D1.3 Executive Summary
This report provides information related to the organization, conduct, discussions and outcomes of the 3rd Mas2tering workshop titled “Business Conference II: Grid Operators, Telecoms and Utilities.” The workshop was held 30 June 2016 in Anglet, France and was co-located with the 3rd edition of the Sustainable Places conference. The workshop was structured in the following manner:
- Introduction and presentation of the Mas2tering project with emphasis on its business model
- 3 presentations from invited smart grid stakeholders
- The USEF foundation (supporting framework)
- Easy Smart Grid (technology developer)
- Blaenau County Borough Council (government and customer segment)
- A guided panel discussion
In total, between 20-30 participants contributed to the workshop.
The invited presentations were insightful and are available on the Mas2tering webpage. Presentation summaries are included in this report with focus on how they impacted the panel discussion and/or relate to the Mas2tering project. Highlights include discussions on the role of the local area aggregator and mechanisms to make this new stakeholder feasible a viable business, a perspective on peer to peer energy trading in real time markets in a scenario where aggregators are no longer needed, select islands as market points of entry for new innovations because they are niche markets where regulatory aspects (present on mainlands) are avoided, and municipal rehabilitation projects as an opportunity for smart grid technology development and as an opportunity for municipalities to assume the role as smart grid market facilitators.
Primary outcomes of the workshop include:
- The development of a market transition model that facilitates smart grid discussions by identifying market phases and pinpointing the business rationale of the actors within it. Namely, suppliers targeting individual prosumers with new services and aggregators targeting local energy communities.
- The development of Mas2tering business cases complementary to the project storyline and market transition model.
- Identification of the need for continued research into approaches for the modeling and estimation of the global net benefit of flexibility management solutions across stakeholders.
- Discussion of the barriers to the uptake of the business model opportunity of the Local Flexibility Aggregator (role of actors, consumer uptake, monitoring controls and technologies)
- Discussion of the DSO value proposition for local flexibility management. The avoidance of annual predictable peak events seems the most agreed-upon starting point.
- Improved clarity on the market point of entry for the Mas2tering flexibility management platform and the consideration of municipalities as a customer segment / facilitator for smart grid technologies and services.
The workshop served as a tool for the development of D1.5 (Business Strategies and Collaboration Opportunities). A complete discussion of the concepts in this report are elaborated in D1.5.
D1.3 Table of Contents
Table of Contents
1.2 Workshop organization and details
2 Workshop Key Discussion Points
2.1 Presentation Summaries
2.1.1 Mas2tering: Introduction, Objectives, Business Models (Dr. Thomas Messervey of R2M Solution)
2.1.2 USEF: Framework and Case Study Examples (Mr. Marijn DeKoning of USEF)
2.1.3 Easy Smart Grid: Smart micro grids and cellular grids (Dr. Thomas Walter of Easy Smart Grid)
2.1.4 Blaenau Gwent County Borough Council (Amy Taylor and Sue Johnson, Council members of BGCBC)
2.2 Panel Discussion
2.3 Findings / Outcomes
2.3.1 Findings and outcomes related to the sector at large
2.3.2 Findings and outcomes specific to the Mas2tering project
The 3rd Mas2tering workshop “Business Convergence II: Grid Operators, Telecoms & Utilities” was held in Anglet, France as part of Sustainable Places 2016. The decision to hold the workshop as a part of SP16 (as opposed to conducting a stand-alone event) was taken to leverage synergies with SP16, increase networking possibilities with other smart grid researchers and smart grid research topics, to allow for conversations to occur over a series of days instead of only at the workshop itself and lastly to continue to reinforce the concept of sustainable places extending beyond buildings themselves, but to the electrical grid and energy networks they connect to beyond the building.
The project has implement both strategies (stand-alone vs. co-locating) and each has pros and cons. The 1st Mas2tering workshop was conducted in collaboration with Smart Homes Day 2014 (a TIM, Zigbee Alliance and Energy@Home association event). The 2nd workshop in 2015 was a stand-alone event at the ENGIE Headquarters in Brussels. This 3rd workshop was co-located and the 4th and final workshop in 2017 will likely be a stand-alone event. Each of the reports surrounding past workshops are available on the Mas2tering webpage and details concerning the scheduling of the fourth and final workshop will be published in early 2017. The workshop was publicized on the SP16 webpage, by the mastering project and via the Mas2tering Value Driven Advisory Group. Publishing the workshop provided the opportunity to engage with other Smart Grid projects to include IndustRE, Nobel Grid, BetsRES, Flexiciency as well as other stakeholders and organizations.
