Smart charging and energy storage: bridging the gap between electro mobility and electricity markets

Smart Charging and
Energy Storage:
Bridging the Gap
between
Electromobility and
Electricity Systems
Eugenio Stoppani
*
Policy officer on automotive industry at
the Directorate General for Internal
Market, Industry, Entrepreneurship and
SMEs of the European Commission
Electric vehicles; Electricity industry; Electricity
markets; Emissions; Smart devices; Transport policy
Introduction
At the 2015 UN Climate Change Conference, global
leaders adopted a universal agreement on climate, with
the aim of keeping global warming below 2°C compared
to pre-industrial levels. This historic agreement will have
important consequences on political actions all around
the world, and the EU, as a global leader in the fight
against climate change, will have to lead the way.
The energy and transport sectors are at a turning point
in history. The transition to a low-carbon, energy secure
and competitive economy has become a priority for
Europe and both of these sectors will need to undergo
major changes in order to contribute to this objective.
Energy and transport are the two biggest greenhouse
gas emitting sectors in the EU. In particular, these sectors
combined were responsible for 78.3% of the EU
greenhouse gas emissions (GHG) in 2014.1
In the same year, road transport was the major emitter
of greenhouse gas emissions within the transport sector,
accounting for 72.8% of all EU transport GHG emissions.2
In addition, road transport currently accounts for one-fifth
of the EU’s total emissions of carbon dioxide (CO2);
light-duty vehicles alone, such as cars and vans, are
responsible for 15% of these emissions.3
Finally, air
pollutants caused by transport such as small particulate
matters (PM2.5), nitrogen dioxide (NO2) and ground-level
ozone (O3) were responsible in 2012 for over 430.000
premature deaths in Europe.4
It is therefore of crucial
importance for the EU to reduce the carbon footprint of
road transport in the long term in an effective way.
Europe will also need to diversify its sources of energy
and reduce its dependency on fossil fuels. This is
particularly true for transport, a sector where Europe is
94% dependent on oil, 84% of which is imported, with a
cost in 2011 of up to €1 billion per day.5
In order to effectively reduce emissions and
dependency on fossil fuels, alternative and clean energies
for transport have to be developed. Among these,
electricity represents a promising solution. As underlined
by the European Commission, “Europe needs to speed
up electrification of its car fleet and other means of
transport and become a leader in electro-mobility.” 6
Electro mobility
Electric vehicles (EVs) represent one of the most valid
alternatives to internal combustion engine (ICE) vehicles
for different reasons. EVs are not only three times more
efficient,7
but thanks to the absence of tailpipe emissions
they can dramatically improve the air quality particularly
in urban congested areas with high levels of pollution.
Moreover, since EVs are powered by electricity and not
by oil, they can substantially contribute to reducing
imports of fossil fuels, thus improving Europe’s energy
security of supply.
The EU has adopted different instruments to promote
the development of alternative fuels for transport, such
as electricity.
The first policy instrument is the Communication
entitled “Clean power for transport: a European alternative
fuels strategy”, adopted in 2013 by the European
Commission.8
This strategy covers all modes of transport
and specifies that action is required to develop in
particular alternative fuels infrastructure, consumers’
acceptance and technological development.9
*
To contact the author please write to eugenio.stoppani@gmail.com. The views expressed in this paper are solely those of the author in his private capacity and do not in
any way represent the views of the European Commission.
1
Eurostat, Greenhouse gas emissions statistics (2016), http://ec.europa.eu/eurostat/statistics-explained/index.php/Greenhouse_gas_emission_statistics [Accessed 3 July
2016].
2
European Commission Directorate General for Climate Action, Reducing emissions from transport—A European strategy for low emission mobility (2016), http://ec.europa
.eu/clima/policies/transport/index_en.htm [Accessed 22 July 2016].
3
European Commission Directorate General for Climate Action, Road transport: Reducing CO2 emissions from vehicles (2016), http://ec.europa.eu/clima/policies/transport
/vehicles/index_en.htm [Accessed 6 January 2016].
4
European Environment Agency, Air quality in Europe—2015 Report (2015), p.9, http://www.eea.europa.eu/media/newsreleases/many-europeans-still-exposed-to-air
-pollution-2015/premature-deaths-attributable-to-air-pollution [Accessed 3 July 2016].
5
European Commission Directorate General for Mobility and Transport, Alternative fuels for sustainable mobility in Europe (2015), http://ec.europa.eu/transport/themes
/urban/cpt/index_en.htm [Accessed 4 July 2016].
6
Communication of the European Commission, A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy, COM(2015) 80 final,
25 February 2015, p.14.
7
European Commission Directorate General for Mobility and Transport, Clean transport, urban transport (2012), http://ec.europa.eu/transport/themes/urban/vehicles/road
/electric_en.htm [Accessed 4 July 2016].
8
Communication of the European Commission, Clean power for transport: a European alternative fuels strategy, COM(2013), 17, 24 January 2013.
9
Communication of the European Commission, Clean power for transport: a European alternative fuels strategy, pp.8–10.
10 International Energy Law Review
[2017] I.E.L.R., Issue 1 © 2017 Thomson Reuters (Professional) UK Limited and Contributors

