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A Coordinated Action towards the promotion and consolidation of all RTD activities for large-scale integration of DER in the electricity market

Final Report Summary - SOLID-DER (A Coordinated Action towards the promotion and consolidation of all RTD activities for large-scale integration of DER in the electricity market)

The SOLID-DER project, was a 'Co-ordination action to consolidate RTD activities for large-scale integration of DER into the European electricity market', as stated in the project's full title. Work package 4, which resulted into deliverable 4.5 was about summarising most relevant findings, conclusions regarding the topic of the EU RTD project SOLID-DER. This included:
- current position of distributed energy resources (DER) in electricity supply;
- drivers and support schemes for more DER in the future;
- technical and socio-economic barriers and recommended solutions for increasing the share of DER renewable energy resources and distributed generation (RES & DG) in the power supply of all EU countries;
- recently upcoming new developments in DER RES & DG) generation, i.e. the increasing role of intermittent RES & DG generation (wind and PV), and their impacts that need to be tackled to secure meeting EU RES targets 2020;
- recommendations for policy measures, changes in regulation and research and technological development (RTD) priorities, necessary to meet the ambitious EU RES targets in 2020 and beyond in all EU countries.

For meeting the ambitious EU targets of renewable energy supplies (RES) and combined heat and power (CHP) aimed for by the EC and individual MS in 2020 the effectiveness and efficiency of the policy support schemes and market and network regulation in place plays a decisive key role. Conclusions were that clear failures in having in time in place in EU countries the appropriate market and network regulation and taking account insufficiently the environmental externalities and inefficient support schemes might lead to an insufficient deployment of RES and combined heat and power production (CHP) in the electricity market.

The studies developed within SOLID-DER work package on technical and system constraints for DER integration resulted in sets of conclusions and recommendations addressing the existing barriers for the widespread integration of DER in Europe. Clearly concluded was that a substantial DER contribution needs the technical, engineering and system improvements in several areas at the same time, i.e. standardisation, technology, education, market implementation, take up of new services. In fact, a change in regulation would particularly modify the landscape on the way towards a much larger DER integration in the electricity supply and networks. However the elimination of technical and standardisation barriers is a first and necessary step to accomplish a much larger penetration of DER in the energy supply. The elimination of the identified barriers through some of the recommendations presented should, either directly or indirectly, support the increase the role of DER systems in the electricity supply and networks of the EU in the future.

The future increase of DER penetration in distribution networks poses a new challenge for regulators to adapt current DER and distributed system operator (DSO) regulations. This adaptation should guarantee that all agents receive efficient location and economic signals. The connection charges paid by DER producers should ensure fair and non-discriminatory network access. On the other hand use-of-system charges should reflect the real impact on costs due to DER production. The participation of DER into ancillary services can improve the operation and planning of distribution networks. In addition, the integration of DER into distribution networks impacts on the revenue scheme of DSOs. Therefore it is important to neutralise this negative effect, and in case of cost reduction, distribute these benefits among DER producers and DSOs. The incremental costs in new investments (CAPEX) and operation (OPEX) due to DER connection should be compensated to DSOs. Moreover, the operation paradigm of distribution networks should change from passive to active management, in order to efficiently use DER to provide ancillary services and then improve performance indicators, such as quality of service and energy losses reduction.

The following measures are recommended in order to increase the market flexibility for dealing with the integration of large volumes of intermittent RES-E generation in power systems:
- Since EU generation markets are liberalised intervention of the government in the market is minimised. Therefore, policy makers are advised to take into account (unintended) effects of support policy on conventional generation's profitability and investment.
- For efficient dispersion of renewable production over countries support schemes need to be harmonised between EU member states, at least to some extent, to secure that RES, i.e. wind turbines are deployed optimally across Europe. In this respect, also the introduction of a single European market for tradable guarantees of origin is of utmost importance for steering investments in an efficient way to countries with the highest resources or potentials to meet the EU renewable targets for 2020.
- Improvements in capacity calculation and allocation of interconnection capacity enable better dispersion of renewable production across regions. Capacity calculation can be improved by better coordination between TSOs, while capacity allocation can be enhanced by using market based mechanisms like implicit and explicit auctions for cross-border trading. For the day-ahead and intraday time frames implicit auctions are most efficient and therefore have to be promoted.
- Besides, more interconnections need to be built to enlarge the interconnection capacity available for improving dispersion of renewable production over countries.
- Planning and environmental procedures for building flexible conventional power plants (gas-fired power plants or hydro power) have to be concise and limited in time. A one-stop shop approach for obtaining licenses and running through all administrative procedures is highly recommended.