Virtual power plants bring together smaller generation units (e.g., wind or solar, potentially supported by batteries and smart loads), the collective entity being treated as a single unit in the market. Thanks to the progress in digitization and communication, virtual power plants can be highly dispersed and need not be localized in a single area.
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Distributed energy resources (connected to the distribution grid) can be aggregated at the power level (from kilowatts to megawatts) to provide ancillary services and at the energy level (from kilowatt hours to megawatt hours) to trade on energy markets. Across Europe, system operators are lowering the various thresholds for market participation, such that a handful of medium-sized distribution-connected resources can already participate competitively in wholesale markets. This push for leveling the playing field is often driven by emerging players like aggregators or prospective flexibility service providers.
• Demand-side response has enormous potential to contribute to maintaining grid balance or tempering electricity prices. As discussed, instead of being discarded, the excess renewable electricity generation could be consumed by increasing flexible electricity consumption. Including the demand side in the equation offers an entirely new perspective on how consumers could support power system management. The evolution of smart grids will allow tapping into demand response across all voltage levels, down to residential customers, small companies, and all manners of buildings in general; see Figure 2.
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How Could Markets Adapt to Accommodate More Demand Response?
Once again, demand-side flexibility pops up as a crucial aspect of the future energy system. The ability of smarter and more sustainable buildings to shift their electricity profile without impacting end-user comfort should be extended to full market participation. For more than a decade, it has been clear that residential appliances can in fact provide flexibility services. A 2015 Belgian study measured the flexibility potential of more than 400 residential appliances over a three-year period. Wet appliances alone could provide a 2-GW power increase (or a 300-MW decrease), sustainable for more than 30 min, for the whole of Belgium [peak demand is between 8 GW (summer) and 15 GW (winter)]. This outcome was made without accounting for the flexibility potential of electric vehicles, which have since increased manifold. Indeed, the further decarbonization of the built environment and the electrification of end demand will multiply this potential. Additionally, the ongoing evolutions in information and communication technology will unlock this potential at lower costs, from individual SSBs to sophisticated energy communities. Smart control algorithms will maintain the integrity of end-user comfort, for instance by monitoring indoor temperatures or by charging electric vehicles before use.
SSBs have already started contributing to emerging distribution-level flexibility markets by providing services like congestion mitigation. For instance, some distribution system operators in the United Kingdom are procuring flexibility services from residential consumers at the low-voltage level, where enduring profile alteration or demand reduction is sought through smart or energy-efficient solutions. These services are far cheaper than reinforcing distribution grids in paving the way for the energy transition. Furthermore, they serve as tangible proof that the building sector can actively serve the grid’s needs and leave behind something of lasting value. The reader should be made fully aware of the implications: this is not some far-fetched future scenario. These changes are steadily developing, and as long as they maintain traction, their positive impact will grow wider by the day.
With the rapid changes in the building sector, and some field-trial experience, it seems everything is in place, and it is time to establish local flexibility markets that incentivize and enable consumers to participate in the energy transition toward a more renewable supply.
Coming Together Is the Beginning: The Story of the gENESiS Project
Defining the SSB
Buildings and end users are clearly at the core of the energy transition. It is thus no secret that most research efforts and industrial developments are focused on the evolution of buildings into more sustainable and flexible entities and their optimal integration into electricity systems. In response to the growing need for a more holistic, sustainability-driven mindset, we should no longer approach buildings with a narrow perspective of “what can the building do for me?” Whole-system sustainability is a fundamental building block in the pursuit of climate change mitigation. The European objective has shifted to unearthing new ways for buildings and end users to contribute to the energy transition, as we move toward the net-zero system in an efficient and cost-effective manner. To get a clear indication of the previous claims, the reader needs only to go through the recent European initiative concerning new buildings, which stipulates that from 2020 onward they must all be nearly zero energy (nZE).
Inspired by the previous initiative, a 2019 international research project (a collaboration among Luxembourg, Belgium, and Denmark) sought to capitalize on the recently expedited shift toward buildings. Based on the concepts of the nearly zero energy building (nZEB) and the smart building (SB), the project proposed the SSB archetype (see Figure 3). Its salient features can be described as follows:
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A building is an nZEB if, over a year, its renewable energy production nearly matches its consumption.
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A building is smart if equipped with an EMS. Following a customer-defined objective, it optimally manages the building’s assets (storage, load, generation, etc.) without compromising indoor comfort. Note that, while an EMS is a prerequisite for smartness, gauging the actual level of sophistication is a different discussion.