The second important initiative is the Directive on the
Deployment of alternative fuels infrastructure (Directive
2014/94), which came into force in 2014. This instrument
requires Member States to adopt national policy
frameworks for the market development of alternative
fuels and their infrastructure.10
As a consequence, the
level of ambition of Member States will be crucial for
the effective deployment of alternative fuels for transport
like electricity in the future.
The third instrument is the Communication entitled “A
European strategy for low-emission mobility”.11
This
strategy is based on three main pillars: increasing the
efficiency of the transport system by taking advantage of
new technologies; speeding up the deployment of
low-emission alternative energy for transport; and moving
towards zero-emission vehicles. The long term goal of
the strategy is therefore to promote the deployment of
vehicles with no tailpipe emissions, such as EVs.
Finally, a recent addition related to electro-mobility
concerns the installation of electric recharging points.
The proposal amending the Energy Performance of
Buildings Directive specifies indeed that Member States
shall install starting and stopping charging points reacting
to price signals in at least one of every 10 new
non-residential buildings and existing non-residential
buildings undergoing major renovation with more than
ten parking spaces (and in all non-residential buildings
with more than ten parking spaces as of 1 January 2025).12
Although electricity represents a valid alternative
energy source of transport, it still has to be produced in
a clean and sustainable manner in order to effectively
reduce emissions of both energy and transport sectors in
the long term. Moreover, electricity markets need to
become sufficiently flexible in order to adapt to new
technological developments, including electro mobility.
For these reasons, a new design of electricity markets at
EU level has become necessary.
Electricity market design
The existing markets were created at times when large,
centralised plants powered by fossil fuels were providing
constant electricity to beneficiaries such as industry,
businesses and consumers, without focusing on efficiency.
Nowadays however, there is an increasing share of
renewable energies in electricity markets, such as solar
and wind. These alternative energy sources already play
a major role in the EU energy mix. In 2013, renewable
electricity generation accounted for almost 26% of the
total EU gross electricity generation and this share
increased by 4.9% in 2014.13
The production of renewable
energies will become increasingly important for future
energy systems and the EU has therefore strongly
supported their deployment at regulatory level, by setting
binding targets of 20% in final energy consumption from
renewable sources by 202014
and of 27% by 2030.15
The increasing growth of renewable energy generation
will nevertheless have an impact on electricity grids in
Europe. Indeed, the intermittent nature of these energy
sources will require greater flexibility and coordination
between supply and demand of electricity.
Along with the growing production of renewable
energies, the increasing number of EVs in the years to
come will represent a further challenge to energy systems.
Because the charging process of EVs will mostly take
place during certain periods of the day at local level, the
additional electricity demand will likely occur in defined
geographical and temporal terms. This will require
adjustments and infrastructural investments in order for
power systems to adapt.
As a consequence, in order to effectively address these
challenges new rules have become necessary to address
the increased variable and decentralised production of
energy, the responsibilities of market players and the
participation of consumers in energy markets.
These new rules are part of the “Clean energy for all
Europeans” package, presented by the European
Commission on 30 November 2016, which consists of
different legislative instruments aimed at completing the
internal market for electricity and implementing the EU.16
The key priorities of this package are energy efficiency,
the EU’s global leadership in renewables and a fair deal
for energy consumers.
The framework related to energy market design is
based on the following pillars: provide clear market
signals for new investments in power flexibility and
renewable energies, remove market barriers and support
regional cooperation on market operations, promote
demand side flexibility, support consumer participation
at the retail level and ensure data protection.17
Within the “Clean energy for all Europeans” package,
two specific instruments focus on market design: the
proposal for a recast Electricity Directive (2009/72) and
the proposal for a recast Electricity Regulation
(714/2009). On the one hand, the recast Directive has
extended its scope and contains changes related to market
organisation, consumers and other market parties. This
instrument will enter into force on the 20th day following
its publication and will have to be transposed into national
legislations by a date to be determined. On the other hand,
the recast Regulation sets principles for integrated
electricity markets with a non-discriminatory market
10
Article 3 Directive 2014/94 of 22 October 2014 on the deployment of alternative fuels infrastructure.
11
Communication of the European Commission, A European Strategy for Low-Emission Mobility, COM(2016) 501 final, 20 July 2016.
12
Article(1)(5)(b) Proposal for a proposal amending Directive 2010/31 on the energy performance of buildings (2016/0381 (COD)).
13
European Commission, Renewable Energy progress report, COM(2015) 293 final, 15 June 2015, p.7.
14
Article 3 Directive 2009/28 on the promotion of the use of energy from renewable sources.
15
Communication of the European Commission, A policy framework for climate and energy in the period from 2020 to 2030, COM(2014) 15 final, 22 January 2014, p.5.
16
European Commission, Directorate General for Energy, Commission proposes new rules for consumer centred clean energy transition, 30 November 2016, https://ec
.europa.eu/energy/en/news/commission-proposes-new-rules-consumer-centred-clean-energy-transition [Accessed 30 November 2016].
17
European Commission Directorate General for Energy, Memo: new electricity market design: a fair deal for consumers, https://ec.europa.eu/energy/sites/ener/files
/documents/technical_memo_marketsconsumers.pdf [Accessed 30 July 2016].
Smart Charging and Energy Storage: Bridging the Gap between Electromobility and Electricity Systems 11

access for all market parties, including consumers. The
Regulation will enter into force on the 20th day following
its publication and will be binding and directly applicable
in all Member States as from 1 January 2020.
In order to effectively achieve in a time and cost
effective manner both the uptake of electro mobility and
the reform of electricity systems, innovative and flexible
solutions will need to be developed. Two processes in
particular appear to have interesting potential for EVs
and electricity systems: smart charging and energy
storage.
Despite being currently at an early development stage,
these technologies will have major impacts in the field
of sustainable transport and energy in the years to come.
The benefits these processes could bring to customers
and operators, but also the regulatory challenges and
solutions necessary to enable their full deployment require
an in-depth analysis, which is presented in this paper.
The first part focuses on smart charging. In this section,
the benefits of this technology for market actors, as well
as some of the challenges and regulatory solutions are
analysed. A focus is also made on aggregation and the
necessary actions needed to promote its development in
electricity systems.
The second part of the paper relates to energy storage.
The analysis focuses on storage technologies applied to
EVs and their benefits for grids and market players.
Moreover, regulatory barriers and solutions to promote
the development of energy storage in future electricity
systems are presented.
Finally, the analysis concentrates on the definition of
roles and responsibilities of market players in relation to
flexibility.
I. Smart charging
(1) Demand response and smart charging
The increasing generation of electricity produced by
renewable and intermittent sources as well as the growth
of electro mobility will require power systems to adopt
flexibility both on the supply and demand side. Different
types of flexibility resources exist, such as flexible
generation, demand response and storage. In this section,
demand response and its applications regarding electric
vehicles will be analysed.
Demand response can be defined as voluntary changes
of electricity patterns carried out manually or
automatically by final consumers or businesses in reaction
to price signals or specific requests.18
An important sector where demand response can be
applied is electro mobility.
As studies have shown, cars are usually parked for
long periods of time, between trips or during the work
day and overnight, which amounts to a driving time of
less than two hours per day.19
As regards EVs in
particular, it is estimated that 90% of charging would take
place at home, especially at the end of the day, and at the
office; as a consequence, electricity peak demands would
occur mostly in low-voltage distribution grids in
residential and commercial areas.20
This means that in order to avoid negative
consequences for the grid and meet users’ needs it will
be important to intelligently manage the charging process
of EVs. For this reason, the “Alternative fuels Directive”
(Directive 2014/94) calls on Member States to develop,
if possible, intelligent systems which would encourage
recharging (of EVs) at times of low energy demand and
prices.21
This process is known as smart charging. How can
smart charging be defined and what are its implications
for electro mobility and electricity systems?
(a) Definition
Smart charging is a process whereby EVs, by being
controlled, are able to provide information and services
in a bidirectional way between different electro-mobility
and grid stakeholders in order to ensure reliability and
security of the system as well as meet users’
requirements.22
This process can provide important benefits for market
actors, in particular electricity grid operators and
customers.
(b) Benefits
As regards electricity grid operators, the first benefit
brought by smart charging would be to significantly
reduce demand, by shifting it from peak to off-peak hours.
Peak demand occurs at three levels in the power
system. First, in wholesale markets, where peak times
create high energy prices; secondly, at Transmission
System Operators (TSOs) level, where high demand for
services with low available offers creates high balancing
prices for system services; and finally at Distribution
System Operators (DSOs) level, where peak demand can
cause physical capacity constraints, such as overload of
lines and voltage drops.23
The physical capacity constraints in particular could
damage grid assets, which would need to be replaced and
expanded. However, by using smart charging, DSOs
would be able to manage more intelligently the grid. This
would allow them to delay and potentially avoid
copper-based investments aimed at increasing grid hosting
capacity, and therefore achieve important cost savings.
18
Eurelectric, Demand response: everything you always wanted to know about demand response (2015), p.1.
19
G. Pasaglou et al, Driving and parking patterns of European car drivers—a mobility survey, European Commission Joint Research Centre (2012).
20
Eurelectric, Smart charging: steering the charge, driving the change (2015), p.14.
21
Recital 28 Directive 2014/94 of 22 October 2014 on the deployment of alternative fuels infrastructure.
22
CEN-CENELEC, E-mobility, Smart charging (2015), p.4.
23

