EXPERTISE

6
Jun

Towards Industry 4.0: calculating the value of your optimisation potential

 

Working on a more sustainable energy future is not only a noble effort in relation to future generations, but can be financially attractive for current business as well. The two infographics below back up this statement with numbers and offer a calculation method that can help you seize the value of your optimisation potential. Both are based on our experiences with our client group of (industrial) energy users.

 

Towards Industry 4.0

All the projects that we are working on within this group share a strong digitalisation aspect, in which raw sensor data are aggregated to higher-value context information. By making this information available at (near) real time, operators are capable of seizing opportunities that occur either on the market or within their own processes, without jeopardizing security of supply. These are typical first steps towards an Industry 4.0 operation.

 

Infographic #1: Calculating the value of reducing excess steam

For example, a medium sized plant with 30 ton / hr production could save €369,000 / year from literally disappearing into thin air while decreasing their CO2 footprint. How? Check this infographic!

Download

 

Infographic #2: Calculating the value of monetizing flex on the imbalance market

For example, by capturing 5 minutes of every high imbalance price PTE in 2017 a medium sized industrial site with 10 MW of flexibility could have created power revenues of €430,000 while supporting stability of the grid. How? Check this infographic!

Download

 

Interested to hear more?

Call Thomas Crabtree (+31 6 3085 2747) and find out how you are able to calculate the value of your optimisation potential. Or check our dedicated web page for industrial energy optimisation.

 

26
May

RFI Technology partner ‘Market Service App’ for local energy markets

RFI Development and integration ‘Market Service app’ for local energy markets

Stedin and Energy21 designed the Layered Energy System (LES) based on the USEF framework. LES is a community-based market model that offers solutions to a variety of existing and future problems resulting from the energy transition. The next step in development of the Layered Energy System is doing a proof of concept in a real life local market setting. The project is looking for technology partners. 

Proof of concept in real life local market setting

Together with technology partners ABB and Enervalis, Stedin has found a location (Hoogdalem) in its grid area where a group of households are willing to participate in the first pilot project. Advanced technology, such as Heat pumps, Batteries, PV, internet-connected appliances (e.g. Laundry machines), is present in these houses enabling a full test of all functions of the Layered Energy System.

The project is looking for a partner who is capable of developing, and integrating the necessary ‘Market Service app’ on the Energy Web Foundation Blockchain. The market-service app has 3 goals:

 It matches local demand and supply of energy (through bids) in a market program (load profile)
 It brings together national and local need of flexibility (through flex offers and orders)

 It is able to process the effect of ordered flex into the market program (load profile)

The application will be a proof of concept and must be compatible with the blockchain of the Energy Web Foundation Tobalaba test network.

Interested to become a technology partner?

For more information, check Stedin’s RFI documents or contact Michiel Dorresteijn in case of any questions. Check our dedicated expertise page The energy system – Market model design to read more about the Layered Energy System.

18
May

Scalability and the design of a new energy system

The next step might prove to be the bigger challenge

Energy21’s Michiel Dorresteijn was asked to respond to the Initiate! Manifesto. Read below his findings and how he elaborates on what could be added to it:

 

The means to produce energy by yourself and to participate in an energy market are becoming available for anyone. Information and data can be obtained and analyzed with easy-to-use apps and increasingly (artificial) intelligent algorithms. At the same time, costs of solar panels, fuel cells and storage systems are plummeting, while the technical performance is being improved. In other words: Energy is democratized.

The Manifesto of Initiate! describes that process spot on.The world of energy is changing rapidly and this new order requires a new economy with new roles and responsibilities. That being said, the next step might prove to be the bigger challenge.

The Manifesto describes the need for something new, but has not yet reached the point of offering an approach on how to solve that. And the initiative is far too valuable and needed (!) if it would restrict itself to formulating the problem.

 

Customer empowerment needs a market design that enables it

If I would leave it with that I would be doing the same: describing a need without offering a way of how to deal with it. In that regard, it may be worthwhile to mention the attempt Energy21 has made on this issue last year together with the Dutch grid operator Stedin. Starting off with the basic assumption that there is a need for a new energy system that can accommodate the democratization of energy production and information, we explored a possible market design that could meet four main prerequisites: the system has to:

 lower overall system costs
 empower customers
 stimulate renewable energy

 be scalable

 

Accommodating both the existing and the new energy economy

Especially the fourth prerequisite is very important. Scalable means that a system can start on a small scale, but can grow without needing a complete ‘bing bang’ replacement of the existing system. A revolution will only lead to resistance and struggle with vested interests. With the Layered Energy System, we have designed and described a system that can accommodate both the existing and the new energy economy.

