smart energy management developing demand response ...€¦ · message from eu is clear on...
TRANSCRIPT
SMART ENERGY MANAGEMENT-
Developing demand response capabilities in real estates?
Presentation
30.1.2020
Aki Toivanen
Vanguard Consulting Oy
WHY REAL ESTATE SECTOR SHOULD BE INTERESTED IN ENERGY SECTOR TRANSFORMATION?Carbon neutrality forces (also) buildings to become more intelligent and dynamic in their consumption profiles – Securing future yields requires investors to incorporate new ways to manage their energy procurement and profiles
COST OF OWN PRODUCTION DECRESES
COST OF ENERGY RISING(?)
GRID REQUIRES MORE FLEXIBILITY
REAL-TIME MARKETS
POWER PAYMENTS RISING
HEALTHY CONDITIONS
LIFETIME MONITORING OF ENERGY EFFICIENCY
PREDICTIVE MAINTENANCE
INTERACTION WITH USERS
CARBON NEUTRALITY
SENSORS AND SUREVEILLANCE
DIGITALIZATION AND AUTOMATION
ECONOMIC VALUE OF CONSUMPTION ELASTICITY
USING PRICE VOLATILITY FOR ADVANTAGE
UTILIZING OWN PRODUCTION
EV AS PART OF THE GRID AND SERVICES
ECOCOMMUNICATIONS WITH CUSTOMERS
BUILDING REGULATION
REQUIREMENTS
ECONOMIC INCENTIVES FROM
ENERGY INVESTMETNS AND SYSTEM
IMPACT ON INVESTMETN YIELD?
CHANGE IN REAL ESTATE LIFETIME MANAGEMENT
TODAY’S AGENDA
Source: Vanguard Consulting Oy
WHY REAL ESTATE SECTOR SHOULD BE INTERESTED IN ENERGY SECTOR TRANSFORMATION?Saving the planet isn’t free: Energy system is becoming increasingly more volatile - How to balance the grid cost efficiently ?
Solar and wind 9 %
Other 91 %
2018
Solar and Wind 25 %
Other 75 %
2030
50 Hz nominal frequency
Sources: Siemens
WHY REAL ESTATE SECTOR SHOULD BE INTERESTED IN ENERGY SECTOR TRANSFORMATION?Decarbonized energy systems requires increasingly more flexible Demand Side Management (DSM) because supply side assets capable of balancing are scarce, and they are becoming increasingly more expensive to use
BALANCING SUPPLY SIDE CAPACITY IS DECREASING • By 2030 EU countries have shut down much of the
balancing production assets (namely fossil fuels) – Nordics nearly 100%
BALACING REQUIREMENTS ARE INCREASING • Industrial processes are not able to cost efficiently provide
flexibility in faster, near real time markets and with small trading units (15 – 5 minutes) • There is always opportunity cost
• With decreasing inertia in the energy system the requirements for fast response capability is increasing
• Electrification, especially increasing penetration of electric vehicles requires capability to adjust consumption
DECARBONIZED PRODUCTION PORTFOLIO• By 2030 EU has shifted generation mix with renewable
generation share of over 30%• EV penetration is expected to be 5-10%, putting heavy
stress on energy system
SECTOR COUPLING TO DRIVE OPTIMIZED ENERGY USAGE
PAN EUROPEAN ENERGY AND POWER MARKETS • Scale increases stability and big markets effectiveness• Intra day markets covers whole Europe since 2018 • Pan European Balancing power markets to be introduced in
2023 • Balancing model and reserve market rules are being
synchronized
CHALLENGES & RISKS BENEFITS
Source: Vanguard Consulting Oy
BALANCING NEED 2025
BALANCING NEED 2020
BALANCING NEED 2030?
WHY REAL ESTATE SECTOR SHOULD BE INTERESTED IN ENERGY SECTOR TRANSFORMATION?Traditionally real estate sector wouldn’t need to be bothered about the problems of energy sector – So why now?
