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How smart is a smart grid? E.ON to gain experience from Simris project

We recently spoke with Staffan Sjölander, the project manager for E.ON’s demonstration project. The project has already attracted a lot of media attention and the Minister of Energy, Ibrahim Baylan, will attend its inauguration.

Staffan Sjölander

On 1 January 2016 Germany energy giant E.ON separated its fossil fuel assets into a new company (Uniper). E.ON has decided to focus entirely on renewables, energy distribution, and energy efficiency services. This was E.ON’s response to the dramatic changes in global energy markets. To develop their understanding of a number of aspects of how to be a next generation utility E.ON has launched a demonstration project for Local Energy Systems. This system aims to provide a reliable electricity supply, which gives the customer greater value for money from locally produced, 100 per cent renewable power.

At the start of September, we met Staffan Sjölander, the project manager for E.ON’s demonstration project. The project has already attracted a lot of media attention and the Minister of Energy, Ibrahim Baylan, will attend its inauguration.

Pilot Project Simris

Staffan explained the background, “The project originated in a major strategy review carried out in the E.ON Group in 2014.” E.ON recognised the problem of grid bottle necks when many customers in Germany started to produce their own electricity from solar. These ‘prosumers’ were producing most electricity when the sun was shining in the middle of the day, the time when the demand from households is at its lowest. The result was an unstable grid, and power sold to the grid during the day had to be bought back in the evenings. E.ON thought about how this change in the energy system could be operated more efficiently and developed the idea of testing a fully-automated Local Energy System. They wanted to know how smart a smart grid could be.

Change of location

The project had a troubled initial phase as the location was first set to be Åstön close to Sundsvall  in Sweden. When there was an appeal against the  permit for building a new wind power plant, the  “NIMBY-effect” (not in my backyard) grew and in  the end it became clear this wouldn’t be a great  start for a project focused on creating collaboration  between the utility and the customers. E.ON  decided to look for another location even though  the permit had been granted. They looked for a  site where a wind turbine was already operating.  Simris, in the south of Sweden, about 1,000  kilometers from the first location at Åstön, fulfilled  the requirement. Simris has 140-150 connections  (mainly houses) and the area isn’t connected to a  district heating network which means that electricity  is used for heating purposes as well. “Although  Simris mainly consists of household customers, Local  Energy Systems have great potential for industrial  customers as well”, Staffan believes.

What’s in it for the customer? To test the system E.ON requires a number of  the households to invest in the solar and battery  package E.ON provides and it’s very important that  most of the customers actually agree to be part  of the project. Staffan outlined the position, “The  solar+battery package comes with a special offer to  customers” and discussion with customers has been  fruitful. E.ON hopes that even more households  than expected will buy the package and produce  their own electricity and provide flexibility in the  system using the battery for electricity storage. The  customers won’t have to pay any specific costs or  see changes in their supply as it’s part of E.ON’s  development work and will be paid for by funds  earmarked for such work. Customers are given  incentives to join the project and be part of driving  down loads when there’s a lot of consumption  and production is insufficient. The main added  value for customers is that they’re using 100 per  cent renewable energy produced locally and the  satisfaction of being ‘self-sufficient’. 

How will it work?

Besides the solar panels and batteries in households,  the renewable electricity generation in the system  will consist of an old Enercon wind power plant, solar  panels and battery storage. For back-up purposes,  when the system is running in island mode, a  generator fueled by renewable HVO will be installed.  HVO (hydro-treated vegetable oil) is a renewable,  paraffinic fuel produced from vegetable sources.

Behind the local energy system is an advanced  control system making it possible to control  production and consumption, and to ensure  power quality and that the local energy system is  optimised to meet the required conditions.

The control system will send information to a  demand side response platform that will activate  customer flexibility based on the needs of the  micro grid. The customers that are engaged will  either have home batteries, heat pumps or water  boilers that can be activated or deactivated to  support the balance in the system. The project will  also include a steerable EV-charging station being  part of the demand response system. The system  will be fully automated, meaning that it’s able  to optimise its operations using all the flexibility  built-into the system including demand response  in the households which have signed up to the  project. The control system will send information to  a demand side response platform that will activate  customer flexibility based on the needs of the micro  grid. The customers that are engaged will either  have home batteries, heat pumps or water boilers  that can be activated or deactivated to support the  balance in the system. The project will also include  a steerable EV-charging station being part of the  demand response system. However, when steering  heat pumps the maximum change in indoor  temperature will be +/- one degree Celsius.

Many vendors are involved but E.ON will ensure  the different kinds of equipment work together. As  Staffan says, “It was a strategic decision by E.ON  not to give this project to one of the bigger players  who wanted to take ownership of both battery and  control system for example”. 

Nordic energy three year project

The future for Local Energy Systems 

Staffan underlined that one of the most interesting  features is the question of how peak demand  could be shaved in this kind of system. This is an  important factor for the future of Local Energy  Systems. “Initially simulations made by E.ON  distribution indicates only a very small decrease”,  he says. “However, if the maximum demand could  be cut substantially a benefit would be a need for  smaller dimensions of the future grid. We are then  talking about optimisation leading to a lower need  for investment and cheaper bills for customers”,  Staffan continues.

In the U.S the idea of cutting the connection to the  grid is evolving, and it’s probably only then that a  profitable business case can be made. If the grid is  used as a back-up to the Local Energy System there  would still be a need to cover costs for the network  operator. Although the project is interesting from a  commercial perspective, Staffan emphasised that  the Simris experiment is mainly aimed at testing the  technology and secondly at a new E.ON business  model. 

On the question of whether Staffan thinks the  utilities will find a business model that can  enable Local Energy Systems, he says they have  a number of important capabilities in-house  such as measurement, settlement and the asset  management expertise to support these projects.  However, he can also envisage other players taking  over the market completely such as Google, Tesla  and so on. 

Another challenge right now is regulation. At present E.ON Distribution, the owner of the project,  would not have been able to be the owner of the  solar and wind units. That’s because in Sweden  distribution companies are only allowed to have  production facilities to cover losses in the grid.  For the Simris project this doesn’t matter as these  facilities are owned by a private company. 

However, the trend is for regulators to adopt  policies aimed at promoting greater competition,  integration, sustainability, energy efficiency,  resiliency, reliability, affordability, and demand  elasticity. So we can expect laws and regulations to  move in this direction. 

What is certain is that the customers joining the  Simris project will have many more opportunities  to interact with their utility compared with today.  Prosumers will be able to understand their  consumption and production profile better and  optimise their link with the utility. E.ON is well  aligned with the trend of using digital technologies  to optimise performance, customer service, and  safety and reliability and taking steps to become a  utility equipped to meet future needs.

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