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A building is sustainable if, on top of being an nZEB, its material stock (construction and electric-thermal assets) has an overall low environmental impact based on its lifecycle assessment. This distinction is important: an nZEB is not necessarily sustainable if its environmental footprint (from construction to demolition) exceeds its nZE benefits. Sustainability is fundamentally tied to the initial design and continued operation phases.
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The Prospects of SSBs
SSBs and their integration into smart grids are of major value in building a more sustainable society. To provide the desired benefits, an SSB must be carefully designed, relying on advanced optimization models and centered on customer benefits and bottom-up empowerment across three phases:
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Building design: Prioritizing investment profitability by deciding on the optimal size and type of assets while meeting environmental and operational constraints. At this stage, factoring in future EMS actions and the potential flexibility interactions is desirable but often difficult to model with sufficient accuracy.
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Energy planning and management: Designing an efficient EMS that offers customers free reign over the benefit they wish to maximize. This benefit could range from economic (electricity bill minimization) to tradeoffs between monetary and environmental goals.
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Grid integration and provision of flexibility services: The paradigm shift from passive buildings to active SSBs revolves around the optimal integration of buildings in smart grids, i.e., examining and exploiting their win–win interaction modes. Sustainable consumers are decisively empowered to enter electricity markets through various products, such as shifting their consumption or arbitrating between production and consumption through battery storage.
With customers unlocking previously unknown revenue streams and grid operators being able to defer costly grid reinforcement and release additional capacity headroom, the result is a clear win–win situation. The inclusivity of this empowerment is its strongest asset: social benefits can be achieved both by opportunistic profit pursuit as well as by customers with genuine environmental concerns, ready to sacrifice some monetary gains in favor of a more sustainable goal. Some preliminary evidence is presented hereafter.
The validity of our hypothesis was tested on real residential buildings in Denmark (Table 1) and in Luxembourg (Figure 4 and Table 2). The building construction is different per country, but the main asset composition was the same: solar panel, electric vehicle, energy storage, heating, ventilation, and air-conditioning (HVAC), water heater, washing machine, and tumble dryer. For the specific experiments, the buildings were equipped (at no cost) with an EMS that independently scheduled and controlled the operation of the preceding devices. The buildings were directly exposed to wholesale energy prices, with the electricity bought and sold at market price, rather than at retail or a with fixed feed-in tariff. End users could override the default settings and program their own preferences into the optimization, such as when the car charging should be completed or during what time the washing machine should be operating. The Danish buildings were examined in two similar 10-day periods over summer months and winter months, both with and without the EMS controlling the assets. On average, the SBs achieved a 45-kWh energy reduction during the winter (a 40% cost savings) and managed to export an additional 70 kWh during the summer (90% additional benefits from selling power into the grid). The Luxembourgian buildings were examined during a year when the local solar production was much lower than expected. We compared SBs that did exclusively cost minimization with SSBs that simultaneously kept track of their environmental profile. The SBs did close the year with lower electricity costs (about 60 €), but the SSBs had a much lower net consumption (about 1,400–1,500 kWh). Under a carefully calibrated management strategy, the second type of building had a massively positive environmental impact at only 4 extra cents per saved kilowatt hour (this cost could be kept low due to the direct wholesale market access).
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Table 1. Conventional Danish building versus SB performance over a 10-day period.
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Table 2. Yearly flexibility requests and delivery for the different scenarios examined.
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Table 2 presents the yearly flexibility provision of SSBs governed by different flexibility remuneration schemes and extra cost tolerances. Undoubtedly, the most important observation was that buildings can support grid operation at no additional cost even when flexibility is treated as a free service. Naturally, when flexibility remuneration is competitive to wholesale market prices, the system operator’s collection of year-round requests is met at an excess of 90%. Though the customer’s willingness to sacrifice some profits to support the grid is an important parameter to consider, the primary driver is clearly the financial value of flexibility provision—when the minimum financial value is set at reasonable levels, the SSB exhibits practically identical behavior regardless of the value of f (see the following paragraph). What is crucial to mention is that even though flexibility provision increases the yearly net consumption, imposing strict environmental constraints (e.g., nZE mandate and daily energy neutrality) can help in containing the resulting increase. Simply put, environmental goals can still be met assuming the flexibility requests are reasonable in terms of size.