Smart charging could also be beneficial for customers.
EVs will inevitably increase the energy demand at
household level, which may require additional connection
and subscription costs. Thanks to smart charging however,
customers would be able to control the time of charging
of their vehicles and shift it to off-peak hours when
electricity prices are lower. This would allow them to
significantly decrease their energy consumption and
achieve important cost savings, which could be between
24 and 31% in case of charging occurring at off-peak
hours.24
Another important benefit smart charging could bring
to customers relates to the total cost of ownership (TCO)
of their EVs. TCO can be defined as an estimate of all
direct and indirect costs associated with an asset over its
entire life cycle.25
As regards EVs, even though their
initial sale price is currently higher than ICE vehicles,
running and maintenance costs are considerably cheaper,
due to the lower price of electricity compared to petrol
and fewer engine parts to be replaced. Moreover, EVs
will likely achieve the same TCO as ICE vehicles in just
five years from now, mainly due to significant cost
reductions in batteries.26
As regards energy costs, it is also
estimated that EVs owners would not only reduce by
three times their energy bill compared to ICE owners, but
thanks to smart charging, they would be able to decrease
it by another 30%.27
Finally, smart charging could significantly contribute
to achieving decarbonisation of the energy and transport
sectors. By coordinating the charging process with the
production of electricity from renewable sources, thus
decreasing the use of emitting power plants needed to
compensate intermittent energy supply, smart charging
could achieve substantial emissions savings.
Smart charging can therefore bring important benefits
to market actors and energy systems. However, in order
to effectively enable the deployment of this technology,
it will be necessary to recognise demand response in
electricity markets as well as new actors such as
aggregators.
(2) Acceptance and equal participation of
demand response and aggregation in
electricity markets
At European level, the value of demand response as a
resource in electricity markets is recognised by the
Electricity Directive (Directive 2009/72) and the Energy
Efficiency Directive (Directive 2012/27).
These legislative instruments specify in particular that
Transmission System Operators (TSOs) shall ensure the
availability of services provided by demand response and
national authorities shall encourage an equal participation
of demand response alongside supply in wholesale and
retail markets.28
The proposal for a revised Electricity
Directive follows the same approach by emphasising that
“national regulatory authorities shall encourage final
customers, including those offering demand response
through aggregation, to participate alongside generators
in a non-discriminatory manner in all organized
markets”.29
The Energy Efficiency Directive also specifies that
TSOs and DSOs “should treat demand response providers,
including aggregators, in a non-discriminatory manner,
on the basis of their technical capabilities”.30
On this point,
the proposal for a revised Electricity Directive follows
the same approach.31
It is worth exploring further the nature and functions
of aggregators in order to better understand their role in
electricity markets.
(3) Aggregators in electricity markets
Aggregators are legal entities that collect the loads of
different demand and/or generation units,32
such as EVs.
These entities contract with industrial, commercial and
domestic consumers and then aggregate their demand
response actions to provide and sell these resources in
electricity markets, by acting as a single entity.
(a) The nature of aggregators
Aggregators can be either suppliers and balance
responsible parties (BRPs), which are market related
entities or their chosen representatives responsible for
their imbalances,33
or third party operators.
In the first case, these entities would decide whether
to source electricity on the market or to activate demand
response services and be the main contact point for
customers.34
In the second case, third party entities would contract
directly with customers and sell their demand response
services to BRPs or to electricity markets.
(b) Functions of aggregators
Aggregators have different functions.
The first one is data management, which consists of
real-time consumption metering, forecasting market prices
as well as estimating energy demand of customers.35
24
25
Please see the definition of TCO at http://www.businessdictionary.com/definition/total-cost-of-ownership-TCO.html [Accessed 1 August 2016].
26
UBS, Global autos: What is the powertrain of the future? Q series, (2016).
27
Eurelectric, Smart charging: steering the charge, driving the change (2015), p.19.
28
In particular see art.12(d) of Directive 2009/72 and art.15.8 of Directive 2012/27.
29
Article 17(1) Proposal for a Directive on common rules for the internal market in electricity, 30 November 2016, 2016/0380 (COD).
30
Article 15.8 Directive 2012/27.
31
Article 17(2) Proposal for a revised Electricity Directive (recast).
32
Smart Grid Task Force, Regulatory recommendations for the deployment of flexibility (2015), Annex 3.
33
Eurelectric, Designing fair and equitable market rules for demand response aggregation (2015), Annex, p.18.
34
Eurelectric, Designing fair and equitable market rules for demand response aggregation (2015), Annex 1, p.9.
35
Charrelle Eid et al, “Aggregation of demand side flexibility in a smart grid: a review for European market design” (2015), p.2.

