If you make the energy need more predictable, unused transport capacity becomes available and tradeable

The increasing electrification in society leads to higher peak loads on the electricity grid. Some people are warning for an energy transition that is too fast. Others are hopeful for a fully electric future. In a report commissioned by the Dutch Topsector Energie program, more than 100 potential solutions are offered, all focusing on maximizing the capacity of the existing or upcoming electricity network to accelerate the energy transition. In a 12-part series, Innovation Origins spotlights the twelve most promising solutions. This is part 4: dynamic capacity planning and trading.

Dynamic capacity planning and trading enhance the predictability of how transport capacity is used and can make unused transport capacity available to other users. This solution provides insight into expected unused capacity, which can be better utilized with non-firm connection contracts. It is suitable for large consumers and large-scale generation, offering a solution for congestion on medium and high-voltage networks. By increasing transparency about available network capacity, companies can contribute to better network utilization.

Trading system

In addition to dynamic planning, introducing a trading system for network capacity makes transport capacity an integral part of the operation and business model of the connected party. This will lead to the use of network capacity, where the added (economic) value is greatest. In an extreme implementation, a situation could be created where, in theory, no new connection or reinforcement needs to be refused; the market determines whether the connection can have the desired capacity by trading available transport capacity. Congestion is time and location-bound, and to prevent it with this solution, the capacity forecast must also be provided with time and location.

Demand and supply

Users and producers already trade in electricity consumption and generation, creating more balance in the demand and supply of electricity. However, this dynamic doesn’t exist for network capacity. By explicitly using a market mechanism to plan and distribute capacity in time and place, the network can be used more optimally. Capacity planning and trading help make the transport needs of the connected party explicit and conscious. It can offer a solution for companies that want to use the connection capacity of other companies, for example, on the same business site. The current transport capacity that is handed over to the network operator is offered to the next in line.

Results

There’s a caveat. Such a system would need new laws and rules and a change in thinking among the users. Good market rules – transparent, equal, and fair – are obviously crucial. Results will only be achieved when currently connected parties engage in capacity planning or existing connection agreements are opened to a baseload agreement with capacity trading. Market rules must facilitate this in the right way. Rules about ‘use it or lose it’ of the already contracted capacity can be introduced as a big stick.

At the end of the day, capacity planning and trading help make the connected party’s transportation needs explicit and aware. It can provide a solution for companies that want to use connection capacity from other companies, for example, in the same business park. Such ‘targeted exchange’ of transport capacity is not possible now. Transport capacity that is currently surrendered to the grid operator is offered to the next in line.