The SSB concept proved unique in targeting the fundamental agents of the green energy transition: making the building desirable for consumers, grid operators, and the environment. However, the marriage between these agents was not always organic; it requires a variety of mathematically rigorous methodologies in support. Everyone will naturally prioritize their own objective, some focusing on designing green buildings and monitoring environmental impact, and others being more concerned with participating in local flexibility markets. Naturally, there is no end to the prospective complexity and diversity. For example, highly sophisticated customers may want to track the national low-carbon energy production and appropriately steer their building profile or try to gain more independence from the grid. While accommodating everyone’s aspirations will be challenging, the win–win effect is inevitable. If anything, the Luxembourg-based project demonstrated that a collaborative approach, where the requirements of individual agents are sufficiently met, is a viable proposition. Coming together requires no more proof, simply action.
Staying Together Is Progress: Creating Smart Sustainable Energy Communities
Defining Local Energy Communities
No matter how sophisticated an individual consumer or building is, the lone path is rarely efficient. A single unit rarely has a big enough piece of the pie to instigate change. However, the story is quite different when you band together; this is where collective energy initiatives come into play. From energy cooperatives to ecovillages and large-scale communities—aggregated energy entities are currently popping up all over Europe. Built with the fundamental objective of serving the participants’ collective welfare, LECs strike a balance between being innovatively disrupting, socially beneficial, and reasonably complex. They are viewed as a highly promising option to achieve collective energy representation in a sustainable way.
The legislation put forth in the European Clean Energy Package formally acknowledged the term energy community, defining the legislative framework for “citizen-energy communities” and “renewable energy communities.” Broadly, an LEC (see Figure 5) is a legal entity with open and voluntary participation to organize its members’ collective energy actions to provide economic, environmental, or social benefits. The LEC members can engage in various activities, including generation, distribution, supply, storage, consumption, aggregation, sharing, and energy-services provision. Customer empowerment and social innovations are at the heart of the LEC concept. End users with co-ownership of renewable energy resources become responsible for their collective energy actions, thus assuming an active role in the energy transition. LECs can promote the implementation of local energy projects that would be challenging for single individuals to launch, facilitate increased autonomy and grid independence, and provide easy, cost-effective, and fair access to local renewable energy, especially to energy-poor and vulnerable customers. Furthermore, by enabling end users to assume various roles, LECs can give birth to innovative solutions and new business models and opportunities.
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LECs in Service of People, Sustainability, and the Grid
The simplest way for an LEC to enjoy economic benefits is to export its locally produced renewable energy surplus to the local grid. Its members can further agree to steer their collective behavior toward maximizing their self-sufficiency and/or self-consumption, further boosting grid independence and shielding them from events like price spikes. This local optimization is also beneficial for distribution grids as it leads to reduced network losses and increased efficiency. Cases exist where an LEC has led to the reduction or even full deferral of network reinforcement. LECs may also provide a variety of services to grid operators, such as demand response of aggregated energy patterns or provisional energy storage through an aggregator.
The SSB-focused project also examined the optimal management of diverse LECs (with different types of end users) to simultaneously achieve economic objectives and support the local distribution grid. The examined LEC was unique in that every agent involved played a distinct role in forming its operation—from the LEC’s shared energy storage down to the individual electric vehicle or washing machine. First, each customer optimized its behavior, and then the shared battery asset further coordinated the collective profile to maximize self-sufficiency or self-consumption. The community battery could also provide extensive support to the grid, either in the form of direct energy requests or by the grid operator reserving part of the battery capacity to be on standby. Preliminary results were positive, with the proposed control structure proving computationally efficient, less prone to cyberattacks and data leaks, and financially beneficial for all participants. Aside from the LEC reaching self-sufficiency levels of more than 97% (during summer), individual buildings could indirectly receive up to €3 within a 2-h period due to the communal battery providing flexibility services (the number in the U.K. trials was close to £2.8).
It is also worth observing whether the aforementioned financial benefits lead to any negative consequences in terms of comfort for the LEC members. Figure 6 presents the weekly indoor air temperature evolution, accompanied by the power consumption levels of HVAC devices (managing the internal temperature), for the three examined building types: residential, office, and health-care facility. As expected, the EMS of each building maintains the desired comfort range with no issue and does so optimally to maximize monetary returns. The temperature dynamics are clearly different between the different building types, but this is simply an academic observation; all that the end users need to know is that the temperature is consistently within acceptable levels. With respect to how the electricity price affects the internal temperature profile, each HVAC system reserves its intense operation for low-price periods. Naturally, the consumption pattern also implicitly reflects the occupancy and thermal needs per building type: residential buildings demonstrate a repeating up-and-down pattern (people going to and returning from work), office buildings operate at high demand during the work week and shut down during the weekend, and health-care facilities maintain a cost-optimal yet consistently active operation.