Table 1 – Workshop Attendee List
|Guest Type||Name & Affiliation|
|MAS²TERING Consortium||1. Zia Lennard, R2M Solution – Italy
2. Juan Manuel Espeche, R2M Solution – Italy
3. Thomas Messervey, R2M Solution – Italy
4. Hassan Sleiman, CEA – France
5. Sylvain Robert, CEA – France
6. Richard Hickey, Rikon/WIT – Ireland
7. Pat Lynch, Rikon/WIT – Ireland
8. JL Hippolyte, Cardiff University – UK
|Invited Guests||9. Marijn DeKoning, USEF/Powerhouse – The Netherlands
10. Alain Zarli, CSTB – France
11. Thomas Walter, Easy Smart Grid – Germany
|Additional Participants||12. Eelko Steenhuis, Cities Northern Netherlands (NG4) – The Netherlands
13. Philip Woestbroek, Enexis – The Netherlands
14. Daniel Iglhaut, TUV Rheinland – Germany
15. Matthias Wissner, WIK Gmbh – Germany
16. Daniel Scholhorn, TUV Rheinland – Germany
17. Olivier Cottet, Schneider Electric – France
18. Mia Ala-Jussela, VTT – Finland
19. Belen Gomez-Uribarri, Acciona – Spain
20. Sue John, BGCBC – UK
21. Amy Taylor, BGCBC – UK
22. Tom Bassett, BRE – UK
23. Malcolm Yadack, HFT Stuttgart – Germany
Several participants joined the event after the signature sheet was circulated. We apologize for any participants not appearing in the table.
A special thank you is given to the expert panel members of who joined the workshop, guided discussions and provided their opinions and expertise. They are Marijn DeKoning representing the USEF Foundation and commercially from energy broker Powerhouse (Netherlands), Thomas Walter from the smart grid technology company Easy Smart Grid (Germany), Amy Taylor and Sue John from the Welsh Blaenau Gwent County Borough Council and Alain Zarli from CSTB in France. Recognition is also given to the European Union as Sustainable Places is organized by the Resilient and Performer FP7 research projects and as such the event and associated projects were made possible by co-financing provided by the European Union. Lastly, a warm thank you to Nobatek for doing an excellent job facilitating all aspects as host of SP16.
System Economic View: A recurrent topic that came up during the panel discussion surrounded the difficulty of assessing system costs and system benefits concerning smart grid solutions especially considering that any specific case study or implementation will be unique. This term and concept (Global Net Benefit) has consistently been raised by ENGIE in the Mas2tering project and transfers over to challenges related to value proposition design in the business models and that it is difficult to establish prices, costs and benefits across stakeholders if we cannot without confidence model system changes across the value chain. This discussion point did not result in any particular outcome other than to acknowledge that methodologies and real world examples are needed.
Innovation violates regulations: Smart grid discussions often “get stuck” on regulatory barriers. Data privacy concerns, data accessibility, data interoperability, the role/participation of the DSO as a regulated body, the lack of settlement mechanisms/clarity between the LFA and supplier are several discussion points that also came up at this Mas2tering workshop. Continuing from the Easy Smart Grid presentation, it was interesting to revisit how islands can offer a research testbed (and viable business case) because one can find instances where regulatory aspects are avoided. That microgrids may offer a first step on mainlands and within the existing grid.
Barriers to Local Flexibility Management: Barriers was a dedicated panel topic. Discussion points clustered on the following topic areas:
- Clarity on the role of the actors: There was a discussion on the need for clarity/fairness in defining the roles of the grid actors. There was a discussion around the ambiguity of who performs what role. It was felt that this was critical in terms of aligning the interests of the actors in the grid. The role of the DSO was a prominent discussion point and whether the DSO would be willing to facilitate a market at LV level and pay for flexibility.
- Consumer participation: There was a general consensus amongst the workshop participants that consumer engagement was the one of the most critical factors in igniting the flexibility marketplace. This will require new tariff schemes, such as dynamic tariffs which will enable higher economic benefits to prosumers by trading their flexibility. It would also require a significant amount of education and promotion of the benefits of engaging in flexibility such as savings made. It was highlighted that incentives need not be primarily focused on economics but that prosumers are also interested in other factors such as contributing to the environment. Incentives will need to be complimented by new technologies for demand side flexibility to work. Local energy communities were identified as been important.
