Can demand response help reduce future distribution grid investments? : an economic study of peak shaving in the Norwegian distribution grid: SEMIAH pilot in Engene, Sørlandet (Southern Norway)
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- Master Thesis 
Steady increases in the number of new electronic devices and electrification of existing technologies, such as electric vehicles, are creating new challenges in the electrical grid. Electrification creates a higher demand for electricity, thus the volume transmitted via the grid becomes larger and consumption peaks tend to increase. In addition, increasing the energy efficiency of electronic devices often results in a higher nominal power. Consequently, the shape of the load curve changes from a low and steady line to high and short peaks, for example with an instant water heater versus a standard boiler. On the supply side, increasing use of intermittent renewable sources is shifting generation from a continuous and predictable pattern to a more volatile and unforeseeable one. All the above developments increase the requirement for more capacity on the grid. One peak hour per year decides on the grid investments for many years. Thanks to the simultaneous digitalisation of power systems and metering, new markets and business opportunities arise. One is demand response, where demand reacts to certain signals and the flexibility gained is exploited for different purposes. For example, can household devices react to reduce the peak consumption of a certain distribution grid area. Particularly in Norway, capacity in distribution grids is becoming scarce and large investments are due. This paper investigates the question of whether by controlling household devices it is possible to reduce peak loads in the distribution grid and whether the process is economically feasible. The paper is based on a pilot in Engene in southern Norway, through the European Union funded research project SEMIAH. The examination of flexibility is achieved through the control of hot water boilers. To set up a simulation framework for a flexibility market, we studied in-depth the Norwegian electricity market, the load patterns of the transformer in Engene and the power consumption behaviour of the pilot households. The results show that boiler flexibility can be well used to shave peaks. Optimising the household boiler consumption against market prices was less lucrative. The profitability of a demand response technology was identified as the main challenge. If business models using household flexibility will become economically feasible, it will depend a great deal on the type of devices included in the demand response system, the information technology used and the development of future power markets. Technology is evolving fast however and many service companies are focusing on the topic. Thus, implementation of peak shaving and other household flexibility concepts are likely to become a reality soon.