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At the same time, these setups are still under trial, and it is important to remain vigilant of still necessary improvements. Despite the immoderate advantages, there is still vagueness surrounding the specific legal standing of LECs. Because of this situation, member states can make unilateral decisions, which may hinder the harmonic development of a common framework. The necessary level of technical sophistication is no secret; significant investment in information and communications technology (ICT) infrastructure is required to optimally set up LECs. Finally, the interests of LECs and system operators can lie at vastly opposing ends, which can lead to the activation of conflicting services and lead to further grid stress and a collective loss of social welfare. Regulatory frameworks enforcing suitable tradeoffs are yet to be found.
Working Together Is a Success: Toward the Smart Sustainable Power Grid
Defining a Rigid Customer–Grid Collaboration Framework
This article has focused on supporting end users and fostering bottom-up developments. Still, one should not discount the merits of top-down approaches, i.e., grid operators dictating development according to network needs. It is true that bottom-up approaches lead to customizable, nonintrusive approaches that allow for significant leeway in designing one’s strategy for interacting with the grid. This approach is a great way to stimulate interest and large-scale investment in sustainable development. However, removing all restrictions from end users would likely result in an unpredictable setting for grid operators with little room for collaboration, which is not sustainable in the long term. Now, giving the same freedom to grid operators is also unreasonable, but there are positive elements to be adopted. The high degrees of network optimality and compliance, alongside the superior observability, monitoring, and control, are not prospects to be easily discarded. In the end, the idea is to merge the positive aspects of the two viewpoints, contain any fallout from their caveats, and ultimately devise a collaborative approach, depicted conceptually in Figure 7, for optimal network management and increased social welfare.
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Such an approach was shown to be viable. Starting with some more academic assumptions (e.g., a knowledge of network topology and building composition) and evolving into a more industry-friendly version, the project demonstrated that serving the objectives of all parties is feasible. The proposed first-of-its-kind three-stage design borrowed elements from all viewpoints: top-down network optimization and the creation of unique requests, partially voluntary bottom-up optimization from individual customers, and an ad hoc local flexibility market for whenever the voluntary support fell short. This approach produced very positive results, even with significant leeway for end users and limited communication. When compared to utopian, purely bottom-up or top-down alternatives, the collaborative approach resulted in no more than a 14% reduction in the recorded benefits for either party—a small inconvenience indeed for setting up a viable framework for smart collaboration.
Extracting Industrial Value for the Smart Sustainable Power Grid
Going from theory to practice always requires stretching our assumptions and pushing closer to realism. Is there really much value to extract as we challenge ourselves with increasingly tight margins? The proposed approach challenged itself across six axes, noting the following:
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Granularity: Moving closer to real-time network management was possible, even when pushing the limits of practicality. One could go down to 15-min time steps, accompanied by long optimization horizons, up to 24 h long.
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Scalability: The complexity of similar (academic) approaches usually precludes scaling up. In this case, targeted approximations reduced solution times by up to 95% without compromising the quality of the results beyond an accuracy deterioration of 1.4%.
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Data availability: Limiting the amount of available information to a minimum would theoretically preclude any meaningful result. However, the use of only basic network models and black box building models did not hinder the effectiveness of the collaborative approach, demonstrating its viability even under the usual real-life challenges that we would normally face.
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Communication: Communication often breaks down, and information will not always be perfectly exchanged among parties. Still, a collaborative approach with high levels of participation and coordination proved resilient against communication failures. Even under extreme scenarios, the overall objective was admirably served, its deterioration not crossing the 1% threshold. This outcome was evidence of true industrial relevance.
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Customer diversity: Collaborative approaches should be inclusive and functioning with every type of end user since uniform customer compositions are rare. This inclusiveness was a fundamental prerequisite that resulted in an approach that was readily applicable to any building setting.
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Exploiting overabundant flexibility: Very rarely do we observe instances of too much flexibility being available; discarding residual capabilities would be a clear loss of opportunity. Tapping into the prospective financial and grid benefits was first proposed in this collaborative approach: after meeting local requirements, we expand these services to the upstream system and higher voltage levels. Besides the additional revenues for consumers, the contribution to whole-system security results in a drastic drop in market and network costs. Grid operators can engage with previously inaccessible flexibility and ultimately focus on higher level objectives, like sophisticated coordination with the national power system.