The second function of aggregators is bundling of
services, which is carried out by pooling many different
individual flexibility services into tradable values;
aggregators then activate flexibility resources when
needed by the market by using technology communication
and control in order to ensure a reliable service.36
The third function is matching and market clearing,
which consists of bidding the bundled services on
electricity markets, based either on capacity trading (e.g.
in balancing and ancillary markets), or on energy trading
(e.g. in day-ahead markets or with long term contracts).37
The last function performed by aggregators is to
guarantee transactions, by controlling ex-post supplied
demand response and remunerating or penalising
accordingly for the non-supplied services.38
The actions carried out by aggregators might have an
impact on other market actors in electricity systems.
(c) Impacts of aggregators on other market
actors
The first impact of aggregators’ activities would be on
BRPs/suppliers. In particular, when third party
aggregators would collect electricity from a certain pool
of customers in order to sell it to electricity markets, they
would affect BRPs/suppliers. Indeed, part of the energy
injected by these entities would not be consumed by their
customers but at another level in the system, which would
put them in imbalance.39
The second impact of aggregators would be on
customers. Actions undertaken by aggregators would
affect the consumption pattern of customers beyond what
was foreseen by BRPs/suppliers when prices were set for
the services provided.40
Finally, aggregators’ activities would have an impact
on DSOs. The activation of demand response services by
aggregators at distribution level would lead to network
constraints and would affect security of supply, unless
adequate rules are developed allowing DSOs to maintain
operational security in their networks.41
(d) Solutions for addressing the interaction
between aggregators and other parties
Issues arising from the interaction between third party
aggregators and other market actors can be addressed
through different types of solutions.
The first interaction concerns aggregators and
BRPs/suppliers. As regards financial compensation related
to aggregators’ activities, the recast Electricity Directive
underlines that these entities shall not be required to
financially compensate suppliers or generators.42
This
proposal underlines that exceptionally, and subject to the
approval by national regulatory authorities, compensation
payments between aggregators and BRPs shall be allowed
only when one market participant would induce
imbalances to another market participant, resulting in a
financial cost.43
This derives from the principle outlined
in the recast Electricity regulation that all market
participants shall aim for system balance and shall be
financially responsible for imbalances they cause in the
system.44
As regards compensation payments, some
stakeholders suggest that BRPs/suppliers and aggregators
would contractually agree on how these should be carried
out, thus allowing market based pricing of energy and
flexibility.45
In this context, it will be crucial to ensure that
BRPs/suppliers do not adjust their injection following
actions carried out by aggregators, as this would
undermine the essence of a demand response system
altogether. Some stakeholders also argue that
BRPs/suppliers should receive information on customers’
activation from third party aggregators as this would allow
them to distinguish between aggregators’ operations and
customers’ load reductions, which would require
balancing actions by BRPs/suppliers.46
Finally, these
stakeholders stress that it will be necessary to ensure that
BRPs/suppliers will be able to renegotiate supply
contracts in order to take into account change in
customers’ consumption patterns which may go beyond
the range initially forecasted by BRPs/suppliers.47
The second issue to be addressed is the relationship
between DSOs, TSOs and aggregators. If, following the
activation of demand response actions by aggregators,
the security of the distribution system was put at risk,
DSOs should be able to conduct constraint management
and have access to key data related to these actions.
Likewise, DSOs should inform aggregators when the
network is available for demand response actions.48
On
the other hand, TSOs using resources provided by
aggregators for balancing reasons should allow them to
be available to the entire market in order to ensure an
equal level playing field with resources provided by other
players.49
36
Eid et al, “Aggregation of demand side flexibility in a smart grid: a review for European market design” (2015), p.2.
37
38
39
Eurelectric, Designing fair and equitable market rules for demand response aggregation (2015), p.10.
40
41
42
Article 17(3)(d) Proposal for a Directive on common rules for the internal market in electricity, 30 November 2016, 2016/0380 (COD).
43
Article 17 (4) Proposal for a revised Electricity Directive (recast).
44
45
46
47
48
49

In terms of contractual arrangements, the proposal for
a revised Electricity Directive underlines that contracts
between customers and aggregators shall not require the
consent of customers’ suppliers.50
In this context, the
remuneration of customers will depend on contractual
arrangements with aggregators. Aggregators would then
have contracts with TSOs or DSOs for the services
provided to these operators.
The analysis has so far presented the value of demand
response and has underlined the need to ensure an equal
participation of new actors such as aggregators using
demand response resources in electricity markets.
However, in order to effectively enable the deployment
of demand response services such as smart charging,
regulations should incentivise operators to invest in these
processes aimed at increasing the flexibility and efficiency
of electricity systems.
(4) Incentivise operators to invest in
flexibility
Grid operators can be defined as market parties that have
to cover their capital costs (CAPEX) and operation costs
(OPEX) through regulated revenues, collected via network
tariffs.51
As underlined earlier, the entry of new market
players and the development of technologies will increase
the difficulty to plan and balance electricity systems. As
a consequence, important investments will be required
by grid operators to cope with this evolution.
In this context, National Regulatory Authorities
(NRAs) and EU Member States will play a crucial role
in incentivising grid operators to make investments aimed
at improving systems efficiently on the long term rather
than adopting short term solutions.
Balanced regulations should therefore allow grid
operators to achieve this objective in a cost efficient
manner, while at the same time ensuring that the quality
of supply is preserved and that consumers benefit from
an adequate and fair price structure. The Article 3(1)
Proposal for a proposal for a recast Electricity Directive
goes in the same direction, by specifying in particular
that national legislation should not hamper investments
into flexible energy generation and energy storage and
that electricity prices should reflect actual demand and
supply.52
Decisions adopted by operators on whether to invest
in additional capacity solutions or in flexibility processes
such as demand response should be based on efficiency
in terms of costs and quality of supply. In this context,
some stakeholders underline that regulatory frameworks
should be technology neutral and ensure that efficiency
requirements are set in all dimensions (terms of setting
costs, revenues and grid tariffs).53
NRAs and EU Member States should also remove
regulatory barriers preventing operators from choosing
flexibility options and ensure that they can recover costs
linked to innovative investments. For instance, the recast
Electricity Directive underlines that national regulatory
frameworks should allow and incentivise DSOs to procure
services aimed at improving the efficiency of the
distribution system and ensure that they are adequately
remunerated in order to recover the corresponding
expenses.54
Finally, the European Commission recommends that
operators should generate revenues not on the basis of
additional sales, but rather on efficiency gains55
; this
would entail for example for DSOs to decouple their
revenues from energy sales and link them to performance.
After having analysed the steps needed to incentivise
operators to invest in demand response, it is now time to
focus on how to engage consumers to use this form of
flexibility.
(5) Engagement of consumers
The empowerment of consumers will be at the core of
future energy systems. The strategy to achieve this
objective is based on three pillars: help consumers achieve
cost and energy savings through better information, give
them more choice regarding their participation in energy
markets and ensure the highest levels of consumer
protection.56
Demand response systems such as smart charging of
EVs would allow cost savings and greater participation
of consumers in electricity markets. In this sense, it will
be crucial for consumers to understand that shifting the
charging to off-peak hours will not negatively impact
their mobility needs, whereas it could economically and
environmentally improve the electricity system. In order
to successfully promote smart charging, consumers will
need to be aware of the benefits that this technology will
bring to their electricity consumption as well as to the
security and reliability of the grid.
(a) Accurate data on consumption
The first point which would enable consumers to adopt
smart charging is accurate data on consumption.
In this sense, smart meters can play a key role. These
devices measure energy consumption, receive and
transmit data by using a form of electronic communication
and provide more information than conventional meters.57
The recast Electricity Directive underlines that smart
meters should allow active customers’ participation in
electricity markets and that the information provided by
these devices should be made easily available at a
50
Article 13(1) Proposal for a revised Directive on common rules for the internal market in electricity, 30 November 2016, 2016/0380 (COD).
51
Smart Grid Taskforce, Regulatory recommendations for the deployment of flexibility (2015), p. 47.
52
Article 3(1) Proposal for a proposal for a revised Electricity Directive (recast).
53
Smart Grid Taskforce, Regulatory recommendations for the deployment of flexibility (2015), p.47.
54
55
Communication of the European Commission, Smart grids: from innovation to deployment, COM(2011) 2020, 12 April 2011.
56
Communication of the European Commission, Delivering a new deal for energy consumers, COM(2015) 339 final, 15 July 2015, p.3.
57
Article 2(28) Directive 2012/27.

