What is flexibility?
Flexibility means modulating electricity production and/or consumption upwards or downwards. Flexibility is not just a question of productivity, i.e. HOW MUCH can be injected or taken from the grid, but also of regulation, i.e. WHEN is it most appropriate. The aim firstly is to minimize consumption costs or maximize injection revenues and secondly to balance power grids at all times. Their frequency must be maintained as close as possible to 50MHz to ensure that machines in industry, services, and residential consumption all run smoothly. The rule is simple: the quantity of electricity injected into the grid must always remain equal to the withdrawn amounts. Excessive deviation can lead to malfunctions and, in severe cases, blackouts.
Why is flexibility increasingly necessary?
Unlike gas or oil, electricity has limited storage options, though advancements in battery storage (BESS) and other technologies are emerging. However, electricity consumption is constantly changing, depending on the season, day of the week, time of day or night, weather, industrial production cycles, and so on. Electricity supply must therefore be able to constantly adapt to this extreme variability.
Now, under the impetus of the renewable energy boom, the consumption variability has been compounded by the variability in electricity production. Because wind and solar power are weather-dependent, they are inherently intermittent.
ENGIE projects that by 2050, the demand for flexibility in Europe will increase six-fold, driven by an 80% rise in electricity demand and a significant increase in wind and solar power generation.
What is the value of the flexibility?
The value of flexibility appears at three levels:
- Avoiding consumption peaks: Here, flexibility consists of increasing production or reducing consumption based on a given alert from the day for the next day. Many countries, including France, have set up capacity mechanisms in order to provide financial incentives for the development or maintenance in operational conditions of such capacities capable of producing or reducing their consumption during peak days.
- Balancing the electricity network in real time by participating in the transmission system operator’s reserve mechanisms: frequency control (FCR), voltage control (aFRR and mFRR): in these mechanisms, the transmission system operator reserves a capacity and pays an income in €/MW in return for the flexibility availability. Furthermore, in the event of use on the aFRR or mFRR, the TSO pays the flexibility operator an amount depending on the produced volume
- Monetizing on the electricity markets the ability to distort its consumption to minimize the costs of supplying electricity to a site. It is about consuming more when prices are low or even negative and less when prices are high. The more you can adapt the consumption in real time, the more you can create value.
Demand flexibility
Guillaume Lehec, Head of Flexibility Services at ENGIE, recalls that “Historically, France developed an initial flexibility system that was simple and yet effective. It was based on peak/off-peak demand and EJP days (peak-shaving days during which energy prices are far higher to incentivize to limit the consumption . This created flexibility through a price signal.” This mechanism – known as “load shedding” – has encountered some success with industrial companies, which can choose the most suitable time to operate their machines. However, this virtuous approach does not allow to meet the new flexibility needs. Indeed, the intermittency of renewable production gives rise on the one hand to increasing volatility on the energy market (with very high prices and negative prices) and on the other hand to the need to adapt quickly to the imbalance which can be linked either to overproduction or to missing production.
In this new landscape, we need a new kind of demand side flexibility involving fine-tuned control of end-use consumption directly by the flexibility operator. Real-time control of connected heating systems for residential customers illustrates this approach well. “The operator turns down the heating from 8 a.m. to 8:30 a.m., accompanied by a tariff information signal, and turns it back up again from 8:30 a.m. to 9 a.m. The customer continues to enjoy the expected level of comfort because the energy is stored as heat in the walls, forming a storage (rather like a battery), which the operator can easily model and operate”, says Guillaume Lehec.
Implementing this kind of demand side management for industrial customers requires considering each sector’s specific features. Guillaume Lehec explains the approach:
“We have many industrial customers with available capacity. We help them to identify their flexibility by working with them on their processes to gain a detailed understanding of how they work. This enables us to help them manage and optimize their energy reserves. We are sometimes surprised by the size of their reserves, and our customers are also surprised by the benefits of our work!”.
Currently, a significant majority of companies, organizations, and governments are establishing ambitious decarbonization targets. Energy markets are becoming increasingly complex and dynamic. In this context, ENGIE International Supply & Energy Management, leveraging the expertise of its teams, particularly in the field of flexibility, is positioning itself as a crucial partner for entities seeking to advance in the energy transition.