BA
LAN
CIN
G C
OST
€/M
W
INDUSTRIAL PROCESSES
SMALL PROCESSES
COMMERCIAL BUILDINGS ENERGY
SYSTEMS
CAPACITY(MW)
OFF BALANCE COSTS AND SHORTER TRADING PERIODS & SMALLER UNIS
SMART ENERGY MANAGEMETN SYSTEMS
LESS SUITA
BLE FO
R FA
ST B
ALA
NC
ING
HYDRO POWER
MECHANICS & OPPORTUNITY COSTS
PROCESS AUTOMATION & DIGITALIZATION
AMR 2.0 + INTELLIGENT HOMES
AND IOT-DEVICES
SMALL BUILDING ENERGY SYSTEMS
Source: Vanguard Consulting Oy
WHY REAL ESTATE SECTOR SHOULD BE INTERESTED IN ENERGY SECTOR TRANSFORMATION?Reserve and balancing markets represent current status – The future market development fundamentals are clear but what will be the market structure and volumes is still open
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€2,00
€4,00
€6,00
€8,00
€10,00
€12,00
€14,00
€16,00
€18,00
€20,00
2 011 2012 2013 2014 2015 2016 2017 2018 2 019 2 020 2 021 2 022
FCR- annual market price development (€/MW,h)
FCR-N HINTA (€/MW,h) FCR-D hinta (€/MW,h)
0
100
200
300
400
500
600
2 011 2012 2013 2014 2015 2016 2017 2018 2 019 2 020 2 021 2 022
FCR- annual market volume development (MW)
FCR-N määrä (MW) FCR-D määrä (MW)
Olkiluoto 3 (Nuclear Reactor) Increase demand by 100MW as per
TSO network code
Volume development most likely, modest 2-5% annual growth
Supply is increasing; Demand volumes are not growing as fast;
High uncertainty on market outlook;
FCR-D market prices diluted in 2018; probably recover somewhat but 2-3€/MW long term outlook
While much of the FCR N/D capacity was traded on annual auctions still in 2018 the market will shift toward hourly markets toward 2020 as per EU winter package. This will slightly increase the market prices.
Source: Vanguard Consulting Oy
WHY REAL ESTATE SECTOR SHOULD BE INTERESTED IN ENERGY SECTOR TRANSFORMATION?Smart Readiness Indicator (SRI) for buildings - While implementation model and schedule is unclear, the message from EU is clear on importance of dynamic energy management in real estates
Source: Ministry of Enviroment and Aalto University 2019
One way or another real estates need to develop their capability to react to energy system needs –Enforced sector coupling is the next wave of energy transformation
DR alone counts for 33% of the total score!
Current model proposed for the European Commission as
of 29th of Jan)
WHY REAL ESTATE SECTOR SHOULD BE INTERESTED IN ENERGY SECTOR TRANSFORMATION?Real estate owners will face increasing energy costs (OPEX) unless they can dynamically manage the loads – Dynamic management offers new earnings and cost reduction opportunities to keep up with increasing requirements and secure yield levels
2. TOTAL COSTS OF INFLEXIBLE CONSUMPTION WILL INCREASE
• New distribution and transmission fee schemes• Increasing impact of Emissions trading• New Nordic balancing model • Derivate market liquidity is lowering and prices going up
3. PRICE VOLATILITY WILL INCREASE• New mechanism for balance errors (wholesale market) • 15-minute balance settlement windows • Increasing share of renewable generation
5. ONSITE ENERGY GENERATION AND STORAGE WILL BECOME FEASIBLE OPTION
• Decreasing costs of generation and battery technology• EV penetration and charging • Increasing costs of transmission
6. GREEN VALUES DRIVE GENERATION Y PURCHASE DECISIONS
Environmental education and awareness campaigns since early 2000 has drastically changed values and views compared to earlier generations
4. POWER MANAGEMENT WILL BECOME AN ISSUE IN LOCAL ENERGY SYSTEMS
• Increasing penetration of EV and onsite charging • Changes in heating systems (District and heat pumps) • Peak power tariff model to distribution fees
1. FAST DEMAND RESPONSE WILL HAVE ATTRACTIVE MARKETS TO CAPITALIZE ON
• EU market harmonization will introduce pan European markets• Increase of renewables drives instability • We are moving toward more real time market mechanism
CHANGE DRIVERS
FLEXIBLE CONSUMPTION PROFILES
10‒20 % €/yCOMPARED TO INFLEXIBLE CONSUMPTION
SMART POWER MANAGEMENT
• Optimal condition services• Better yield from onsite generation• Energy cost optimization • Enable EV fleet charging • Deferred building CAPEX • Reduced peak power fees
NEW BUSINESS OPPORTUNITIES
• EV charging business• Communications and branding • 2-way digital interface with users • Predictive maintenance • Property yield and value • Attractiveness to customers • ?