- Monitoring Controls: Participants raised the issue that flexibility will require the involvement of the TSO, DSO, BRP, Supplier, Aggregators and Prosumers and that it will be important that the system will be managed effectively to ensure stability. Actors will have to be coordinated effectively and they will need to exchange data on actions in a timely, accurate and efficient manner so as not to cause undue stress to other network actors. Surrounding this topic, USEF highlighted its market based coordination mechanism – “traffic light system”.
- Technology: discussion on MAS Discussions centered on the need for advancement in technologies to handle the complexities of the grid, stakeholders, and markets. Mas2tering used the opportunity to discuss the benefits of the use of multi-agent systems to unlock the potential of prosumer flexibility.
Difficulty of the DSO value proposition: Mas2tering seeks to engage the DSO in LV grid flexibility trading and as such a value proposition and business model must be developed. Given this, we deliberately considered this topic during the panel discussion. Discussion points included: CAPEX deferral is interesting but there is no economic mechanism to monetize it. That the DSO may be logical choice to act as a facilitator of the flexibility market. That any grid upgrades can potentially kill the flexibility business case. That DSOs have little to no incentive to make the grid more efficient (except in the UK where there is a financial return). That DSOs want to avoid peaks but don’t want to lose control. That large peak avoidance is interesting to DSOs via access to localized control power but data sharing is necessary and lacking.
Need for national level infrastructure: Discussing the opportunities for flexibility, Dr. Walter again highlighted some facts related to unlocking the value proposition in Germany which included: Germany often has a negative price balance between PV and fossil generated power, that Germany currently burns coal for flexibility and that €1 billion of wind curtailment per annum is present in the north of Germany while fossils are being burned in the south of Germany.
Role of the LFA and who occupies it: The LFA was also a deliberate discussion point as Mas2tering has made the designation of the local flexibility aggregator (LFA) to draw distinction to the challenges, opportunities and mechanics of flexibility management at the local level. Numerous actors were proposed such as the Supplier, Telco and independent. Because of their current relationship with existing prosumers it was considered that the Supplier was the most likely candidate. Nevertheless, it was highlighted that in the USA, most aggregators are independents.
Role of Municipalities in the LV grid: It was interesting to listen to a municipality engaging in smart grid concepts. During the panel session, we asked if Blaenau Gwent could see the possibility of a municipality assuming the role of the Local Flexibility Aggregator. Blaenau Gwent responded that although the possibility was not excluded, it was seen as more likely that municipalities would seek to partner with the LFA to ensure community objectives were achieved and to act as a facilitator between technologies and community opportunities. It was also expressed that there was a financial motivation behind this as well as municipalities are struggling to realize revenues. Hence, a smart grid transition can be seen as an opportunity to benefit the community in several ways which include better and more sustainable services/solutions for community members and also increased revenues for the municipality. Several examples of forward thinking municipalities (Nice in particular) were then discussed.
1.1 Findings / Outcomes
1.1.1 Findings and outcomes related to the sector at large
Global net benefit: In business model discussions, it is often stated as a warning that the value of LV flexibility is too low to make it financially viable. Such case studies may lack a system view (impact across stakeholders) and may lack a consideration of how the market will function once mature. The finding is that continued research is needed into understanding system costs and system benefits.
Market transition and the positioning of the actors within it: At points, it was hard to understand the point or perspective of workshop participants. Restated, it has been a theme across workshops that discussions can be unclear or circular. Reflecting on why this is the case, we realized that participants are often referring to different points of time (e.g. different assumptions about the state of maturity of the market) or from different stakeholder perspectives (e.g. the business case for each different stakeholder is different). The outcome was that we need to ensure that comments and perspectives are placed within the context of a market in transition and that the business case of the stakeholder in consideration is made clear. In deliverable D1.5, this led to the development of Figure 15 which argues that as we pass from the present to future markets, two actors will be most influential. They are suppliers and aggregators. Suppliers (operating in a “Competitive Clusters” scenario) will be focused on business to consumer solutions (mass market) with the intent of retaining or growing its client portfolio. They will encroach on what is currently considered ESCO market space by offering energy management + supply contracts as opposed to simply energy supply contracts. Their business model will focus more on prosumer services than it will on flexibility management / trading on the flexibility market. Instead, aggregators (operating in a “Vertical Market Solutions” scenario) will look to broaden their flexibility portfolios to extend beyond industrial clients to include also residential clients. Local energy communities operated by LFAs will be a preferred market point of entry. Restated, whereas suppliers will seek individual contracts with prosumers, aggregators will seek collective contracts with local energy communities. The business model of aggregators will focus on flexibility first (engagement with the flexibility markets) and services second. In a following and final phase of the market transition (Functioning Flexibility Market) we argue that suppliers and aggregators will merge (e.g. that suppliers will outsource the LFA role to professional aggregators).
