Flexing your assets' muscles

Flexibility and the power system: What is flexibility in energy?

The flexibility of a power system, according to the International Energy Agency, refers to "the extent to which a power system can modify electricity production or consumption in response to variability, expected or otherwise." Eurelectric defines it as "the modification of generation injection and/or consumption patterns in reaction to an external signal (price signal or activation) in order to provide a service within the energy system."

Both definitions describe an ability to adapt in response to external forces:

Ability to adapt: Flexibility is classified as either positive or negative, based on the effect on available energy. Positive flexibility is the capacity to increase the amount of energy by either ramping up a generation or reducing usage, while negative flexibility refers to the potential to reduce energy by either decreasing generation (e.g. curtailment) or increasing usage.

Individual assets can have flexibility in one or both directions. How flexible a system is depends on how much, but also how quickly, it can adapt generation or usage in up and downward direction.

External forces: The signals driving the operators of flexible assets to adjust their supply or demand can include both physical and economic factors. Physical factors include peaks and valleys in demand due to normal daily demand patterns, weather-related fluctuation in consumption or intermittent renewable generation, or planned or unplanned outages.

Economic factors include changing prices on balancing or spot markets: Market participants may choose to adjust supply or demand in order to take advantage of favorable prices. Changes in price, however, are usually a reflection of physical factors, meaning there is a close link between the two.

What are the potential sources of energy flexibility?

Almost any type of power source, load, or storage has the potential for flexibility, but each comes with its own unique considerations, as shown in the table below:

*Sources: IHA (hydro), Guidehouse Insights (DSM), IEA (all others)

Battery storage

Battery storage is a key technology to help balance fluctuating wind and solar generation, storing excess energy on days with high renewable production and delivering it on days with low renewable production. As such, it offers both positive and negative flexibility.

Battery energy storage systems (BESS) are among the newer additions to the power market, but due to their efficiency and immediacy in response, the technology has seen massive surges in demand. Today's most common battery type is lithium-ion, which entails natural degradation from charge-discharge cycles. This is is why lithium-ion batteries can only handle a limited number of cycles per day and throughout their lifetime. Battery development is experiencing significant growth at rapid speeds, cementing utilization on the wholesale electricity market. 

Pumped hydro

Pumped-storage hydropower is one of the oldest and most mature forms of storage, providing both positive and negative flexibility. Excess energy is used to pump water up to a reservoir at a higher elevation. When energy is needed, this water is released to flow through turbines at the lower level to generate electricity. Pumped hydro offers natural, clean storage and is extremely flexible with very short lead times. While pumped storage exhibits strong energy-to-power ratios, efficiency losses are higher than those of batteries. The main limiting factor of pumped hydro is geography: Suitable locations are limited, and the cost of construction is very high.

Wind and solar power

Since their production is weather-dependent, wind and solar installations aren't inherently flexible. They run and generate power when the wind blows and the sun shines, meaning there is no way to “turn them up” to counteract energy shortages or to take advantage of rising prices. However, modern wind turbines and photovoltaic systems can be shut down much faster than traditional power plants, which makes them a great source of negative flexibility.  Due to weather dynamics, solar and wind often complement each other, with one likely to produce more when the other produces less. As a result, a combination of the two not only provides a more constant energy supply, it also enables greater opportunities to respond to an energy surplus and to benefit from commercially optimizing this flexibility.

Thermal power plants

Thermal plants include conventional fossil power stations but also modern combined heat and power (CHP) plants, which run on various fuels, including waste, biogas, and biomass. CHP plants use waste heat from power generation for industrial purposes or district heating. In practice, many CHP plants optimize their operations to meet thermal demand, while the electricity generated is seen as a byproduct.

Both CHP and traditional thermal power plants provide a good source of positive and negative flexibility, for example by reducing previously scheduled generation. In many parts of the world, thermal generation is still the primary power source, although dynamics are changing in favor of renewables. A key role of thermal plants today is the provision of backup power and coverage of demand peaks. Even in places where thermal plants are dominant, they often act as buffers that only run to cover peak demand. In either case, flexibility, especially minimizing ramp-up times, is an important aspect of plant operations. Different fuels have significantly different ramp-up characteristics, for instance, coal plants measure ramp-up in hours, while some gas turbines can ramp up in a matter of minutes.

With the huge amount of thermal capacity standing around, thermal plants are the biggest available source of flexibility today, and this will likely only change gradually over the next few years.

Demand-side management

The flexibility of power generation is one side of spectrum, but with proper incentives, energy consumers can also participate in adjusting energy usage. Demand-side management (DSM) is the ability to reduce or increase power consumption, or to shift a load to a more favorable time. In most DSM applications, the flexibility is either only positive or only negative, although it can be both. An industrial facility may be willing to temporarily increase production to absorb excess energy. A paper mill or cement plant could flexibly time-shift their load peaks to take advantage of price changes or interrupt production temporarily.

In practice, DSM is mostly carried out with large commercial users. Consumer-level DSM currently doesn’t exist beyond some pilot projects, as strong use cases still have to be developed, with adequate rewards for private users whosacrifice convenience and control of their appliances for the good of the grid. 

E-mobility

A new and growing source of flexibility comes from charging electric vehicles. This can occur in two different ways. First and most obviously, a smart charging station can adjust charging speed or start time to take advantage of lower-priced power, providing flexibility. Consider a simple charger: It usually starts immediately and at full power. Unfortunately, most electric vehicles today are plugged in during morning or evening hours, when prices are highest. Flexibility arises from the ability to delay the charging process while still ensuring that the vehicle is charged to the desired level in time. Within the available time window, until the car is needed again, the load can be shifted according to market prices and reallocated based on short-term price movements. The ultimate goal is to charge the car with a unidirectional power flow from the grid.

The second option, called vehicle-to-grid (V2G), uses the car battery to actively deliver power to the grid when needed. V2G can considerably increase the level of flexibility, as long as technical restrictions and the car owner's preferences allow utilization of this flexibility. A fleet of charging vehicles can be aggregated to act as a distributed battery bank. However, this solution requires bi-directional chargers, which are still in their infancy.

How can we leverage flexibility to sustainably support the grid?