Future electricity markets will require flexibilityThe European electricity system is undergoing a period of great change. As a result of wind and solar power, electricity production is increasingly prone to fluctuation. The power system must be flexible when production depends more on the weather than the market situation. This provides an opportunity for electricity users who could save through flexible consumption which is driven by price. At Fingrid's Electricity Market Day, the question was asked as to where flexibility on the electricity markets should come from. Several factors play a part in achieving the objective of flexibility on the electricity market. Existing flexible and adjustable electricity production consists mainly of condensing and hydroelectric power. The competitive ability of condensing power, which relies on fossil fuels, has weakened and plants are closing down. In addition, environmental reasons prevent an increase in hydroelectric power. The share of inflexible production, such as that from nuclear power and renewable energy, will increase. Although production capacity will increase in the future, its flexibility will decrease.
In contrast, the demand for electricity is not very flexible when electricity is expensive. When demand exceeds production, price spikes occur on the electricity market. Ultimately these are paid for by electricity consumers.
During peak consumption, demand response plays a critical role in ensuring the sufficiency of power. Using demand response, it is possible either to decrease the consumption of electricity during periods of high consumption or when electricity is expensive, or move consumption to cheaper hours. Such action will not only keep the power system in balance but also benefit users in the form of more affordable electricity bills.
Participation in demand response may at first require some investment, but very cost-efficient solutions for optimising electricity consumption are expected. Currently, demand response is utilised primarily by large-scale industry. As technology develops, however, the possibilities of utilising demand response will increase in all areas of electricity consumption. This also applies to private households. Once new, remote electricity meters have been installed in all households, it will be possible to purchase electricity at exchange-quoted hourly prices.
The markets need cost-efficient technical solutions which automatically direct consumption. There is also a need for a service to help the consumer and, if necessary, to gather the potential flexibility from a group of several users into a flexibility product which can be sold on the market. Fingrid, for its part, is interested in purchasing demand response to form a reserve with which to adjust balance in the power system.
On Electricity Market Day, held on 7 July, Fingrid's Development Manager Jonne Jäppinen will hold a talk on demand response dealing with how Fingrid has initiated demand response trials.
You can follow Electricity Market Day presentations live online using the webcasting service at:
Executive Vice President Juha Kekkonen, tel. +358 (0)30 395 512