Market solutions for the integration of Active Demand-based services in the ADDRESS project

The European ADDRESS project aims at a market based integration of Active Demand (AD) into the power system in order to the provide services to the different power system participants, especially the distribution and transmission system operators. The ADDRESS project focuses mainly on the technical aspects of such AD integration, but additional research was carried out to analyse the existing market mechanisms and the required adaptations and evolutions. The results of this market mechanisms analysis is presented in this paper. The paper browses the existing markets that are relevant for the AD solutions proposed by ADDRESS and addresses the barriers to the integration of AD, mainly the minimum size of a bid or offer and the costs for participating. The actor who gathers AD in order to form products to offer them to the other actors, referred to as the aggregator, would need to collect a large number of consumers' flexibility in order to overcome those obstacles. Two possibilities are presented to facilitate the participation of AD. One is a regulatory change allowing smaller resources to participate. The other one is the creation of a flexibility market pooling the capacities from various flexible resources. The "pay-back" effect, which occurs at the moment that the flexible resources return to their normal state, is an additional risk for the resource operator. The paper proposes a new bid type including both the flexibility and its "pay-back" effect. The paper presents existing mechanisms to deal with grid constraints at the transmission level, such as capacity auctions and the re-dispatching in case of other network problems. Possibilities for the distribution system operator (DSO) to adapt them to the distribution level are proposed. The DSO could set up bilateral contracts, calls for tenders or an open market to deal with local constraints. Bilateral contracts would be the first option; other potential solutions could become available as the amount of local resources increases. In cases where these market based mechanisms are not sufficient, the DSO may need to curtail the use of some resources, particularly the flexible ones. The paper proposes a simple curtailment, without any form of compensation for the owners of resources and a redispatching option inspired from the transmission system level.