near-real time.58
The use of smart meters would provide
consumers real or near time data on their consumption,
thus enabling them to quickly adapt in time and volume
to different prices throughout the day in order to save
energy and money.
An important element related to accurate data on
consumption is billing information. In this sense, the
proposal for a revised Electricity Directive underlines
that consumers shall receive billing information free of
charge and that their bills should be clear, accurate and
easy to understand.59
Thanks to a comprehensive billing information and
accurate data related to the use of smart meters,
consumers would change their consumption patterns in
order to become energy efficient and cost effective. The
overall improvement would therefore be an increase in
consumer trust and engagement in energy systems.
(b) Price signals
The second point which would allow consumers to adopt
smart charging and achieve cost savings would be to have
access to price signals rewarding flexible consumption.
In this sense, the price structure should accurately reflect
temporal differences in terms of savings.
In some EU Member States pre-determined time of
use tariffs (TOU) indicate to consumers in advance
periods of the day when electricity prices are lower. These
systems rely on price signals providing incentives to
consumers to either shift their demand or to reduce their
overall consumption. However, the increasing number of
EVs in the years to come will likely have the effect of
progressively shifting electricity demand to times of the
day when prices are lower. This would create new
consumption peaks, which would negatively affect
electricity systems.
A more sophisticated and accurate alternative is real
time or dynamic pricing. In this system, price signals are
provided to consumers in advance, varying from a real
time/ hourly basis to day-ahead basis, reflecting variations
in wholesale market prices.60
In countries where dynamic
price contracts exist, consumers have been able to achieve
savings of 15%–30% on their electricity bills.61
The
proposal for a revised Electricity Directive outlines
therefore that Member States shall ensure that customers’
are entitled, upon request, to dynamic electricity price
contracts by their suppliers.62
As regards EVs, dynamic pricing could be coupled
with smart chargers, which are electronic devices able to
communicate with market actors, such as aggregators, to
achieve automated response. According to some authors
however, dynamic pricing, even when associated with
smart chargers, would not generally deliver a dispatchable
energy resource that systems operators, such DSOs or
TSOs, could rely upon.63
In this sense, in order to being able to control small
loads like EVs and allow market participation of
consumers, actors such as aggregators will need to
manage demand response based on direct load control.
In this system, and when response becomes predictable
enough to provide day-ahead load curves, aggregators
would act on behalf of consumers by recharging their
vehicles during lower rate periods, responding either to
signals from system operators or real-time wholesale
prices.64
In particular, aggregators would respond to real
time price signals sent by DSOs or TSOs and use
communication and control technology with EVs
computers in order to charge them when it is more
convenient, subject to the agreement of customers, as
defined by contractual arrangements.65
Dynamic pricing combined with automated charging
will likely be deployed in the first stage of growth of EVs;
however, after greater presence of these vehicles on the
roads, direct load control by an independent entity will
be necessary in order to effectively enable consumers’
market participation and better manage the charging
process of EVs.66
(c) Security of data and privacy
The increasing communication of data flows and
information between various actors of electricity markets,
in particular consumers, will require adequate protection
of privacy, as well as security.
As regards smart metering systems, the proposal for
a revised Electricity Directive underlines that privacy and
data protection of final customers shall be ensured with
relevant European legislation in these fields.67
Moreover, non-discriminatory access to data should
be granted to both consumers68
and market actors
responsible for management and collection of data.69
In
this context, the recast Electricity Directive outlines that
these actors shall be authorised and certified by national
58
Article 19(2) and Article 20(a) Proposal for a revised Directive on common rules for the internal market in electricity, 30 November 2016, 2016/0380 (COD).
59
60
Eurelectric, Everything you always wanted to know about demand response (2015), p.10.
61
Communication of the European Commission, Delivering a new deal for energy consumers, COM(2015) 339 final, 15 July 2015, p.5.
62
63
Sarah Keay Bright, “Policy brief: EU power policies for PEVs, Accelerating from here to en masse”, The Regulatory Assistance Project (2011), p.6.
64
Sarah Keay Bright, “EU power sector market rules and policies to accelerate electric vehicle take-up while ensuring power system reliability”, in European Electric
Vehicle Congress Brussels, Belgium, 3–5 December 2014, p.11.
65
Sarah Keay Bright, “Policy brief: EU power policies for PEVs, Accelerating from here to en masse”, p.6.
66
Philip Baker and Mike Hogan, “The market design initiative: enabling demand-side markets”, The Regulatory Assistance Project (2016), p.5.
67
Article 20(c) Proposal for a revised Directive on common rules for the internal market in electricity, 30 November 2016, 2016/0380 (COD).
68
Directive 2012/27/EU on energy efficiency and Recital 12 of Recommendation of the European Commission 2012/148 on preparations for the roll-out of smart metering
systems.
69

