D2.1 Report on Enabling Regulatory Mechanism to Trial Innovation in Cities «pending approval»

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The deliverable 2.1, Report on Enabling Regulatory Mechanism to Trial Innovation in Cities, was submitted by Trondheim Kommune in July 2019. Following, the executive summary of the deliverable:

This report investigates and analyses how EU legislations and national regulations influence the process of establishing positive energy blocks (PEBs), positive energy districts (PEDs) and community grid systems (CGSs) – and how they could be processed and operated within the framework of a local energy market. Within the scope of the report, these terms are defined and understood in the following way:

Positive Energy Block (PEB):​ A compact area including at least three mixed use buildings (> 15.000 sqm) and local production which over a year produce more energy than it consumes. In Ireland the PEB will be referred to as the Community Grid System (CGS) as described below.

Positive Energy District (PED): Mixed-use energy efficient districts that have net zero carbon dioxide emissions and actively manage an annual local surplus production of renewable energy.

Local Energy Market:​ A transparent market accessible for all appropriately metered assets – independent of size – within a PEB or PED. Could be local production or local consumption. The local market operation includes system operation.

Community Grid System (CGS): Community Grid System (incorporating smart-grid PEB’s) is a group of distribution network connected electrical resources, within a clearly defined boundary in the distribution system, with a single defined logical connection point to the wider grid. Unlike a traditional Microgrid, the Community Grid is a logical rather than a physical connection point in which it is obligated to autonomously maintain disturbance-neutrality at that point. The concept of the Community Grid is that of a virtual “microgrid”, where the energy entities (demand customers, generation and energy storage) are connected to the existing DSO network in a similar manner to today.

The project demonstrations will be implemented under actual national regulatory regimes with relevant dispensations. However, an extensive implementation and upscaling of the tested solutions demands compatibility with current and future EU regulations.

The major scope of the project is to identify, describe and support processes that enables positive energy blocks and districts. It is focused on how these rather progressive and innovative processes are challenging established operational routines in the countries of the actual Lighthouse and Follower cities. For the project it is investigated and done through a gap analysis between Norway and Ireland for the Lighthouse Cities of Trondheim and Limerick. It is included an overall comparison with and between the Follower Cities of Pisek in Czech Republic, Võru in Estonia, Alba Iulia in Romania, Smolyan in Bulgaria and Sestao Berri in Spain.

A Positive Energy Block or District is possible where the annual energy production within an area is greater than energy consumed within the same area. To make this possible it is crucial to address all existing and new incentives including how these incentives should be amplified by using new technology and business models. For a basic understanding of all the implications in the process towards this scope, how the power market is operated is addressed – both as an electric and a financial system. Within the EU framework the power market includes the following six r​ oles​:

Power producer​ – generates and sells production through market operator or bilaterally. Market operator​ – receives bids and clears the market (neutral).
System operator​ – ensures that the system is operated electrically correct/optimal.
Grid operator​ – transports electricity to customer.

Supplier​ – buys or generates electricity and sells it to a customer. Customer​ – buys electricity for consumption.

The roles interact digitally for metering, system services, settlement and payment services. For the local market as demonstrated in the +CityxChange project, these interactions are simplified, and the roles are reduced from six to four due to that the operation is local and partly automated.

The identified incentives for setting up a PEB will be strengthened due to that local energy resources are given a real-time market value. The incentives will vary for the players within the local energy market. The main tasks to be executed within the PEB demonstrations are:

  • Generate electricity – as an independent power producer – locally without any upper limits.
  • Sell produced electricity to a local market operator or bilateral.
  • Third parties allowed to own and operate local storage of electricity and heat.
  • Sell storage products either as energy, capacity and system service from battery to local market or local system operator or local grid company.
  • Sell surplus energy to the global market through a local market operator.

The gap analysis from Norway and Ireland has identified that to be able to operate a local market including a community grid system special permissions are required. For the Trondheim demonstrations, the Distribution System Operator (DSO) TrønderEnergi will act as the operator of the PEB – the Community System Operator (CSO). The DSO is already granted with the necessary dispensations, thus most likely only a few applications to the regulator is necessary in order to perform the demonstrator. The gap analysis identifies need for changes that are crucial to be able to operate a sustainable PEB within a local power market – after the demonstration period.

The gap analysis for Limerick is more extensive, due to the fact that a new entrant – Community System Operator(CSO) – will operate the local energy market on a pilot basis for the duration of the project, under the supervision of the current DSO. Several dispensations need to be granted to the third party CSO. At the replication level of the project the role of CSO, in many jurisdictions, will conflict with the DSO role under Law.

DSOs are funded under the “Common Good” Principal – in this way freeing up their “Commons” type system for use by producers, system services providers and others. Meantime DSO have, in most jurisdictions, the primary objective of providing the best value possible to all consumers, as determined annually by the Energy Regulator.

DSO-power is not naturally symbiotic, or under regulations, with the strict obligations of CSOs, who must deal with the enabled of ever increasing levels of new Renewable & Recycling Energy Electricity Generators connected under Disturbance Neutral Prosumer Group (Franchised Local Energy Communities – FLEC).

For the Follower Cities, the basic regulatory and policy conditions are mapped, with a focus on replication of the processes and enabling the GAP analyses for the respective countries.“

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