

resources to actively participate as an alternative to generation?

• Three major components (SEDC 2013):

1. Comparable access to markets

2. Comparable compensation

3. Fair and reasonable risk management

• Guiding questions:

1. What experiences can serve as best practice examples to manage demand?

2. Which policies are most effective in pushing their employment?



Facilitated discussion – sub-questions/

icebreakers

• What do you see as the main opportunities and benefits for demand-side management in

existing/future markets and for the grid?

• What do you see as the main barriers and challenges (e.g. regulatory/legislative, market, economical,

technical) to reaping the benefits?

• What experiences can serve as best practice examples for demand-side management and which

policies do you see as most effective in pushing their employment (EU/US)?

Are additional enabling policies necessary and would they be justified (premium price/floor price,

quote for DR)?

Is a generic product sufficient or is market segmentation necessary?

Should the characteristics of a DR program be adapted to the different limitations of DR resources?

Which parties should be able to aggregate loads and bid them into the markets (capacity, ancillary

services, …)?

Should the contractual relationships for DR providers be standardized by law?

• In what way will the implementation of the EU Energy Efficiency Directive affect your

organisation/involvement with demand-side management?

• Have you undertaken/ are you aware of studies examining the cost-benefits of demand-side

management measures (for your country or for your organisation), and/or their cost-effectiveness

relative to other flexibility measures?



80

60

40

20

Mo Di Mi Do Fr Sa So

GW

Demand

Photovoltaic Hydro

Fossil Power Wind Onshore/Offshore

Biomass

Demand: ~80 GW

Wind: ~4 GW

PV: 0 GW

• In 2022, 15-25 GW

controllable resources are

needed which operate

less than 200 hours per

year

• Open cycle gas turbines

can meet this demand

cheaply (35–70 million

EUR per GW and year)

• Demand-side measures

will further reduce costs


Illustration of Challenges of Securing Supply in

times of Peak Demand, November 2022, DE

Alexandra Langenheld | Washington, 10.12.2013 14

Questions or Comments? Feel free to contact me:

[email protected]

Agora Energiewende

Rosenstraße 2

10178 Berlin

Agora Energiewende is a joint initiative of the

Mercator Foundation and the European

Climate Foundation.

T +49 (0)30 284 49 01-08

F +49 (0)30 284 49 01-29

www.agora-energiewende.de

Thank you for your attention!


Roundtable 2: Energy Efficiency and Demand Management · Roundtable 2: Energy Efficiency and Demand...

Documents

Transcript of Roundtable 2: Energy Efficiency and Demand Management · Roundtable 2: Energy Efficiency and Demand...