SEDC event EDF Vision of demand response and new opportunities for Power System

SEDC event EDF Vision of demand response and new opportunities for Power System Bernard Delpech Deputy executive vice president EDF R&D 3 October 2011

Table of Contents Context and Challenges in France Means and actors to provide flexibility(relationship between actors) Different scenarios in accordance with the needs of the system Conclusion : requirement for the future SEDC Event 2

Table of Contents Context and Challenges in France Means and actors to provide flexibility Different scenarios in accordance with the needs of the system Conclusion : requirement for the future SEDC Event 3

The issues of the demand response development in France.Since a long time the French electric system has to deal with increasing and stochastic demand French growing electricity demand Source RTE Increasing thermal sensitivity of French electric uses (heating + air conditioning, increase of temperature gradient : passage of 2100 MW/ C to 2500 MW/ C in 2025 ) Strong thermosenbility of demand in France SEDC Event 4

The share of Intermittent Renewable Energies in energy mix is expected to grow / Development of new uses with EV in France as every where in Europe Focus on Intermittent Renewable Energies In 2020, the only wind power capacity will increase from 86GW to more than 165 GW. With closures of dispatchable conventional channels: 5.8 GW in 2009 removed (55% coal industry, 24% nuclear) and construction of means of advanced or semi base. The Renovable Energies will represent France in 2020, 22-25GW for wind (against 5.3 GW in 2010) and 5-9GW for PV (against 0.8 GW in 2010) Focus on EV development Under different assumptions, electric vehicles deployment could represent a storage capacity between 3.5 and 130 GW in France in 2020. The use of these vehicles and how they are charging, are showing new challenges to the system. Potential important impact on Load Curves. Estimated number of vehicle in 2020 Scenarios Number Hypothesis No specific actions, no No particular incentives and operating development 120 000 costs in 2020 High level of Demand, regulation very favorable, Highest important infrastructure development 4 300 000 development SEDC Event 5

Renewables generation is mostly intermittent : a need of increased flexibility for the system Wind Generation (simulation of a scenario with 30% of wind share in Generation in France) 7 years of wind statistics GW 60 150 TWh, equivalent 65 à 70 GW 40 Puissance moyenne : 26% 26%, soit 17 GW 20 Puissance garantie : 6% 6% Moyenne sur 7 années 0 SEDC Event 6

The regulation changes : development of capacity mechanism Introduced by a new act (2010): NOME = New Organisation of Markets in Electricity» Decree on capacity market to be published during spring 2012; Suppliers will have an obligation to obtain capacity certificates in proportion with their peak demand; Obligations are settled and certified 3 to 5 years in advance, the level required (MW) remains to be defined by public authority; France as a whole zone, but taking to account network inter-connections; All the capacities (both from generation or demand curtailment) which contribute to meet the peak are integrated; Capacity certificates = an annual item (related to a specific year link climat or technical event). Issues currently under debate Which type of organization for capacity obligation (TSO with organized market, suppliers)? Who is able to certified and how can mesure the capacity available? What is reflecting with the price of capacity? (reliability, availability, M&V) What is the valuation of DR capability with this system? SEDC Event 7

Needs of flexibility to the European and French electrical system Cover Peak demand Growth of the peak demand is faster than the growth of energy Increased thermosensitivity New uses (at minimum ~ 600 000 electric vehicles by 2020) Ensure balance P = C and balance physical network Strong impact of the hazard on the prediction ENR Follow the load SEDC Event 8

Table of Contents Context and Challenges in France Means and actors to provide flexibility Different scenarios in accordance with the needs of the system Conclusion : requirement for the future SEDC Event 9

Several solutions to provide flexibility at different time horizons (in France) Decrease the volatility of renewable Diversification locations Better forecasting Storage possible in all issues Increasing interconnections Demand Response Active management of demand Capacity reserve for load management Increase in demand off-peak Pricing / consumer motivation (TOU) Reduced demand for peak Ex: EJP / TEMPO Market purchases Lower volatility Flexibility of conventional means of production Ex :hydraulic Note: All these solutions are not perfectly substitutables. The horizons necessary for the realization of investments are not equivalent. The realization of a production mean to cover peak demand will require three years for its implementation. DR System can be implemented quicker (<1 year), but the question of their qualifications is extremely important. In case of failure, the replacement by conventional means is long, and leave an uncovered period for the system. SEDC Event 10

