+CityxChange partner, Aneo (formerly Trønderenergi), a Nordic renewable energy company, has successfully developed and deployed a novel solution for local energy and flexibility markets (LFM) in the two Positive Energy Blocks, Brattøra and Sluppen, located in Lighthouse City Trondheim.
As a Horizon 2020 project, +CityxChange aims to pilot integrated, innovative, and replicable solutions for Positive Energy Blocks & Districts, which are developed and tested in Lighthouse Cities (Trondheim & Limerick), in close collaboration with the Follower Cities (Alba Iulia, Písek, Sestao, Smolyan, and Võru). The long-term goal of the project is to create sustainable urban ecosystems with zero emissions and achieve 100% renewable energy city-regions by 2050.
ANEO’s work on LFMs plays a key role in establishing successful Positive Energy Blocks in Trondheim, and was recently awarded 2nd place at the Norwegian Smartgrid Centre’s Innovation Award 2023. Their groundbreaking solution has great potential for upscaling and replication, promising to enhance energy market efficiency and contributing to the broader energy transition.
What exactly is a local energy and flexibility market (LFM)?
The market solution is a one-of-a-kind, comprehensive innovation that incorporates the same steps and actions as an ‘ordinary’ global power market (think bid matching, trading, settlements, measuring, invoicing, etc.). The local energy and flexibility market essentially functions as a downscaled power market, in which the individual assets trade energy and user flexibility with each other, and then the market itself trades system services with the local Distributed System Operator (DSO).
The two local markets consist of a total of 16 buildings/installations involved in the energy trade (6 at Sluppen and 10 at Brattøra). These buildings contain 29 individual assets (11 at Sluppen and 18 at Brattøra) that participate in the market, including PV systems, heat pumps, battery storage, and HVAC systems, as well as Vehicle to Grid (V2G), EV chargers, and E-busses. These assets act as individual market actors, partaking in the buying and selling of energy.
For practical reasons, the market solution currently operates on a 60-minute time resolution, however it is capable of performing trades at a 15-minute time resolution and will soon transition to this shorter time resolution. Trading is based on a set of predefined trading rules—for example, how much capacity can be pulled from a certain flexible asset or local PV system at a certain time of the day/week/year. The market is fully automated, based on novel trading algorithms (or ‘trading rules’) that improve themselves through machine learning.
The solution is designed and operates within two main trading modules: the DSO-round and the Asset-round. As you would expect, the DSO-round is exclusively for DSO services, and includes all available user flexibility. In this round, flexibility is sold as a so-called ‘system service’ to the DSO. Local PV production and other unregulated energy resources are excluded from this part of the market trading, making the local user flexibility potential/volume a predictable and stable source. As a result, the local user flexibility is highly viable as a DSO system service. Results also show that the local DSO is willing to pay for such system services, given their contribution to the balancing of the local energy grid.
The Asset-round, on the other hand, involves all energy bids and bid offers, which are made available from the buildings and their assets to the local marketplace. In this sense, energy production (kWh) is sold to local customers, who are thus also considered assets in this equation. The availability and volumes, both for bids and bid offers, are reported on the local marketplace at as close as 15 minutes before each hour (trade) starts.
Why is this important?
The market has been fully operational for more than a year, during which we have been able to verify it as a viable, practical market solution, and have gained knowledge on how to widely scale and replicate the market to other local contexts. During this time, ANEO has gathered extensive results showcasing how local Renewable Energy System (RES) production (primarily PV energy), also known as Distributed Energy Resource (DER) capacity, is sold locally. Currently, more than 80% can be sold, leading to a distinct 6% reduction of the local peak load, and according to estimations, a reduction of 20% could soon be obtainable. In Norway, the solution has already reduced tension on the local ‘Distribution grid’, and even the ‘Regional grid’. If scaled-up, this solution has the potential to have a positive impact on the larger ‘Transmission grid’. This will have important implications for increasing grid capacity and reducing grid bottlenecks.
The +CxC project has estimated that with the LFM solution, it could be possible to increase local energy resource utilisation efficiency by up to 20% and even more in certain specific periods. Harnessing flexibility can ease the burden on the grid and possibly circumvent the need for costly infrastructure upgrades. Currently, the anticipated costs for grid upgrades and maintenance in Norway are estimated to be close to 20 billion euros, which will be paid for by consumers through grid taxes, making the LFM solution highly consequential. Efficient utilisation of user flexibility on the local scale may also reduce energy costs for the consumer, having a significant socio-economic impact and potentially contributing to the reduction of energy poverty.
Why isn’t this happening everywhere?
While the +CxC LFM is highly successful, there are still challenges regarding the potential for replication and upscaling, and the journey is far from over. A major barrier to implementation is the need to update the current grid and energy market regulation in order to actually make use of the digital opportunities we have available. Regulatory approval is key to transforming an LFM from a digital solution that trades energy and flexibility, into a solution where trades executed within the market will be accounted for by the existing electrical system and market.
Furthermore, local market solutions still lack sufficient economic incentives, with only a slightly positive return on investments for the market owners and operators, through peak shaving and peak shifting. While participants in the +CxC LFM are drawn by the economic advantages for trading local flexibility and energy, these benefits are currently dependent on local DSO funds. The absence of direct economic gains from local energy trading and DSO service means it lacks adequate incentives for operating and integrating local markets.
The local energy market approach and solutions demonstrated in Trondheim are highly viable, and key for a successful energy transition. An upscaled +CityxChange LFM could not only increase local utilisation of renewable energy but also be a strong mitigator of increasing grid capacity issues, having positive financial, socio-economic, and environmental impacts if adequately replicated and scaled.
The aim is to further develop the energy market to leverage the ICT advancements and foster a sustainable, flexible, and decentralised electricity system that empowers individuals and communities to actively participate. The solution has the potential to accelerate local electricity production and demand investments, optimise grid investments through smart technologies, and facilitate a transition towards sustainable cities.
Curious to learn more? Read the full deliverable, D5.6: Trondheim Flexibility Market Deployment Report, and check out the two dashboards displaying the live trades and summary of results and impacts:
Also be sure to download our ‘How to PED cookbook’ for an overview of our project’s main outcomes and achievements.