In Summary
While the overarching topic of this article is fostering the bottom-up empowerment of end users and buildings, we covered many different topics with the following key messages:
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Buildings today and prospects: Buildings are a significant contributor to global energy demand, making them an excellent candidate to undergo sustainable transformation. They can passively achieve high energy efficiency and customer benefits and ideally support grid operators with flexibility services. Though not widespread, these opportunities paint a hopeful picture.
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Market support for buildings: Despite the vast untapped potential, the few available local market structures are nascent and not broadly inclusive (with high barriers to entry, complex participation requirements, etc.). The added whole-system value is massive, as seen in several large-scale applications. Most tangible attempts to incorporate demand response have been crowned with success, paving the way for establishing proper frameworks at the global level.
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The SSB: The SSB is the meeting point between long-term environmental friendliness, smartness in service of unearthing customer benefits, and ability to support the grid’s operation with flexibility. Recent research efforts have identified significant added value for society through this brand-new resource with high potential.
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The smart sustainable community: Collective energy representation can eliminate some techno-economic barriers that individual consumers would face by themselves. It makes achieving sustainability and economic goals easier and significantly expands the range of flexible options that can be offered to support the grid, thus unlocking new revenue streams.
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The smart sustainable power grid: Neither end users nor grid operators can pursue their objectives independently, mandating some form of collaboration. By reconciling bottom-up and top-down viewpoints, one can satisfy multiple objectives, even in the presence of practical restrictions like ICT failures or customer diversity. Positive effects are not limited to the local level and can have far-ranging implications, reducing network costs through the provision of multilevel flexibility services and seeding the ground for new electricity markets.
Significant potential exists for SSB applications. Their development fulfills the energy requirements of cost-effectiveness and sustainability. The concept is bound to dominate future developments as we move closer to the low-carbon 2050 vision. However, it is key to avoid one-sided developments and establish a fair and transparent collaboration framework. The best way to do so remains open, but agreeing on some basic common goals is the first action. Technological developments in smart sensors and meters are vital as these new sources of information will enable optimal energy management. On the other hand, stimulating consumers is not only a matter of technical and financial benefits; it requires a multidisciplinary approach, including the involvement of experts from social sciences to understand what people may best react to, depending on social, economic, and geographical context. From planning to implementation, success starts and ends with a common strategy and by being proactive rather than reactive. In the words of Albert Einstein: “A clever person solves a problem. A wise person avoids it.”
Acknowledgment
The authors acknowledge the funding from FNR Luxembourg in the frame of the research project gENESiS.
For Further Reading
I.-I. Avramidis et al., “gENESiS: Design, operation and integration of smart sustainable buildings in smart power grids,” in Proc. 29th Mediterranean Conf. Contr. Automat., Puglia, Italy, Jun. 2021, pp. 45–52, doi: 10.1109/MED51440.2021.9480315.
G. Deconinck and K. Thoelen, “Lessons from 10 years of demand response research: Smart energy for customers?” IEEE Syst., Man, Cybern. Mag., vol. 5, no. 3, pp. 21–30, Jul. 2019, doi: 10.1109/MSMC.2019.2920160.
M. Liu et al., “Grid and market services from the edge: Using operating envelopes to unlock network-aware bottom-up flexibility,” IEEE Power Energy Mag., vol. 19, no. 4, pp. 52–62, Jul./Aug. 2021, doi: 10.1109/MPE.2021.3072819.
“Nearly zero-energy buildings,” European Commission, Brussels, Belgium, 2021. [Online] . Available: Energy.ec.europa.eu/topics/energy-efficiency/energy-efficient-buildings/nearly-zero-energy-buildings_en
A. Caramizaru and A. Uihlein, Energy Communities: An Overview of Energy and Social Innovation, vol. 30083. Luxembourg City, Luxembourg: Publications Office of the European Union, 2020.
Biographies
Iason-Iraklis Avramidis is with Oaktree Power, W1J 6ER London, U.K.
Florin Capitanescu is with the Luxembourg Institute of Science and Technology, Esch-sur-Alzette L-4362, Luxembourg.
Geert Deconinck is with KU Leuven, B-3001 Leuven, Belgium.
Himanshu Nagpal is with Eurac Research, Bolzano I-39100, Italy.
Per Heiselberg is with Aalborg University, D-9220 Aalborg, Denmark.
André Madureira is with the Luxembourg Institute of Science and Technology, Esch-sur-Alzette, L-4362, Luxembourg.