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| Small is Beautiful: The Winter Package looks to unlock decentralised energy Pöyry Management Consulting has revealed its analysis on the EU's 'Winter Package' that was unveiled in Brussels. Where the first three European 'energy packages' aimed to get electricity markets working by focusing on the big assets – large-scale generation, transmission networks and interconnectors - the Winter Package signals a change of focus for European energy markets. The Winter Package centres much more on activity on lower voltage parts of the system. It seeks to provide a framework within which demand side response, storage, aggregators and consumers all play an active role. To complement this, it also places a stronger emphasis on more active and innovative distribution system operation, reflecting expectations of more dynamic flows and greater system management challenges on the lower voltage networks. Long-standing market design issues are also revisited, signaling the ongoing evolution of the framework. Notable amongst these are renewables integration and resource adequacy measures. Recognition within the package of the ability for active consumers to generate, store, consume and sell self-generated electricity reflects the reality of a growing number of households or businesses with their own renewable generation and storage assets operating in tandem. The rights of active consumers to carry out these activities without disproportionate cost and to contract with aggregators without the consent from a retailer, sends a clear statement that consumers are expected to interact with and participate in the electricity markets of the future. Simon Bradbury, Principal Consultant at Poyry, said: "As with all market reforms, there will be winners and losers. Active consumers and aggregators, as well as demand response providers and storage facilities all look set to benefit from the clearer entitlements and enhanced roles that the Winter Package is looking to introduce for them. On the flip side, greater activity from consumers and aggregators may make it more difficult for conventional retailers to balance their positions, unless they are able to engage with customers to channel their flexibility to mutual benefit. "While the Commission has sought to address many big topics in the Winter Package, there is not much to enhance the operation of the intraday markets, particularly in respect of allocation of cross border/zone transmission capacity rights to the intraday timeframe. Given the importance of accessing flexibility in the near-term in the future, the lack of ambition in this regard is an opportunity missed. Leaked drafts of the Winter Package also contained provisions for 'third country participation', interpreted by many as a Brexit response. These provisions are notable by their absence in the final versions, perhaps sending a signal for Brexit negotiations." The Winter Package also further grapples with capacity mechanisms and states new mechanisms can only be introduced if a broader regional adequacy assessment identifies issues that cannot be resolved through other enhancements to the market arrangements and following consultation with neighbouring countries. There is also the potential for existing capacity mechanisms to be withdrawn if regional assessments suggest that there is no adequacy issue. This limits national control over the introduction of a capacity mechanism and has the potential to unwind or modify existing schemes. National control is also being constrained more generally with the potential for more regionally defined pricing zones. The other big development is the addition of an emissions limit to capacity mechanism eligibility. New capacity will only be able to participate in a capacity mechanism if emissions are below 550g CO2/kWh, with this requirement extending to all capacity 5 years after the rules take effect. Quite how this is to be applied (e.g. a spot limit or an annual bubble) is unclear. But, in any event, this is a clear block for participation of coal generation in capacity mechanisms. write your comments about the article :: © 2016 Construction News :: home page |