Government intervention (state aid) in electricity markets – EDSO welcomes European Commission focus on demand response

Image of press release demand response

EDSO for Smart Grids, the European association of electricity distribution system operators (DSOs) working to bring smart grids from vision to reality, is pleased to see the European Commission’s (EC) special action plan for demand response which accompanied today’s guidance to member states on state intervention in electricity markets.

The European policy objectives of reducing greenhouse gas emissions, increasing energy efficiency and the share of renewables, together with the deregulation and integration of Europe’s electricity markets, is significantly increasing the electricity from local sources and creating a more dynamic and distributed electricity system with the customer in focus. The DSO is at the core of this paradigm shift, empowering the consumers by giving them the possibility to actively take part in the market through the use of smart meters and by connecting solar panels, wind turbines, electric vehicle charging points and local energy storage to their grids.

As in any other market, demand response is crucial. Enabling consumers to alter their energy consumption in response to market signals and time-of-use tariffs will add flexibility to the DSO’s core job of securing energy supply and a stable network, thus keeping the lights on in this new and less predictable system. Peak-shaving, the moving of a part of consumption from peak usage hours to a time of lower demand, can result in avoiding the costly expansion of physical networks. This means savings for the consumer in a time when other requirements placed on the energy sector are pushing energy bills upwards.

In order to enable the retail electricity markets to function efficiently, the role of the DSO will need to develop into that of a neutral market facilitator. Part of the DSO’s role will be to secure and manage the consumption data, but there is a need to clearly define the roles and responsibilities of the DSO in relation to market actors such as aggregators, Energy Service Companies (ESCOs) and retailers, as well as in relation to the transmission system operators (TSOs). EDSO, therefore, welcomes the EC’s initiative to look at the complex picture that is forming and to work towards developing a clear working practice for the actors in this future energy system. EDSO is open and willing to cooperate with the EC and other stakeholders to contribute to the development of a well-functioning retail market in Europe.