authorities, which may also require the appointment of
compliance officers responsible for checking their actions
and ensure non discriminatory access to data.70
When applied to electro-mobility, data collection
related, for instance, to driving patterns of consumers,
should be carried out by ensuring that it is stored securely
in a way that safeguards privacy and used only for the
purposes agreed by contractual arrangements.
After having analysed barriers and solutions for the
development of demand response services such as smart
charging, it is now time to focus on another important
process that can significantly contribute to achieving
system flexibility: energy storage.
II. Energy storage
(1) Introduction
In the future, energy systems will require a perfect match
between generation and consumption of electricity. This
balance will be necessary for electricity grids to maintain
a stable and safe supply. In this sense, flexibility provided
by demand response services, aggregation and distributed
generation will significantly contribute to achieving this
goal.
In the longer term however, energy systems will be
required to adapt to fluctuations in demand and generation
by allowing excess electricity to be “saved” for periods
of higher electricity demand. In this context, energy
storage could be an interesting solution. This technology
would provide electricity at most needed times and would
fill geographical and temporal gaps between supply and
demand in electricity systems. Thanks to this process, the
stability of the grid as well as the quality of power could
be significantly improved.
This could be particularly relevant for countries with
an important share of renewable energies in the overall
electricity consumption. Indeed, in these cases the energy
produced by renewable sources has to be reduced during
low consumption periods in order to ensure the quality
of the grid, unless the energy produced in excess can be
stored.71
Energy storage can positively contribute to achieving
a more optimised energy system by providing different
types of services to market players in order to increase
their flexibility.
(2) Benefits of energy storage
First, at generation level, energy storage can provide
arbitrage opportunities, meaning the possibility to sell
stored energy during high demand periods in order to
generate profits.72
Secondly, at transmission and distribution levels,
energy storage can support grid stability by addressing
congestion problems in the network, thus postponing or
potentially avoiding investments aimed at expanding the
generation capacity of the grid.
Finally, at consumer level, energy storage can support
the integration of decentralised production as well as
innovative processes such as demand response services.
In particular, if associated with demand-side response,
decentralised energy storage could increase the
self-consumption rate of a household running a PV system
from 30% to 65–75%.73
A sector where energy storage could have positive
impacts is electro-mobility.
(3) Energy storage applied to electric
vehicles: Vehicle to Grid (V2G)
Several types of storage technologies exist, such as
pumped hydro and compressed air, which are at different
stages of development and deployment. One emerging
technology which is becoming increasingly competitive
and will be able to be scaled up and aggregated in order
to provide important storage capacity is represented by
lithium-ion batteries. These batteries are used to power
portable electronic devices as well as EVs. Batteries can
offer a much faster response to instant variations in
renewable energy generation compared to other
technologies, a particularly suited solution for the
intermittent nature of these sources. In particular,
lithium-ion batteries provide the most interesting solution,
due to their comparably higher energy density, efficiency
and lifetime. Moreover, studies show that thanks to the
increasing demand and subsequent mass production of
EVs, the price of these batteries will decrease in the years
to come.74
In this context, the alternative fuels Directive
(Directive 2014/94) calls on Member States to develop,
if possible, intelligent systems which would enable on
the long term EVs to feed power from the batteries back
into the grid in order to ensure stability of the electricity
system.75
EVs, which are parked like ICE vehicles for most of
the time, could therefore be used to store power in excess
produced by renewable energy sources and discharge
electricity back to the grid in times of high demand. In
70
71
European Commission Directorate General for Energy, The future role and challenges of energy storage (2013), p.5.
72
European Parliament, Directorate General for internal policies, Policy Department A: Economic and scientific policy, Energy storage: which market designs and regulatory
incentives are needed? (2015), p.17.
73
European Commission, Summer Package, Commission staff working document: Best practices on renewable energy self-consumption, SWD (2015) 141 final (2015),
p.4, http://ec.europa.eu/energy/sites/ener/files/documents/1_EN_autre_document_travail_service_part1_v6.pdf [Accessed 15 August 2016].
74
75
Recital 28 Directive 2014/94 of 22 October 2014 on the deployment of alternative fuels infrastructure.

this process, called vehicle to grid (V2G), EVs
communicate with the grid to provide demand response
services by either supplying electricity into the grid or by
regulating their charging rate.
Whereas smart charging can provide services only
during the charging process, V2G goes a step further, by
allowing EV fleets to be used as distributed energy storage
systems and thus being able to provide services aimed at
achieving stability and flexibility of the grid.
These are also known as ancillary services, which
support the transmission of electric power between
generation and load, thus ensuring a satisfactory level of
operational security and quality of supply.76
(a) Ancillary power services
Within ancillary services, ancillary power services consist
of delivering and absorbing power over a certain period
of time, thus allowing generation of revenues from this
activity. The most promising valuable services for V2G
are regulation and reserve.
(i) Regulation Frequency regulation is the ancillary
service used by system operators to hold frequency within
a given range in response to imbalances between supply
and demand; it is carried out in real time by increasing
(regulation-up) or decreasing (regulation-down) the
production level of power plants.77
When applied to
electro mobility, frequency regulation can achieve
revenues if a minimum number of EVs are aggregated to
provide a pool of resources able to access the market.
Revenues can be achieved through “the capacity payment,
which depends on the amount of the power bid; the
service payment, on the basis of the overall exchanged
energy; the opportunity cost payment, which has to
account for the missing revenue due to reduced production
level”.78
(ii) Reserve In electricity markets, reserve consists in
having generating capacity kept aside to cope with sudden
power variations.79
Several types of reserves exist, based
on response and operational times. Among these, spinning
reserve in particular has a short response time, varying
from few seconds to 5–10 minutes.80
Thanks to the fast
response times offered by batteries in EVs, spinning
reserve could therefore be used by system operators to
meet sudden changes in demand. The remuneration linked
to this type of ancillary service would be based on power
availability and the energy delivered.
After having focused on energy storage applications
for electro-mobility, the analysis should now focus on
the regulatory challenges and solutions necessary to
deploy this technology.
(4) Regulatory framework and challenges
related to energy storage
The main legislative instrument related to energy storage
at EU level is the Electricity Directive (Directive
2009/72), which will be replaced by the recast Electricity
Directive (2016/0380 (COD)), once it will enter into
force.
One of the areas covered by this piece of legislation
is unbundling of energy suppliers from network operators.
The objective of unbundling is to separate energy supply
and generation from the operation of transmission
networks. Indeed, companies active both in transmission
networks and sale or generation of energy may have an
interest in blocking competitors’ access to infrastructure,
which would prevent fair competition, causing higher
prices for consumers.81
In this sense, the current version
of the Electricity Directive underlines that TSOs and
DSOs are not entitled to directly or indirectly exercise
control on undertakings responsible for the generation or
supply of electricity. 82
The current version of the Electricity Directive does
not mention energy storage, which means that its position
as regards unbundling requirements is unclear. Because
of the lack of definition in this Directive, storage is
usually considered as an entity also supplying electricity,83
on which network operators, according to this legislative
instrument, cannot exercise control.
The second issue related to storage concerns grid fees
structure. Grid fees are normally paid by final consumers
for the use of the electricity network to transport
electricity. In the case of storage, electricity is first sent
from the grid to the storage facility, which then supplies
it to consumers. Even though a double flow of electricity
occurs, the storage facility is neither a producer nor a
consumer, but provides only an intermediate service in
the grid. Despite this, in some countries double grid fees
are paid for using for example pumped hydro storage.
This does not only have negative consequences for market
actors but could also hamper the future use of EVs as
storage units and their interaction with smart grids.84
The third regulatory challenge related to storage is the
fact that the Renewable Energy Directive provides for
priority access to the grid to electricity produced by
76
Agency for the cooperation of energy regulators, Framework guidelines on electricity grid connections (2011), p.6.
77
A. Damiano, “Vehicle to grid technology: state of the art and future scenarios” (2014), p.156.
78
A. De Los Rios et al, “Economic analysis of vehicle-to-grid (V2G)-enabled fleets participating in the regulation service market” in Proc. IEEE Innovative Smart Grid
Technologies Conference (ISGT 2012), Washington DC, US, 16–18 January 2012, pp.1–8.
79
Damiano, “Vehicle to grid technology: state of the art and future scenarios” (2014), p.158.
80
Damiano, “Vehicle to grid technology: state of the art and future scenarios” (2014), p.158.
81
European Commission, Directorate General for Energy, Market legislation, https://ec.europa.eu/energy/en/topics/markets-and-consumers/market-legislation [Accessed
16 August 2016].
82
Articles 9(1)(b) (i) and 26(2)(a) of Directive 2009/72 concerning common rules for the internal market in electricity.
83
WIP, CENER et al, European regulatory and market framework for electricity storage infrastructure. Analysis and recommendations for improvements based on a
stakeholder consultation, Deliverable 4.2, stoRE project (2013), p.14.
84

