Taking markets to all levels: Valuing flexibility to achieve market-based sector integration
Common paper presents concept to connect the Siemens Building Energy Management Systems with EPEX SPOT markets
Munich / Paris, 25 September 2019. Siemens CT and the European Power Exchange have published a white paper outlining their concept to further open up EPEX SPOT’s markets to decentralized market players, down to the level of a single building. This will be possible using Building Energy Management Systems and optimization algorithms developed by Siemens and connecting them to the flexibility and wholesale markets operated by EPEX SPOT.
The paper lays out four levels of the electric system on which offer and demand occur.
- Level 1: within a building or site
- Level 2: within a local distribution area, such as a village, smaller city or a city district
- Level 3: within a region encompassing larger cities
- Level 4: national or even transnational areas
By enabling the market participants to value their flexibility across these levels, Siemens and EPEX SPOT aim at unlocking the full flexibility potential of decentralized assets to the benefit of the whole electric system.
Market mechanisms on all levels – from buildings to countries
With the evolution of the energy landscape, the power system is moving from centralized assets to smaller and distributed energy sources. Buildings are more and more equipped to self-supply their electricity needs and even store power for future use. Energy Management Systems for buildings combine these assets with data on forecast and energy use, on a building level. The Building Energy Management System developed by Siemens can interact with other such equipped buildings to achieve local optimization, in order to generate additional revenues for the owner. The concept foresees that the system automatically generates offers to other buildings and market participants expressing the willingness to buy, sell or give access to flexibility.
This flexibility can then be made available locally to other participants, covering local areas such as villages or city districts. The role of the local optimization is to aggregate individual offers through peer-to-peer transactions and to offer the remaining flexibility on the regional or the wholesale market.
On a regional distribution area, flexibility can be valued on flexibility markets operated by EPEX SPOT. They are complementary to the wholesale and balancing markets. If there are no grid constraints, participants can also value their flexibility directly on the wholesale market, which covers national and trans-national areas.
Market-based sector integration
The connection of Siemens’ Building Energy Management System, deployed on the local level, with EPEX SPOT’s regional and wholesale markets allows market participants to value their flexibility across all market levels. This renders peer-to-peer trading on a local level compatible with the wholesale market. Decentralized market players benefit both from the marketing of their surplus and from a reliable, transparent price signal as provided by the wholesale market. The interaction between individual buildings and upper market levels also widens the scope of the price formation process, covering all market levels, also to the benefit of the end-consumer.
“EPEX SPOT’s trading system is already fit to welcome these direct offers from the local operator via Application Programming Interfaces” says Philippe Vassilopoulos, Director Product Development at EPEX SPOT. “Siemens is currently testing the interactions of our Building Management System with local optimization algorithms and simulating interaction with EPEX SPOT historical market prices. This will allow us to determine the conditions under which a residential or industrial actor would create value with additional flexibility,” says Stefan Niessen from Siemens Corporate Technology. In the next step, EPEX SPOT and Siemens will further study the interfaces between their systems to enhance this direct and automated connection between all market levels. The partners then aim at deploying this integrated energy market concept in a practical use case. A timeline for such a project will be communicated in due course.
The European Power Exchange EPEX SPOT SE and its affiliates operate physical short-term electricity markets in Central Western Europe and the United Kingdom. As part of EEX Group, a group of companies serving international commodity markets, EPEX SPOT is committed to the creation of a pan-European power market. In the first half of 2019, 300 TWh were traded on EPEX SPOT markets. In 2018, its 289 members traded 567 TWh – a third of the domestic consumption in the eight countries covered. 49% of its equity is held by HGRT, a holding of transmission system operators. For more information, please visit www.epexspot.com.
Siemens AG (Berlin and Munich) is a global technology powerhouse that has stood for engineering excellence, innovation, quality, reliability and internationality for more than 170 years. The company is active around the globe, focusing on the areas of power generation and distribution, intelligent infrastructure for buildings and distributed energy systems, and automation and digitalization in the process and manufacturing industries. Through the separately managed company Siemens Mobility, a leading supplier of smart mobility solutions for rail and road transport, Siemens is shaping the world market for passenger and freight services. Due to its majority stakes in the publicly listed companies Siemens Healthineers AG and Siemens Gamesa Renewable Energy, Siemens is also a world-leading supplier of medical technology and digital healthcare services as well as environmentally friendly solutions for onshore and offshore wind power generation. In fiscal 2018, which ended on September 30, 2018, Siemens generated revenue of €83.0 billion and net income of €6.1 billion. At the end of September 2018, the company had around 379,000 employees worldwide. Further information is available on the Internet at www.siemens.com.