In my opinion, the strength of Initiate!’s message will be defined by the remedy for the sore spot that is offered, not only by putting the finger on it. Otherwise, very true observations may become hollow statements. Based on what can be read in the Manifesto so far, I am eagerly and expectantly looking forward to what this initiative will bring.

 

Interested to hear more?

Check our dedicated expertise page on energy system and market model design or contact Michiel Dorresteijn.

31
Aug

Layered Energy System – Sustainable energy and flex for everyone

Stedin and Energy21 have designed a solution to a variety of existing and future energy system problems resulting from energy transition.

Blockchain technology is used to give shape efficiently to the layered energy system. Stedin and Energy21’s approach distinguishes itself from other projects in the energy sector where blockchain technology is applied because it is based on an open market rather than on peer-to-peer energy supply.

This layered energy system:

 uses a tax alternative for the Dutch netting scheme which makes sharing flexibility attractive
 is scalable, can be applied in the existing nationwide market model and improves access to flexibility for all market players
 leads to lower system costs
 involves customers in the energy system and consequently increases commitment to energy transition and the support base for changes

 

Introduction

Energy transition leads to problems with grid congestion, voltage quality and system balance. To a great extent, the answer to those problems lies in providing access to and utilising decentral flexibility.

Only some of this flexibility will become available if the netting scheme is abolished. For the most part, prosumers will work on balancing their own generation and consumption “behind the meter”, as that will yield greater benefits. This may create a self-reinforcing effect which will make the grid increasingly less attractive and more expensive, which is also known as “grid defection” or “the death spiral”.

Blockchain technology is often mentioned as the overall solution for the complexity of a smarter energy system. However, the process often becomes a goal in and of itself. Stedin and Energy21 first and foremost examined the concept of open local energy markets as a solution to challenges the energy sector is facing, which resulted in the design of their layered energy system. Only after that was the applicability of blockchain technology examined in the context of that concept.

 

Layered market model requirements

A sustainable energy market model that can handle the challenges of energy transition, satisfies customers’ wishes and stabilises and develops itself to the lowest possible costs, consists of the following elements:

  1. Prices in the local market are lower than energy prices beyond the local market. To that end, a different form of the energy tax regime is used, which also serves as an alternative for the netting scheme.
  2. Incentives are provided by the grid manager to prevent grid congestion. In the preferred scenario, the grid manager acts as a party seeking flexibility on the market in order to perform congestion management locally.
  3. Both the local market and the nationwide wholesale and imbalance markets (and possibly adjacent and underlying markets) are linked through a gateway. Because of this layered structure, the sustainable local energy market model was named ‘layered energy system’.On the gateway, the local market constitutes a single entity and acts in accordance with the rules of the nationwide market. 
  4. Behind the gateway, the arrangements in the local market apply. This allows the local market to operate within the existing nationwide market:
     The reliability and the existing liquidity in the nationwide market continue to be secure and accessible
     There is no need for far-reaching changes in the nationwide market
     New market model variations grow in the ‘protected’ environment of the local market (see also figure 1)
  5. The local market is in a geographically connected area. This is necessary to make congestion management possible and is furthermore in line with the Dutch ‘postal code rose’ concept.
  6. The local market model is adaptable. The first design can be based on the Universal Smart Energy Framework (USEF) principles, in such a way that the facilitating system is flexible to such an extent that learning experiences and customers’ wishes can quickly be translated into improvements of the system.

Figure 1: Schematic representation of the links between local markets and the nationwide market.

System approach versus peer-to-peer supply

This layered energy system distinguishes itself from other energy sector projects that apply blockchain because it is premised on a market rather than on peer-to-peer energy supply.

It is precisely because of this system approach that supply, grid capacity and flexibility can be taken into account, making it possible to use the ‘lowest possible system costs’ as an important driver in the local market model. This is a second significant distinction compared with other local market initiatives.

 

Linking a local market to the nationwide market

A bidding system based on a merit-order principle is used to bring together supply and demand on the local market. This bidding system combines the local market prices with the wholesale market prices. As soon as there is a surplus or deficit on the local market, the wholesale market is accessed through the gateway.

Supply and sale in the local market are not subject to energy tax. Energy purchased from the wholesale market is subject to energy tax, which is allocated to all purchase orders made in the local market. This system enhances the possibility to purchase energy generated locally at the lower local price. Therefore, local energy will at all times be used first, making it attractive to offer flexibility in the local market.

