1. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 1 VTT PROCESSES Current demand response and metering activities and research projects in Finland 7 March 2005 Pekka Koponen

2. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 2 VTT PROCESSES Outline t Research projects in which VTT Processes participates t TSO is promoting demand elasticity t The state and activities of metering in Finland t The state of demand response in Finland t On DR and metering related electricity market rules in Finland

3. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 3 VTT PROCESSES DR and metering related research projects, in which VTT processes participates t MAHIS, Field trials of demand response to spot market price based real-time tariffs, 2004-2005 (probably extended till 2006). The purpose is to study and develop solutions that enable the use of load control potential in the electricity market. t IEA TOU-project (Time of use pricing), Project will be completed in April 2005 t IEA : DEMAND RESPONSE RESOURCES (DRR), Task XIII in DSM Agreement (lasts 30 months, started spring 2004), methodology, business processes, infrastructure, tools and implementation plans for the rapid deployment of a demand side management program into participating country electricity markets, ( www.demandresponseresources.com ) t EU-DEEP (2004-2009) : European Distributed EnErgy Partnership that will help the large-scale implementation of distributed energy resources (generation, storage, controllable loads), (www.eudeep.com)

4. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 4 VTT PROCESSES MAHIS, Field trials of spot market price based real-time tariffs Test sites t 5 electrically heated detached houses t 5 electrically heated apartments in a row house t bigger buildings connected in the district heating network, apartment buildings, services (consisting apartments for elderly people, elementary school, health centre) Status t Meters and building automation systems are installed and working, data is being collected t The 10 small customers have chosen the spot price based energy tariff. t Tuning of the systems and development of models and response methods continues

5. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 5 VTT PROCESSES Indoor temperatures are permanently measured in MAHIS test sites. Example: an electrically heated detached house

6. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 6 VTT PROCESSES MAHIS, Outdoor temperature and electricity consumption (with interval 1-10 min) are also measured permanently on-line for each test site

7. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 7 VTT PROCESSES MAHIS, Field trials of spot market price based real-time tariffs Problems and barriers identified so far t Large differences between DSOs in terms of metering tariffs and technology in the practices of arranging hourly metering and local on-line metering for electricity consumption. DSO has the electricity billing metering monopoly in Finland, so there is no alternative. (=> Large scale DR business is impossible now) t Some DSOs use customer segment load curves for billing small customers that are hourly measured, even when both the customer and the electricity retailer asks for billing based on hourly measurements. Our only explanation for this is that their billing & metering systems are too unreliable, inaccurate and inflexible to be applied for small customers. ( => no incentive for DR there) t In the existing situation implementing hourly price response (or any small DER) is too expensive for small customers, because of high electricity metering costs and other costs. t Slow response of many floor temperature measurements due to lousy instrument installation practices in building automation. ( => response modelling needed) t Low and stable energy prices especially this winter in the Nordic electricity market ( => 1) too small incentive to DR 2) spot-price tariff customers win )

8. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 8 VTT PROCESSES IEA TOU-project (1) Objectives t Understand how to motivate smaller customers to modify demand to save energy/CO2 t Define mechanisms for their participation in the demand, generation side of markets t Quantify benefits of using customer Demand Elasticity t Quantify costs of using Demand Elasticity Project will be completed May 2005

9. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 9 VTT PROCESSES IEA TOU-project (2) Subtask 1 t Quantify impact of end use monitoring and feedback on energy saving and DSM for smaller customers (EUMF) – Reduce demand by feedback of end use information (EUMF) and promotion – Customer persuaded to save energy because of environment, reducing costs

10. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 10 VTT PROCESSES IEA TOU-project (3) Subtask 2 t Quantify impact on demand response of TOU pricing for smaller customers (TOU) – Moving/reducing demand, scheduling local generation for money savings (TOU). – Does automatic response to TOU remove need for TOU metering? – Customer persuaded to move energy demand to save money (short notice)?

11. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 11 VTT PROCESSES IEA TOU-project (4) Subtask 3 t Quantify pricing, control, energy use, validation and mechanisms for smaller customers (DSB/DR/DT). – Scheduled, moving/reducing available demand/generation for payments – Customer persuaded to plan ahead to reduce/move energy use (long notice)?

12. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 12 VTT PROCESSES TSO (Fingrid) is promoting demand elasticity t TSO has realised that more demand elasticity is needed to improve power system security and to avoid market failures. t TSO has load shedding agreements with large industry t TSO is interested in having aggregated small controllable resources available. t TSO sees it important that more loads respond to electricity market price variations (spot market and faster markets) t The TSO actively participates in project steering and is organising with our help regular meetings on demand elasticity (demand elasticity forum, about twice a year) and a seminar in April 2005.

13. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 13 VTT PROCESSES State of metering in Finland (1) Number of remote readable kWh-meters in real use in Finland as estimated by Vattenfall Yearin FinlandVattenfall in Finland 200470 000 ?30 000 2007?360 000 Vattenfall has ordered 330 000 remotely readable new meters and their reading system, communication is based on mobile phone network. The new meters measure consumption and interruptions and can be used to remote load management. In Finland Vattenfall has 360 000 customers and 12 % market share in retail of electric energy.

14. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 14 VTT PROCESSES State of metering in Finland(2) Outsourcing meter reading business is common t Vattenfall has made an agreement with Telia-Sonera t Several others use Ista There is no common meter reading standard => either several meter reading systems in parallel or all from one vendor => Expensive, large scale gives benefits

15. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 15 VTT PROCESSES State of metering in Finland (3) New meter generation offers solutions to the experienced problems and new possibilities t Better reliability and improved tolerance to data collection and communication system failures provided that the meter reading systems utilise these features: long storage at the meter and cumulative readings of hourly (or 15 min interval) metered values. Communication from the meter is not via pulses. t The accuracy of hourly billing improves. Less need for estimation of missing values. Accuracy is not cut to save bandwidth etc. t Include calendar based timing and ad-hoc control commands for load control. t Real time consumption data available locally from the meter to for example building automation or DER-automation => Need to focus on electricity market rules, business models and system requirements

16. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 16 VTT PROCESSES On the status of demand response in Finland t DSOs installed many direct control systems for electrical heating loads before the electricity market was opened up to competition. These systems have not been used during the competitive electricity market (, because of unbundling, need for new rules and business models, low electricity prices, short management time-horizon,..) t Time of use tariffs are still commonly applied for electrically heated houses and cause significant balancing needs at the system level. (2-time or 3-time distribution and/or energy tariffs). t Electrical heating has significant unused demand response potential, because the system costs have been too high. (about 600 000 electrically heated homes) t Large energy intensive industry reacts to the energy market price variations with their own energy management systems. t Tariffs based on the spot market prices are available even to small customers, but still rarely used. For small customers demand response is still infeasible because of high system costs, especially costs of hourly metering, now maybe also legislation.

17. VTT TECHNICAL RESEARCH CENTRE OF FINLAND 17 VTT PROCESSES On DR and metering related electricity market rules in Finland t Power distribution and transmission are unbundled from trade and generation. Billing metering is a part of the power distribution monopoly of the local DSO. t Need to improve legislation and authority regulation regarding metering. t The DSOs together develop their recommended practices for billing metering via the Association of Finnish Energy Industries (www.energia.fi) t Every customer can buy electric energy from whom she/he wants. t Customer segment load curves are applied, even for many customers that have hourly metering. After 27.12.2004 using customer load curve based balance settlement is not allowed for over 3x63A customers, if the load is measured for each hour. After 27.12.2004 customer segment load curves must be used for customers 3x63 A or less for balance settlement (, if electricity is bought from other than the local supplier). => New barrier for demand response of small customers?