DSOs as Flexibility Market Facilitators: An outcome was the common agreement that DSO involvement is needed as LV flexibility market facilitators and there is a strong need for regulations supporting this.
1.1.2 Findings and outcomes specific to the Mas2tering project
Business Case Design: Two aspects of the workshop strongly influenced business case design
· The need to view the sector as a market in transition / the need to develop a business case and business model specific to various phases of the market transition
· The need to consider revenue streams beyond those immediately associated with flexibility management (the service and margin on flexibility trades). An example is to include the value of customer retention or client gain for a supplier (with the hypothesis that suppliers that offer flexibility solutions will win market share in the future and those that do not innovate will lose market share). Although the inclusion of such aspects complicate the evaluation of a business case, they may be the types of drivers most relevant for business model transformation. It was also highlighted that prosumer choice may considerably be driven by non-financial motivations.
Consideration of Municipalities as a Customer Segment: The presentation from Blaenau Gwent had us consider for the first time how Mas2tering could potentially interact with local area governments and public projects. The outcome was that governmental agencies became a customer segment in the Mas2tering business model work and one of the actors in our collaboration opportunity matrix reported in project deliverable D1.5.
Contribution to business strategies and collaboration opportunities development: The various stakeholders present and different experiences/opinions of the involved participants directly contributed to the structuring of the business strategies and collaboration opportunities reporting in deliverable D1.5. Of consequence, this helped identify where Mas2tering believes it will find its market point of entry for its MAS-driven flexibility management platform which is aggregators looking to extend their portfolio down to residential flexibility. In this case, Mas2tering offers a technological solution to a stakeholder already implementing a corporate strategy related to residential flexibility. Another conclusion was that technology developers (often innovative SMEs) will have difficulty engaging a market that yet doesn’t exist. Restated, these companies may be forced to wait until the market has matured because they lack access to the clients or markets participants. As a result, they will likely need to partner with actors who do have access.
Once again, a workshop with industrial and research oriented participants alike was a useful instrument for the Mas2tering project to ensure its direction is relevant to the community. In this 3rd workshop and 2nd and final installment of the business model convergence series, we were able to interact with other research projects, targeted industrial smart grid actors (suppliers, DSOs, governmental agencies, energy network operators), research groups and the developers of smart grid technologies. It proved effective to co-locate with the Sustainable Places conference and it proved effective to have a workshop structure that included not only the Mas2tering project, but presentations from targeted stakeholders outside to the consortium. It was also effective to have a guided panel session that had prepared questions, but also provided the flexibility to adapt to the discussion points of the participants.
From the workshop, we gained insights that directly contributed to the development of project deliverable D1.5 (Business Strategies and Collaboration Opportunities) and that also led to the shaping of the project business cases and validation plan. The business cases directly relate to the view on how the market will transition and how suppliers and aggregators will position within it.
As main outcomes and conclusions, we list:
· Discussions related to smart grid business models must position themselves both with respect to the point in time being discussed (or level of market maturity) and business rationale of the stakeholders being discussed. Resultant to this workshop, Mas2tering developed a view on market transition and this has been related to the project use and business cases.
· Continued research is needed into approaches for the modeling and estimation of the global net benefit of flexibility management solutions across stakeholders. The inability to quantify the benefits of flexibility management solutions presents a barrier to their development and uptake.
· Sharpening of the envisioned role of the LFA and its ability to deliver value to multiple actors
· The role of the DSO and ability to quantify the DSO value proposition for local flexibility management remains an area where continued work is needed. The avoidance of annual predictable peak events seems the most agreed-upon starting point.
· Suppliers and Aggregators will develop flexibility management products and services in parallel. Suppliers will target prosumers to offer new services and aggregators will target local energy communities to expand their flexibility portfolios. In a mature market, suppliers and aggregators will likely merge.
· Municipalities may be an attractive customer segment related especially to large-scale public projects and/or their vision to serve as a facilitator of smart grid concepts and potentially with a financial model behind it.
A complete discussion of the concepts in this report are elaborated in D1.5.
Once again, gratitude is expressed to the European Union, to the organizers of Sustainable Places and local area host Nobatek.