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Demand response - Use and limits in a liberalized electricity market – Peter CLAES & Michaël VAN BOSSUYT<br />
• Febeliec also insists on the need for electricity supply to follow demand, as is the<br />
case in other economic markets. If this was not the case and load were always to<br />
follow electricity supply, this would require full participation of households to<br />
demand side response, up to the level of individual appliances, a rapid<br />
development of affordable storage to smoothen the balance between demand<br />
and supply, and many other measures. It is however not compatible with<br />
industrial investments in the field in Belgium, as industrial operations often<br />
require stable regimes, as is shown by the baseload consumption profiles in<br />
many sectors and industries. To enforce this would fatally undermine industrial<br />
activities in Belgium, and accelerate the leakage of jobs and carbon-dioxide<br />
emissions.<br />
As described above, demand side flexibility is interesting in a market environment as a<br />
more cost efficient solution compared to large, not frequently used, reserve generation<br />
capacities to solve issues of generation adequacy for a limited number of hours and<br />
MWs. In countries where specific system adequacy issues have arisen over the course of<br />
the last years (such as Belgium, GB, France, …), demand side flexibility has seen<br />
progress on many levels. The appearance of new market roles as aggregators and<br />
flexibility service providers (FSPs) in general, the more active involvement of suppliers<br />
and balancing responsible parties as well as an increased demand for flexibility products<br />
from system operators have had a positive effect on the development of this segment.<br />
However, several obstacles and barriers currently still exist, hampering the development<br />
of the full potential of the demand side flexibility available within the electricity system.<br />
These barriers include:<br />
• Commercial and legal constraints: The ownership of the load flexibility is not<br />
always clear (transfer of energy); moreover, many market players with flexibility<br />
within their consumption patterns and production cycles have no incentive to<br />
make this available as they have no exposure to market prices (either because of<br />
fixed-price or non-flexible contracts, or because of lack of adequate meters such<br />
as hourly measured or smart meters) and legal stipulations can exclude certain<br />
types of flexibility (e.g. definition of demand side response excluding<br />
participation of emergency generators to certain demand side response products<br />
as they do not reduce consumption).<br />
• System constraints: The minimum size, duration, frequency of activation,<br />
notification period, and other technical constraints of demand side response,<br />
which vary between sectors and industrial processes and for which flexibility<br />
products are sometimes not compatible with technical and safety constraints, are<br />
often based on historical generation-focused requirements and not adapted to<br />
other sources of flexibility.<br />
• Grid codes and tariffs: Grid codes and tariffs should not penalize demand side<br />
flexibility participation (e.g. related to the rebound effect, where grid tariffs can<br />
penalize industrial consumers who want to catch up with production loss after<br />
Revue E Tijdschrift – 131 ste jaargang/131 e année – n° 1-2-3-4-<strong>2<strong>01</strong>5</strong> (publication mars/publicatie maart 2<strong>01</strong>7) 4