IEEE Power & Energy Magazine - March/April 2021 - 52

agreements might limit the potential of using demand-side
flexibility for system-balancing purposes. If system operators can limit the grid access of flexible resources when
flexibility is needed on a system level, the alleviation of
congestion may be achieved at the expense of flexibility utilization for system balancing. However, limited grid access
also results in significant savings for both asset owners and
system operators (due to reduced network upgrade costs), so
a cost-benefit analysis is necessary to determine if an unlimited grid access results in socioeconomic benefits higher
than the required connection fees.
Local flexibility markets are envisioned to operate in parallel to the existing power markets, with system operators
being able to procure flexibility at specified locations of the
network, both at transmission and distribution levels. Such
markets are more compatible with the EU Clean Energy
Package, regarding the market-based procurement of flexibility services.
The Lolland project tests how a local flexibility market can solve congestion at a transmission level on the
island of Lolland, which often experiences congestion
due to very large amounts of renewable power production. The project will allow the TSO to acquire balancing power on an individual transformer basis, in contrast
to current practice where balancing power is offered per
bidding zone.
The Danish EcoGrid 2.0 designed and demonstrated a local
flexibility market on the island of Bornholm. In this market,
DSOs can acquire flexibility services by DER aggregators in a
market-based environment. These services can increase DSO
reliability, provide flexibility in case of planned maintenance
or faults, and resolve potential conflicts between the safe operation of the distribution network and the provision of services
at a system level by DERs. Since local flexibility markets can
operate seamlessly in parallel to the existing markets, their
operational integration is relatively easy, whereas, by providing a market platform for localized market procurement, the
potential use of demand-side flexibility for system balancing
is not negatively affected.

While all of the aforementioned mechanisms can coexist, some are more attractive depending on the characteristics of a particular power system and the regulatory framework. Research and pilot projects can provide valuable
insights and real-life experiences and learnings, guiding
all of the relevant stakeholders toward the most appropriate and beneficial solutions.

Energy Security and Marketplaces for
Flexibility Procurement: Some Real-Life
Experience from Denmark

The mechanisms presented in the previous section intend
to facilitate the use of demand-side flexibility and safely
integrate DERs and demand-side management in modern
power systems. Since the early 1990s unbundling, power
system operation has been becoming more market based. As
a result, the opportunities for exploiting DER flexibility and
demand-side management are continuously expanding. This
leads to more revenue streams for the owners of those assets,
increased competition and operational cost reductions, more
business opportunities for actors such as aggregators, and
multiple benefits to the overall system operation.
Flexibility in Denmark, and particularly demand-side
flexibility, is primarily procured and activated by the Danish
TSO, Energinet, in a national and Nordic balancing market.
However, this trend is changing by establishing additional
marketplaces for flexibility procurement in two directions:
1) downstream marketplaces, such as localized flexibility markets as well as local energy communities, and 2)
upstream marketplaces, such as regional (e.g., Nordic and
Pan-European) markets. This upcoming trend is illustrated
in Figure 4, including an example for each market.
As examples for downstream markets, two energy communities in Denmark were recently demonstrated: the
Energy Collective project in Bofællesskabet Svalin and
the EnergyLab Nordhavn project in the Nordhavn area of
Copenhagen. Further development of energy communities
is expected to be initiated in Denmark in the coming years.
Additionally, EcoGrid 2.0 designed and demonstrated a
local DSO-level flexibility market, which will be described later.
As examples of upstream markets, the Nordic Balancing Model
is the foundation for continued
European
Nordic cooperation and a market
Market
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evelo
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annual socioeconomic benefits of
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Nordic cooperation are estimated
ent
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to be around €200 million and
e
D
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going to be modernized to ensure
Do
a safe transition to a new way of
operating the Nordic power sysfigure 4. The existing and upcoming marketplaces for demand-side flexibility protem.
It will be compliant with
curement in Denmark.

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IEEE Power & Energy Magazine - March/April 2021

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