Internet of Things: ‘a game changer’ for DR
Platts, Power in Europe, 23 October 2017
Mixing and matching: REstore explains how automated aggregation is earning demand response participants more than they can get by going it alone.
Automated demand response company REstore has signed agreements with Statkraft, IthoDaalderop and TerHills to market synthetic portfolios of batteries, electric boilers and commercial/industrial consumers into primary reserve markets in continental Europe.
The company has contracted 140 large lithium-ion batteries, installed at the TerHills hotel resort on the Belgian/Dutch border, to deliver 18 MW of primary reserve (frequency regulation) to Belgian TSO Elia from spring 2018, via REstore’s Flexpond demand response platform. Meanwhile Statkraft Markets has agreed to place its 3 MW lithium-ion battery, at Dörverden in Germany, into Flexpond.
Finally, REstore has signed a technology partnership with IthoDaalderop, a manufacturer of domestic heating, hot water and ventilation systems, installing chips in electric boilers that enable them to join Flexpond.
Combining assets with differing characteristics in Flexpond meant participants earned more for doing less, REstore co-chief executive Pieter-Jan Mermans told S&P Global Platts October 12.
This was particularly remarkable for Statkraft Markets, one of Europe’s premier energy traders with a vast portfolio of assets under its management.
“Statkraft’s move from monetizing the battery one-on-one in the primary reserve market, to using Flexpond as a means to monetize the battery in a pool, generates a much better return,” Mermans said.
“The logic applies to the other two agreements [with TerHills and IthoDaalderop]: we don’t put an asset one-on-one in the market, such that it has to comply with all specifications. Our patented algorithms make a synthetic portfolio, where batteries, commercial consumers and, eventually, flexible boilers are combined, each with a different role, but together delivering dependable frequency regulation/primary reserve from the grid operator perspective,” he said.
The technical characteristics of batteries, in particular their fast reactivity, allow slower industrial loads to participate in the lucrative market for primary reserve, REstore’s other co-CEO, Jan-Willem Rombouts, said.
The battery will provide fast residual power for frequency deviations within the +/- 100 mHz band, while the industrial flexibility and electric boilers deliver reserve power outside the +/- 100 mHz band,” he said.
While batteries were suited to rapid recycling, they were not suited to delivering large volumes of energy.
“Remaining at a state of charge at or above 50% while rapidly cycling up and down is actually good for battery lifetime,” Rombouts said.
That’s different to a large industrial process, which typically cannot respond very quickly, or cycle up and down with rapidity. It has less difficulty, however, in delivering a significant amount of energy for a full hour or more,” he said.
Electric boiler chips
The deal with Dutch household appliance manufacturer IthoDaalderop meanwhile opens up a new world of retail demand response.
Initially REstore focused on aggregating industrial and commercial demand response, signing up the likes of Arcelor, Mittal and Total to its Flexpond platform, selling up and down regulation into balancing markets to mutual benefit.
Extending aggregation to the residential segment was unattractive for two reasons: the prohibitive cost of connectivity (installing a gateway box in a house destroyed any business case); and the lack of regulation around the use of flexible power on the low voltage grid.
“But then we realized last year that things were changing, with the Internet of Things allowing communication with household devices in a very efficient, cheap way,” Rombouts said.
This was a reference to embedded connectivity – a chip built into a device before it leaves the factory. Once installed in the household, the chip automatically connects to the Cloud.
“That’s a game-changer. The chip is a cheap, small sensor that runs on extremely low power with good connectivity,” he said.
Plug and play
Breakthrough number two has been recognition by European regulators of the importance of demand response in the residential sector.
With the European Commission seeking to empower the consumer in its Clean Energy Package proposals, allowing households to benefit from grid stabilization is a priority as smart meter programs are rolled out.
“Our focus has been forging partnerships with electric boiler and storage manufacturers,” Rombouts said. “Our role is in the back office, making sure devices can connect to Flexpond. The business case is profitable: a boiler owner could earn up to £50/year, compared with the cost of the boiler at £300-£350.”
For the customer the proposition is basically one of plug-and-play. The concept is explained and boundary conditions set, with a pledge that they will never be breached. Hot water and heat will be available when and where required.
“It is interesting that people doubt the value of this, saying “but boilers only operate for a few hours a day.” That is exactly why they are a useful resource – to absorb surplus energy, rather than to release energy,” Rombouts said.
Increasingly, up regulation is required to stabilize frequency at times of surplus power on the grid.
“It may not happen that often, but when boilers do turn on a little earlier than normal the energy efficiency gains are considerable, while the impact on the end user is minimal,” he said.