Different types of Demand Response (DR) Dynamic and flexible tarifs energy Efficiency Seasonal Tariffs Fixed critical peak prices Multi-year planning / long term Participation for capacity markets and ancillary services annual Management (<5 years) New Auction on charges decreases daily forecast intraday <15 min New Emergency programs Variable-peak rate Time of Use New erase cuts New Control of the charge In place for decades Domestiques devices connected to intelligent networks Complementary ways to implement DR The opportunity to participate in any or for economic reasons New Incentive & market based programs SEDC Event 11

Which type of actors can provide flexibility with DR? Actors able to provide flexibility to the system may have the following skills Identify DR potential Technical connection to the operational platform Support on regulatory, contractual and legal aspect of DR Assessment and site preparation Control and optimize the DR Observe, study and anticipate needs of electricity markets. Manage offers submission to RTE and financial flows between actors DR Activation Maximize the recovery of deletions On all existing mechanisms Provide SI competence and coordination with other actors Provide services for players of the electrical system, and transfer of skills DR Valorisation SEDC Event 12

A wide range of potential flexibility provider to the system Energy supplier Brokerage firms SEDC Event 13

Relationship between suppliers and aggregators Relationships along the chain value We have 3-4 kinds of relationship between agregator and energy supplier throughout the chain value Covers each brick of chain value Needs Relations Provide flexibility to the system to the suppliers Outsourcing ou partnership ou competition ou Securing the activities of network operator Outsourcing ou partnership ou competition Provide services to the consumer Outsourcing ou partnership ou competition An issue of sharing gains/risks between customers, suppliers, aggregators, and network operators Bilateral contracts Examples Offers flexibility to the producer or for its behalf Ex : PG&E, GDF Suez UK Provides flexibility to the network managers TSO : Réserves pour RTE (FR), STOR (UK) DSO : Low carbon London Service offering based on the erasure energy Efficiency More... SEDC Event 14

partnership Outsourcing Integration Examples of organization observed to aggregate and manage DR EDF, integrated use, a pioneer of dynamic pricing GDF Suez acquisition and integration of UK Energy Yorkshire Outsourcing DR, PG&E EnerNOC, Comverge and other Partnerships, and EnerNOC Npower SEDC Event 15

Examples of organization observed to aggregate and manage DR EDF, integrated use, a pioneer of dynamic pricing Off-peak / on-peak : the first TOU tariff Critical Peak Pricing EJP TEMPO tariff for residential and small commercial Introduced in 1965 SEDC Event Goal: to influence the daily load curve / Smoothing the load. Induced a new use : hot water storage inducing an important electricity storage. 20 TWh, 11 millions of households. More than 1/3 of residential customers (60% in volume) have chosen this (optional) tariff. Its disappearance will induced an increase of the power required during peak periods, mainly in the morning and also in the evening => impact on the French electric system balance. Key Points Introduced in 1982 Design Consistent with the needs of the electrical system Historically low cost implementation Good customer acceptance in connection with the image of the supplier Goal: to induced consumption shifting in case of special events : high consumption (cold days) and/or transmission congestion. Prices are increased by a factor between 5 and 10, according the option during peak period; at other times prices are much lower than regulated flat tariff. Since 2006, 4 separate regions to take into account specific regional constraints (North, South, PACA, West). Since 1994, just an optional offer to firms (C&I), replaced by Tempo for residential customers. A mix of time of use and critical peak pricing offers since 1996 Twofold goal : flattening daily load and guarding against extreme events (climatic or on material). 3 types of days : «Bleu, blanc, rouge», with different prices (variation between 1 and 8 between blue days and red days). Day ahead signal on display. Choosen by 1,2% of households and 1,4% of small commercial customers Price signal a big incentive for households to shift their consumption : Between 0,5 and 1 kw/household on red days (300 MW maximum) 150 MW during white days Consumption decrease by 60% during red days compared to blue days, Consumption decrease by 24% during white days compared to Blue days (by 47% with a Energy Manager to monitor electric heating). Renew with arrival of the smart 16 meter