renewable energy sources but without foreseeing any
responsibility for producers to contribute to a more
balanced system.85
This unclear situation at regulatory level undermines
the development of storage at large scale. This is
detrimental for electricity market players as they cannot
exploit the useful balancing services that storage can
provide to the grid and are thus unable to defer
investments in additional capacity infrastructure. Because
of this regulatory and economic uncertainty, market
players are therefore refrained from investing in electricity
storage.
However, the recent legislative proposals contained
in the Commission’s “Clean energy for all Europeans”
package provide some possible solutions to address these
regulatory issues.
(5) Regulatory solutions to promote energy
storage
The first regulatory challenge is the lack of definition of
energy storage. The recast Electricity Directive addresses
this point by defining energy storage as a technology
which consists of “deferring an amount of the electricity
that was generated to the moment of use, either as final
energy or converted into another energy carrier”.86
The
definition proposed by this legal instrument could
therefore improve the situation as regards investment
certainty for energy storage in the future.
The second issue to be addressed is the control of
storage by market operators. The recast Electricity
Directive specifies that DSOs and TSOs shall not be
allowed to own, develop, manage or operate storage
facilities. 87
However, this restriction will not apply if,
after an assessment by regulatory authorities of the
necessity of such derogation, other parties have not
expressed their interest to own, develop, manage or
operate storage facilities, and such facilities are necessary
for the efficient, reliable and secure operation of
distribution and transmission systems.88
An important point relating to the control of storage
is the possibility for operators to invest, own and exploit
storage services to balance supply and demand of energy.
This is particularly relevant for EVs which can be used
as storage facilities to provide a range of services to
different market parties. On this point, the recast
Electricity Directive specifies that TSOs shall not own
directly or indirectly control assets that provide ancillary
services; however, derogation from this restriction is
possible if similar conditions to those mentioned above
in relation to storage facilities are fulfilled.89
This
derogation would thus allow operators to invest and
manage energy storage ancillary services with the aim of
effectively contributing to the flexibility, reliability and
quality of electricity systems.
The third regulatory challenge relates to the position
of storage in the electricity system and the applicability
of grid fees. Legislative provisions should adopt a broad
approach by covering the different services that storage
can provide to market parties at all levels in the energy
system. In this regard, some stakeholders underline that
storage should be recognised as the fourth element of the
energy system alongside generation,
transmission/distribution and consumption: this would
avoid this technology from being classified as generation
or as consumption, or as both, and would thus eliminate
the double charging that storage facilities often face.90
The fourth issue concerns the responsibility of
renewable energy producers to contribute to system
balancing, for instance by reducing intermittency of
supply. On this point, the recast Renewable Energy
Directive specifies that national support schemes for
electricity from renewable sources shall ensure that
producers take into account the supply and demand of
electricity as well as possible grid constraints.91
This
means that producers of renewable energy will have more
responsibility to contribute to a more balanced system in
the future.
The fifth priority is to grant energy storage equal
access to flexibility markets. The design of flexibility
markets should be harmonised at EU level and ensure
neutrality in relation to technology: this would enable
technologies such as energy storage to compete on a level
playing field with flexible fossil-fuel based generation
units.92
In this regard, the recast Electricity Regulation
underlines that, as a general rule, all generation, storage
and demand resources shall participate on equal footing
in the electricity market.93
The last important issue concerns the use of storage
by end-users. Energy storage technologies such as
batteries in EVs, combined with solar power systems,
will enable consumers to optimise self-production and
save costs on their electricity bills. Therefore, it will be
crucial for the European Commission to provide guidance
to Member States on how to design support schemes for
renewables in a way that will enable a harmonious
development of storage at consumer level across the EU.94
Moreover, impact assessments could be further required
85
Article 16(2)(b) of Directive 2009/28 on the promotion of the use of energy from renewable sources.
86
87
Articles 36(1) and 54(1) Proposal for a revised Electricity Directive (recast).
88
Articles 36(2) and 54(2) Proposal for a revised Electricity Directive (recast).
89
Article 54(1) and (2) Proposal for a revised Electricity Directive (recast).
90
European Association for Storage of Energy (EASE), EASE calls for expansion of the Electricity New Market Design Package, Press release, 30 November 2016, http:
//ease-storage.eu/wp-content/uploads/2016/11/2016.11.30-EASE-Press-Release-on-EMD-Package.pdf [Accessed 30 November 2016].
91
Article 4(1) Proposal for a Directive on the promotion on the use of energy from renewable sources (recast) (2016/0382/COD).
92
93
Article 3(i) Proposal for a regulation on the internal market for electricity (recast) (2016/0379/COD).
94

to find the right balance in terms of regulation, tariffs and
grid fees: this in order to enable, on the one hand,
consumers to store and produce their own energy and, on
the other hand, allow operators to manage reliable and
economically sustainable grids.95
In order to effectively deploy flexibility services such
as smart charging and energy storage, the roles and
responsibilities of relevant market players in relation to
flexibility need to be clearly defined.
III. Roles and responsibilities of energy
market players in relation to flexibility
As the role of aggregators has already been defined
earlier, the analysis should now focus on the other market
players involved in flexibility processes.
(1) The role of national regulatory
authorities (NRAs)
National regulatory authorities (NRAs) are responsible
for ensuring a competitive, flexible and secure internal
market in electricity within the EU. In relation to
flexibility, the recast Electricity Directive specifies that
NRAs shall be responsible for facilitating access to the
network for new generation capacity and energy storage
facilities and for measuring the performance of TSOs and
DSOs in the development of smart grids that promote
energy efficiency and the integration of renewable energy
sources.96
(2) The role of Balance Responsible Parties
(BRPs)
Current technologies do not yet allow electricity to be
stored in large amounts, which means that it has to be
produced and consumed in real-time. Differences, also
called imbalances, between consumption and production
of electricity entail costs which at large scale can also
lead to national grid failures.
In order to avoid these failures, forecasts have to be
made based on daily energy reports. These reports
determine who will produce and buy what amounts of
electricity and specify which networks will use it. This
information is sent by BRPs to national electricity
network operators, which monitor the balance of the grid.
The role of a BRP is therefore to ensure that “the
supply corresponds to the anticipated consumption of
energy in its balance area during a given time period and
financially regulates for any imbalance that arises”.97
In terms of financial adjustments, the recast Electricity
Directive specifies that a BRP should be entitled to
compensation payments from an aggregator only when,
because of the latter’s actions, it would suffer imbalances
which would cause financial costs.98
At the same time, in
case demand response services are beneficial for a BRP,
the earnings derived from them should be shared with
the entity that provided this flexibility resource. 99
(3) The role of suppliers
Suppliers can provide energy supply as well as flexibility
offers, such as dynamic pricing and automation program
options for consumers; as a consequence, they will have
an important role to play for the development of consumer
flexibility.100
(4) The role of DSOs
Distribution networks are at the core of the evolution of
energy markets and they will need to become increasingly
responsive in order to facilitate market participation by
consumers and enable flexibility services in a direct and
dynamic manner.
In this context, DSOs will play a crucial role. They
will be responsible for ensuring the stability and power
quality of distribution systems and for acting as neutral
facilitators to allow coordinated market enablement and
customer empowerment. Moreover, DSOs will be
responsible for connecting and integrating energy
produced by distributed generation, managing relations
with demand response customers and developing charging
infrastructure of EVs and storage solutions.
In order to effectively achieve these objectives, DSOs
will require incentives to invest in flexibility processes.
For this reason, the recast Electricity Directive underlines
that national frameworks shall enable DSOs to procure
services from resources such as distributed generation,
demand response or storage to provide secure and
efficient operation of their systems and ensure an adequate
remuneration for these services in order to enable the
recovery of at least the corresponding expenses.101
In relation to flexibility, DSOs will also need to have
access to information on planned aggregation actions in
order to prevent negative consequences for the
management of distribution networks. In this sense, real
time monitoring ability and controllability in the medium
and low voltage distribution grid will be necessary;
following this, decentralised generators, charging
processes of EVs and consumers should be included in
real-time smart grid operations.102
95
96
Article 58(e) and (k) Proposal for a revised Electricity Directive (recast).
97
DKE Expertise Centre Standardization E-Energy / Smart Grids, Energy glossary, https://teamwork.dke.de/specials/7/Wiki_En/Wiki%20Pages/balance%20responsible
%20party.aspx [Accessed 16 August 2016].
98
99
100
101
102