Where grid congestion is imminent in or adjacent to the local market, the grid manager will also act as the party seeking flexibility, creating an extra incentive for making flexibility available. It will remain attractive to stay connected to the nationwide market and the nationwide grid to be able to trade in surpluses and deficits without having to invest in high-cost assets.

This local market design stimulates the contribution of flexibility to locations suffering from a flexibility deficit and discourages the expansion of flexibility to locations that already have sufficient flexibility.

Figure 2: Example of bringing supply and demand together on a local market.

Market process and blockchain application

The market process in the layered energy system follows the USEF steps: PLAN – OPERATE – SETTLE. The process has been outlined. The applicability of blockchain was tested based on that process.

Moreover, the technical aspects of the local market model can be given shape in various ways and its applicability is not contingent solely on blockchain technology. However, this technology does have a number of aspects that may offer major benefits in terms of flexibility, privacy and security. The type of blockchain (private blockchain, consortium blockchain or public blockchain) is important in that regard.

A consortium blockchain was chosen for this market model. One of the advantages of this type is that it is less energy intensive and easier to regulate. A preliminary cost comparison of a market facilitation based on blockchain versus server-client technology yields an outcome of €0.20 versus €2.00 per user per month in the local market.

 

Proof of Concept

In addition to the above-referenced benefits of our layered energy system, using blockchain offers a unique platform to gain accelerated learning experience with the renewal of the energy system and to explore the partnership between new parties.

Stedin and Energy21 have fleshed out the functional design for this market model and translated it into a rudimentary preliminary version of a working blockchain plus accompanying front application, which confirms the applicability, but currently does not allow for extensive testing and scenarios.

The next step is a stakeholder round intended to explain the model and to get feedback on the layered energy system. After that, the proof of concept will be developed in more detail based on pilots based on market needs. The premise in this respect is that this will be done in partnership with parties in the energy sector, but also with the necessary external parties, such as local energy cooperatives, consumers, banks and technology suppliers.

 

Interested to hear more?

For more information, please contact Michiel Dorresteijn (Projectlead Market Analysis & Blockchain Technology) via +31 6 117 169 27 or michiel.dorresteijn@energy21.nl

1
May

How to (contractually) arrange a beneficial ‘modus operandi’ with your service provider?

This article will be the first in a series of articles that address the non-technical aspects of acquiring service based concepts, approaching the word ‘service’ as a practice, not a product.

 

Over the past years, we have seen a dramatic rise in solution providers changing their license model to service based concepts. In contrast to acquiring a product (for example, a software solution), you and your service provider start a long-term, intensive relationship.

Their service activities will become an integral part of your business processes, taking a profound share in your operational business opportunities but also risks.

Therefore, instead of mainly discussing technical qualifications such as scalability, security, cost and software customization, acquiring service based concepts means taking into consideration more operational aspects as well.

 

3 ways to optimize your service contract

In this first article, Christian Renders (responsible for IT projects and service integration at Uniper in the Benelux) and Jesper den Engelsman (Head of Managed Services at Energy21), will share their thoughts on the starting point of the relationship with your service provider: the service contract. They will try to find an honest and realistic answer to the following question:

When moving to service based concepts, how to (contractually) optimize the ‘modus operandi’ with your service provider to maximally benefit from the services offered?

Significant parts of the answer can be found in 1) regulated proximity, 2) tranparant and business driven targets and 3) close involvement in the contracting negations. Let’s take a closer look at each.

 

1. Create regulated proximity towards your business departments

Business departments tend to define their desired IT solutions themselves. Yet, within the relationship between the IT department and the business departments, Renders stresses that both parties should stick to their expertise. It should be the IT department that pro-actively defines the correct IT solutions to current and future business problems.

To be able to do so, he argues that being responsible for IT has got more to do with business than with IT. “I spend 80% of my time among my business colleagues”, says Renders, “since I think it is most important that I understand their job and the hick-ups in their daily processes, not the other way around.”

This means that if one outsources IT service management, it is most important to organize a similar, close connection. “One cannot expect a service provider to provide outstanding service management if they are not able to get as familiar with the essentials of your business departments’ daily processes (and challenges) as you do.” says Renders.

Den Engelsman agrees, “from a service provider’s perspective you owe it to your customers to know what they are doing and why they are doing it. This can only be accomplished if both parties invest time and effort in sharing knowledge and creating awareness.”

But allowing a direct connection will make most IT managers fear blind follow up of IT requests by dirty & quick fixes resulting in the creation of an IT infrastructural monster, know both Renders and Den Engelsman.