Examples of organization observed to aggregate and manage DR GDF Suez acquisition and integration of UK Energy Yorkshire Outsourcing DR, PG&E The partnership, Npower / Flexiticity Largest portfolio of industrial DR in the UK DR activity was acquired by merging a local energy company, Energy Yorkshire, which was already providing DR activities The first target is interruptibility in industrial processes, particularly cementry. DR Capacity - about 200 MW (study IEADSM 2007) Sources value mainly STOR DR is only a little part of the activity supplier. At the EU-DEEP project, test different types of development. A combination of mechanisms to generate more revenue for the client Discuss the future system capacity. Key Points Consistent with the needs of the electrical system Historically low cost implementation Good customer acceptance in connection with the image of the supplier Outsource DR with 22 aggregators EnerNOC Agreement Access to software available to C&I customers of PG&E : Monitoring consolidated real-time + energy saving recommendations per month, year and segmented by activity. Agreement with Comverge (5 years) Key Points Access to software available for market for individuals : management of 150 000 houses (air conditioning, water heaters, water pumps...) to reduce cosumption in emergency case. Aggregator provide services for the development of the DR capacity on the portfolio of suppliers Regulation for the emergence of aggregator Historical lack of infrastructure Lack of knowledge about customers Partnership to provide 600 MW of DR. Npower DR program is dedicated to the STOR market C&I customers With sharing of the gains and risks between the players (unknown contract conditions) Flexitricity is the largest UK agregator, its power in discussion is important. As an outsourcing process everything Npower keep its label, but Infrastructure and devices are those Fexitricity In this operation agregator sets up DR progam in a first time, and in a second time it will share the gains with the suppliers Key Points Follower strategy Save time in competition (facing GDF for example) SEDC Event 17

Table of Contents Context and Challenges in France Means and actors to provide flexibility Different scenarios in accordance with the needs of the system Conclusion : requirement for the future SEDC Event 18

Scenarios must be constructed in accordance with the needs of the system Facing complexity and constraints of flexibility, many smart grid projects attempt to integrate the skills of actors to answer questionss ahead for the demand-response in France Address, Premio, Greenly, REFEXE... Linky (Lyon, Tours) From a DR point of view, smart meter systems are: First step to inform customers on their energy use and educate them in order to improve it Acceptance of the new organization of the energy market : regulation, new players, new contracts Another example of complex coordination in Europe : "Low Carbon London An example Experiment incorporating EDF Energy SEDC Event 19

Low Carbon London (2011-2014) Different type of partners to handle all aspects of all these emerging issues Necessary cooperation between actors PRODUCT SUPPLIERS 2nd TIER PARTNERS LEAD PARTNERS SEDC Event 20

Low Carbon London Aligned with stakeholders objectives to cut C02 emissions through energy efficiency, electric heating and transport, and decentralised generation Partnering with National Grid, energy suppliers and commercial aggregators to explore commercial innovation Integration of technological and commercial innovation at scale involving direct interaction with customers and communities Key Points Targeting C & I Issue of coordination of actors Recruitment programs to customers Cover the risks Focus on distributed generation SEDC Event 21

Table of Contents Context and Challenges in France Means and actors to provide flexibility Different scenarios in accordance with the needs of the system Conclusion : requirement for the future SEDC Event 22

Conclusion : requirement for the future Better coordination of players and markets around the DR DR devices require, in the medium term,a concerted cooperation currently tested in various demonstrator DR devices require technical consistency and standardization Without this, an expected part of the potential disappears under adaptation and an expensive war standard. Growing importance of cyber-security issues There are synergies between AMM infrastructure and DR players Exchange portals for suppliers, aggregators & DSO Transmission of tariff signals & Energy management A key point : customer acceptability Most clients accept DR programs without discomfort, and with revenue. However, this aspect is still under experimentations, uses are moving. Evolution of regulation A fair regulation without differences and subsidies between DR and production investments, and without penalties Regulation in the context of unbundling must ensure that the efficiency investments for the community can be made. Promote innovation for the system SEDC Event 23