Facilitating the cohesion of energy efficiency and demand response markets
The EU has set targets to make buildings more energy efficient and also offer greater energy flexibility. New and resounding technical and business solutions are considered a necessity to reach these objectives. Two European projects, NOVICE and HOLISDER are both testing innovative models to increase the impact of flexible energy services by addressing the relationship between ESCOs, demand response aggregators and end-users but in slightly different ways.
Recent updates to the Energy Efficiency Directive (EED) highlight that EU buildings need to be 30 per cent energy efficient by 2030 and Member States need to incentivise Demand Response (DR) participation and liberalise the market to help lower electricity use at times of high market prices or grid instability.
Currently, energy services companies (offer supporting energy services to end-users), aggregators (acquire flexibility from end-users to serve different market players) and end-users are limited in their involvement in addressing the challenges of the EED. In order to meet these aims, incentives which increase public engagement and the cooperation of ESCOs and aggregators is needed.
In bringing these two stakeholders to work together, not only will they be able to access wider DR markets, but their joint expertise can significantly benefit customers in exploring new revenue streams and reducing their energy costs.
The EU-funded NOVICE project is developing a new business model for building renovation projects that uses an enhanced Energy Performance Contract (EPC), to allow ESCOs and aggregators to work together. By combining revenues from both energy efficiency and demand response, clients can maximise revenues from their energy assets which leads to shorter payback periods and an improved return on investment compared to projects that consider energy efficiency alone. NOVICE will attempt to demonstrate and validate this business model through implementation at pilot sites in some of Europe’s most mature energy markets.
The HOLISDER project is taking a more technical and consumer-centric approach, in the context of Living Labs and four pilot site demonstrations. The project aims to pull together intermediaries and third parties for defining new business models in energy efficiency and DR optimisation. By acting on behalf of the consumer, third parties can give them more empowerment in energy market transactions across Europe.
United cause Throughout the EU, energy markets are volatile and at odds with one another, regulated and managed differently from one to the next, making it extremely difficult to implement cohesive applications and policies for smart sustainable buildings.
HOLISDER and NOVICE are developing new business models to demonstrate the opportunities available in open markets, such as those in the United Kingdom and Ireland where more DR markets are open, mature and more accessible. These models will offer a major opportunity to influence policy makers and regulators to integrate, monetise and create new revenue streams in otherwise restricted markets.
“It is rare to consider both energy efficiency and DR together in a single building retrofit project,” Jo Southernwood, coordinator of NOVICE believes, “but both NOVICE and HOLISDER are looking at new business models that enable these two approaches to work together in closer alignment.” Southernwood and Ander Romero, project coordinator of HOLISDER, see eye-to-eye in the slight differences between how each project is going about this.
“HOLISDER is developing new and innovative technologies that facilitate residential and small tertiary buildings to be involved in the DR market with more ease through collaboration with ESCOs and aggregators,” explains Romero. “NOVICE is more focused on emerging value propositions for commercial buildings, using a new EPC template to combine the services of ESCOs and aggregators into a single offering that that benefits all stakeholders,” adds Southernwood.