To take away this fear, the solution can be found by only mandating business up to a certain level. All fixes that exceed this level will be discussed and evaluated more extensively. This way, you can create increased proximity and speed up the process while monitoring thoroughness.

 

2. Target models that live up to the meaning of “service”

It is important to create mechanisms that trigger your service provider to be transparent about the quality of their work. “I’ve seen contracts in which the service provider was paid based on the number of closed incident tickets, resulting in a perverted incentive: ticket creation led to higher payments.”

Therefore, don’t focus on fix targets but on prevention targets. Renders explains: “Problem management is a key to success, as this will make the total number of bugs decrease over time. This is beneficial for all, as business experiences less disruption in their application landscape and IT can spend more time on structural improvements of infrastructure and application functionality.”

Both the customer and the service provider take a shared responsibility in this. The quality of a fix and the extent to which it contributes to managing the bigger problem, is defined by both the solution and the definition of the problem. “In your release management process, include clear definitions of a proper problem description”, says Den Engelsman, “and create a culture in which your service provider is eager to ask supplementary questions”.

While many focus on the number of fixes, “service targets should ultimately be defined by the business processes they support” says Den Engelsman. For example, look at the invoicing process of an energy supplier. Instead of agreeing upon follow-up time, number of fixes and availability hours of the system, the service target could be defined by the number of invoices that can be processed within the hour.

That way, the service provider focuses on making sure that the service is available at exactly the right time, in exactly the right manner. This can in its turn result into lower effort and lower costs, yet optimal availability. 

 

3. Beat contractual mis-matches: corporate compliancy versus business reality

A third way of securing high quality service is to stay in the driver’s seat during the contract negotiations, up until the final bit. Contracts should pass all legal and financial compliancy requirements, but be aware that technicalities like intellectual property or payment terms do not make the success of the operations.

To protect your business from contractual mismatches, limit your contract to business-driven service targets as explained in the previous section. “Business priorities are jeopardized when contractual targets just consider resolution times rather business continuity,” says Renders, “If a billing run needs to be completed today, business is not helped if the incident will be resolved ‘within 8 hours’; it needs to be fixed right here and right now.”

If you do prefer to address operational details, create a separate Operational Manual. Creacting such a non-legal document has another important benefit: speed up operational change management. “Along the road, new insights will force you to quickly change your modus operandi. The extensive compliancy checks that are needed to change legally imposed procedures will slow down your operational resilience”, according to Den Engelsman.

 

Bridging the first 2 years…

“My experience is that it will take a year or two to develop a partnership that is able to optimize results”, says Renders. In his long experience in running IT operations, implementing new IT capabilities and setting up contractual relationships, he knows that you’ll learn by doing and that it takes a lot of commitment from both parties. However, the above 3 strategies can help you and your service provider make it through these first 2 years.

In upcoming articles, we will take a deeper dive into the relationship between you and your service provider after the contracts have been signed and the actual service delivery will have to start taking place. Stay tuned!

1
Jun

Quant sessions: live energy data deduction

Datamanagement is one thing, but data analysis is a science on its own. Our team of quants help energy companies and large scale users deduce essential insights from their energy data to improve their forecasts and decrease their imbalance costs.

Energy knowledge beats model complexity

While the technical performance of your data management software and the logic in your data management processes should be in order – crucial conditions for correct analysis – it is the energy intelligence that adds quality to quantitative analysis.

Our knowledge of the energy market and its business processes allows us to organize data such that great results can be achieved through simple regression models. The low computational effort required for these models makes them particularly suited for fast-paced processes like intraday trading.

 

From quant art to business process

We recognize that even the most accurate models are of little value when they cannot be successfully automated. Energy21 combines quantitative skills with vast experience in automating processes. 

We use our EBASE data management software to schedule runs of our own regression models, or of models from external tools such as Matlab and R. This way the most recent data is always available for business decisions. 

 

Half-day quant sessions: live energy data deduction

We organize quant sessions in which our team gets to work with your data and deducts valuable insights when it comes to:

  Demand, (Renewable) Supply and Price Forecasting
  Portfolio management
  Big data analytics (PowerBI, visualization, machine learning)
  Optimization (CPLEX)

Energy companies or industrial and commercial energy users benefit from working together with our quants during the sessions. Also, we deliver a report summarizing the results of the analysis plus recommendations to implement improvements in business processes. Together, this helps improving forecasts and decrease imbalance costs.

 

For more information, contact Alex Trijselaar (Head of Quants) via +31 6 3167 3035 or alex.trijselaar@energy21.nl

31
May

Towards a new energy market model

Quantoz and Energy21 present the first outlines of a new energy market model and blockchain based application at the E.ON: agile Demo Day.