As mentioned earlier, DSOs will play an essential role
for the development of electro-mobility. For this reason,
the recast Electricity Directive underlines that DSOs shall
be given the necessary framework to facilitate the
connection of publicly accessible and private recharging
points for EVs to the grid; also, they will need to
cooperate on a non-discriminatory basis with undertakings
that own, develop, operate and manage recharging
points.103
The recast Electricity Directive underlines as
well that DSOs may be allowed to own, develop, operate
and manage these recharging points only if other parties
have not expressed their interest to do so and the
regulatory authorities have granted their approval.104
A final important point concerns management and
exchange of data. As underlined by the recast Electricity
Directive, DSOs should provide all eligible parties in
non-discriminatory manner timely and accurate data under
clear and equal terms.105
These parties should also ensure
that data is securely exchanged in order to guarantee
privacy.
(5) The role of TSOs
TSOs are responsible for ensuring the overall system
security and guarantee frequency system balancing.
Due to their role, TSOs decide in many EU Member
States on prequalification, measurement, verification and
communication requirements within the balancing and
ancillary services markets.106
One of the novelties
introduced by the recast Electricity Directive is that TSOs
will need to work in close cooperation with neighboring
TSOs and DSOs and will be responsible for procuring
balancing and non-frequency ancillary services from
market participants to ensure operational security in a
non-discriminatory, neutral and market based manner.107
The decisions adopted by TSOs on how to enable
balancing services at the lowest possible cost while
ensuring system security will have an impact on the level
of investment in flexibility services in EU Member
States.108
Therefore, these entities will have a key role to
play in the development of flexibility in future electricity
systems.
(6) Cooperation between TSOs and DSOs
Cooperation between TSOs and DSOs will be essential
in order to coordinate respective actions and exchange of
data in an effective and secure manner. In particular, three
areas will be of utmost importance: coordinated access
to resources, regulatory stability, grid visibility and data.109
As regards the first area, it will be crucial to ensure
that decisions at DSO and TSO levels take into account
the impacts they might have on the respective areas of
competence as well as on access to resources.
In relation to the second area, regulatory instruments
should provide a predictable and coherent framework and
timescale in order to allow TSOs and DSOs to manage
their networks in an optimal way.
Finally, transparency and accuracy of data as well as
mutual communication between TSOs and DSOs should
be promoted to allow an effective grid management by
all parties.
Enhanced cooperation between TSOs and DSOs would
be beneficial for customers, who would receive quality
services at a competitive cost, but also for other market
players, by allowing flexibility sources to participate in
all markets and by promoting the integration of distributed
energy resources and demand side response.110
Conclusion
The development of electro mobility and the emergence
of new technologies and market actors will require an in
depth reform of the energy and transport sectors. This
evolution will also be necessary in order to effectively
decarbonise the economy in the long term. Achieving
these objectives in a time and cost effective manner will
require the adoption of responsive and innovative
solutions such as smart charging of EVs and energy
storage.
This paper has provided an overview of the main
regulatory challenges and solutions related to these
technologies. In this context, the recent “Clean energy
for all Europeans” package lays down a framework which
will support, together with the necessary actions at
national level, the deployment of these technologies in
the EU in the years to come.
The first part focused on smart charging. The analysis
has shown that this service can effectively contribute to
reduce peak demands, delay additional grid capacity
investments and save costs and energy for consumers.
New actors such as aggregators could effectively allow
the access of these resources to electricity markets.
However, the analysis has also shown that these entities
should be able to compete on a level playing field with
other actors and rules should be adjusted to ensure smooth
interactions among them. Moreover, appropriate
incentives will be required to encourage operators to
invest in demand response services and empower
consumers through clear and secure offers.
The second part of the paper focused on energy storage.
This process will be essential to achieve grid stability and
effectively integrate decentralised energy generation.
103
104
105
Article 34 Proposal for a revised Electricity Directive (recast).
106
107
Article 40(1)(a) and (i) Proposal for a revised Electricity Directive (recast).
108
109
CEDEC, EDSO for smart grids, Entsoe, Eurelectric, Geode, General guidelines for reinforcing the cooperation between TSOs and DSOs, p.1.
110
CEDEC, EDSO for smart grids, Entsoe, Eurelectric, Geode, General guidelines for reinforcing the cooperation between TSOs and DSOs, p.2.

When applied to electro mobility, in particular through
vehicle to grid (V2G), this form of flexibility would
enable consumers to achieve costs savings and allow
operators to better manage energy systems. In this context,
it will be important to ensure that operators are
encouraged to invest in this technology and that they can
effectively recover their costs.
Finally, the paper concluded by focusing on the
definition of roles and responsibilities of market actors
in relation to flexibility. The analysis has shown that by
clearly establishing the respective competences of market
actors, regulatory frameworks will allow an effective
deployment of flexibility processes such as smart charging
and energy storage in future electricity systems.

Smart charging and energy storage: bridging the gap between electro mobility and electricity markets

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Smart charging and energy storage: bridging the gap between electro mobility and electricity markets

Similar to Smart charging and energy storage: bridging the gap between electro mobility and electricity markets (20)

Recently uploaded

Recently uploaded (19)

Smart charging and energy storage: bridging the gap between electro mobility and electricity markets