MARKET VALUE OF DEMAND RESPONSE
+100 000 €/MW/yMARKET VALUE 2025 (VGC 2018)
PROSUMER OPPORTUNITYCapability to control loads MARKET CHANGES 2020 – 2030
Source: Vanguard Consulting Oy and Korkia Consulting Oy
SMART ENERGY MANAGEMEN IN FINNISH REAL ESTATE SEGEMENT: THE GOALAdvanced building automation systems and technologies help to meet future challengers – Transformation is not just about technology but requires new approach from planning phase the lifetime management and operations
THRESHOLD REQUIREMENTS
PRIMARY PURPOSE IS ALWAYS
OPTIMAL USAGE PROFILE AS PLANNED REAL ESTATE HEALTH IS SECURED SECURITY IS NEVER COMPROMISED
TRADITIONALLY REAL-ESTATE
MANAGEMENT
= Static against variable environment
= MWh/m3 not optimized
Energy is mainly procured with flat
price contract which is above wholesale
price
Consumption profile risk is protected
with derivates or owner carries partial
market risk
= €/MWh is higher for consumer
energy
No micro-grid solutions due to poor
payback
No capabilities to earn from Fingrid
reserve markets
Less consumed
energySENSORING + ANALYTICS + CONTROLLABLE LOADS
MICRO GRID OPTIMIZATION AND ONSITE ASSETS
IMPLICIT DEMAND RESPONSE
CAPABILITIES
EXPLICIT DEMAND RESPONSE
CAPABILITIES
Less purchased
energy
Reduced unit costs
New revenue
stream
SMART ENERGY MANAGEMENT
Annual purchased energy volume is
decrease 5-10% against reference value
Reduction of average price paid for
energy (€/MWh) of roughly 3-5%
Fingrid automated reserve markets give
30,000€ – 100,000€/MW/year depending
portfolio capabilities
Better CAPEX efficiency for EV, PV and
storage solutions and improved readiness
to meet future requirements
Source: Vanguard Consulting Oy
SMART ENERGY MANAGEMEN IN FINNISH REAL ESTATE SEGEMENT: CURRENT STATUSLarge real estate investors and owners have been slow to react to the energy transformation and are facing increasing operational costs
Solar panels are familiar to almost everyone, as well as electrical vehicle charging in small scale with the current technologies and operating models.
For real estate automation is mainly a static monitoring and maintenance system that does not follow the price of electricity, but is utilized for power management.
Battery technologies and their utilization is clearly more unfamiliar.
Purchasing electricity is almost 100% done with fixed-price procurement contracts or protected with derivates.
Business models and concepts that utilize decentralized resources are relatively unfamiliar to everyone.
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2
18
16
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8
13
14
1
3
17
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Demand Response businesscase
Batteries as part of buidlingsystems
PV generation
EV charging as part RE business
Energy community models
PPA agreements
0 % 20 % 40 % 60 % 80 % 100 %
Has the organization done R&D for the following topics? Are they well understood? (N=19)
Source: Vanguard Conslting and Korkia discussions 2018 – 2020 with Real Estate investors
Unrestricted © Siemens AG 2019
18.10.2019Page 11
SMART ENERGY MANAGEMEN IN FINNISH REAL ESTATE SEGEMENT
Leading building technology players are establishing flagship projects to demonstrate the
value of smart energy management - Siemens flagship is Sello shopping center
Demand response
market
El Spot
Electricity market Solar Panels
750 kWp
Battery storage
2 MW / 2,1 MWhTrade
Microgrid
functionality
Cloud
based
Smart
Energy
Platform
eCar charging
SMART ENERGY MANAGEMEN IN FINNISH REAL ESTATE SEGEMENTSo how Sello with smart energy management systems did in SRI benchmarking?
Source: Siemens
SMART ENERGY MANAGEMEN IN FINNISH REAL ESTATE SEGEMENT: PATH FORWARDTransformation requires changes thorough out the chain, starting from project development to re-engineering the real estate management processes and models
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REAL ESTATE INVESTORS AND OWNERS
• Concept development to include new building technologies
• Demand consultants and planning companies for new solutions
• Build new energy and service procurement models and contracts
• Do not just chase the energy efficiency, create flexibility to your portfolio’s
CONSTRUCTION COMPANIES AND ENERGY MANAGERS
• Update concepts and offerings to incorporate more advanced energy system components
• Energy managers should update operational models how portfolios are managed
BUILDING TECHNOLOGY & ENERGY SOLUTION
PROVIDERS
• Provide data for researchers to proof the feasibility of the concepts
• Open data interfaces and contractual models to support market development (fear of lock-in)
RESEARCHERS AND PUBLIC SECTOR
• Cities and municipalities should include power component and digitalization in building permits more often
• Incentives for solutions that support energy systems stability
• Cultivate cooperation between real estate, building and energy sector
• (electricity) planning guidelines and standards need to be updated to 20th
century