The market model and application enable decentralized communities to optimize their energy use and build up their flexibility portfolio. Prosumers can use this flexibility to balance out the market for a profit while grid operators use this increased flexibility to mitigate congestion problems. Among a wide range of innovations presented at the Demo Day, E.ON chose this project as one of two to be further developed.

 

 

A new market model?

The increasing amount of renewable energy causes grid congestion. Since this problem normally occurs limited hours per year, in contrast to the rather costly solution of increasing grid capacity, the answer can be found in increasing grid flexibility.

Simultaneously, with the installation of local production consumers (now prosumers) are also looking for methods to locally manage both their production and consumption. The installation of smart meters, issued by the European Union, is an important first step in this development. However, the current energy market model was not designed to facilitate local production and flexibility.

Therefore, Quantoz and Energy21 are first developed a new market model for decentralized communities. After analysing the pricing mechanisms, market processes and actors of the current energy market, they designed new market rules and a framework at community level running on USEF‘s Plan–Operate–Settle-cycle, in which:

  Prosumers are core actors and have full control over their energy
  The market responds to energy availability (reactive energy use)

  Flexibility is monetized and traded on the market

Second, they used the results of this first step to develop a blockchain based application for both grid operators and consumers.

App for grid operators prosumers and grid operators

The application enables grid operators to set up community energy markets where suppliers and customers are managed by smart contracting. Per power time unit (PTU), local production and consumption are matched by an algorithm that also calculates the local energy price.

For example, imagine a situation (beat 12 in this example), where Supplier A and Supplier B are active together with 4 consumers.

Blockchain for grid operators

The above dashboard screenshot of the application shows the matching price of the community market for beat 12 as seen by the grid operator. Using this dashboard the grid operator can manage the suppliers and consumers that have access to the community market. Furthermore, the grid operator can have an overview of the expected production and flexibility for each beat.

Prosumers building a flexibility portfolio

Also, pronsumers can have full control over their production/consumption and monetize their flexibility. They can trade their (solar- or windenergy) produced electricity on the community market. Simultaneously, they can connect their consumer appliances such as smart refrigerators, electric vehicles or home batteries to their blockchain account using smart connectors (see screenshot below). The accounts are protected by private keys to ensure data security.

Blockchain for consumers

The combination of this blockchain application, their smart meter and the smart connectors enables consumers to optimize their energy use and build a flexibility portfolio that can be used to balance out the market for a profit. It is also possible to outsource the optimizing activities to an aggregator.

Wanted: visionary grid operators

Quantoz and Energy21 are currently finalizing the market model design, testing their blockchain technology and further improving the application. Next to E.ON, they are looking for other visionary grid operators and suppliers with the drive to facilitate community energy markets in a pilot project.

For more information about this project, please contact Michiel Dorresteijn (Projectlead Market Analysis & Blockchain Technology) via +31 6 11716927 or michiel.dorresteijn@energy21.nl.

1
Jun

Brainiac: What compliancy challenges do industrials face when managing their CDS?

During the 1st edition of this year’s Brainiac series, Energy21 took a deep dive into the world of regulatory compliancy. We focused on large-scale (industrial) energy consumers setting up a Closed Distribution System (CDS) network.

Regulatory grid tariff transparency

Since managing a CDS means being a grid operator ‘light’, how does one rearrange its cost registration to meet with regulatory grid tariff transparency? Such transparency is preliminary for the operational register and activities such as switching and allocation. These have to be managed to enable third party access or free choice of supply.

Our Eugene Baijings shared his knowledge and the experiences he gained during his various consultancy activities at large scale energy consumers and grid operators in Europe.

 

Market model for energy flexibility

Second topic on the agenda: flexibility. Jeroen Bode shared some of the insights he gained so far working as Director for the USEF Foundation (via Energy21). They, together with ‘EnergieKoplopers’, have received the Energy Market Innovation of the Year Award.

USEF, the Universal Smart Energy Framework, delivers a market structure for flexibility that fits on top of most energy markets and defines the roles and guidelines required to benefit all players in the electricity chain, from consumer to grid operator.

The EnergieKoplopers project in Heerhugowaard tested a USEF flexibility market. Smart appliances were installed at 203 households enabling flexible electricity consumption. The smart appliances were automatically controlled by a smart IT system.

 

Brainiac?

Energy21 organizes Brainiac sessions every 2 months to share valuable insights and sector knowledge among its Energy IT experts. For more information about the topics discussed, contact Eugene Baijings +31 6 29072232