Innovation - A Game Changer for Power System Flexibility

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Innovation powers the energy transition

Today, renewables account for one third of total global power generation. However, wind and solar power generation would need to increase from 10% today to 60% by 2050 to achieve Paris Agreement climate objectives.

The power sector is leading the energy transition, driven by the rapid decline of renewable generation costs and emerging innovative solutions that can make energy production, transmission and consumption more flexible.

IRENA's “Innovation landscape for a renewable-powered future” identifies 30 key innovations that contribute to increasing flexibility in power systems.

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Innovation trends in the power sector

Electrification of end-use sectors like industry, transport and buildings allows for deeper decarbonisation and reduces overall energy demand.

Decentralised energy systems and small-scale generation turn the consumer into an active participant, fostering demand-side management.

Digital technologies allow cost-effective management of assets, connecting devices, collecting data and monitoring and control, and help decarbonise other sectors.

Innovation goes beyond technology

Emerging technologies that enable the integration of Renewables into a power system allow new ways to operate it. They provide new services that enhance the system’s flexibility.

In order to monetise the flexibility created, new regulations are needed. Innovative market design in turn makes room for innovative business models, which ensure a stable revenue stream.

Innovation empowers consumers

Energy users are increasingly becoming prosumers who produce their own energy using solar PV from their rooftops. Using innovative devices such as heat pumps, batteries and electric vehicles, they can interact with the energy market through pricing mechanisms like time-of-use tariffs.

The growth of decentralised electricity assets and increased digitalisation creates new opportunities for consumers to engage in the energy transition and become active players.

As consumers become prosumers, they increase system flexibility and help to boost the share of renewables.

Innovation empowers consumers

Enabling technologies connect at consumer end

Enabling technologies allow the active participation of consumers in the energy market.

Rooftop solar PV, electric vehicles and behind-the-meter batteries are connected and controlled via digital technologies, internet-connected devices, and apps.

Behind-the-meter batteries help manage the demand. Electric vehicles can also be managed via “vehicle-to-home” smart charging.

Internet-connected devices can be automatically controlled according to price signals.

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New businesses emerge to sell services to the grid

Increased digitalisation and smart metering have created new business models.

Businesses emerge to aggregate distributed generation, loads and storage of consumers and prosumers while remotely monitoring, controlling and managing the portfolio of assets in real time.

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Innovative market design compensates prosumers

Policy makers and regulators must design markets that allow prosumers to be effectively and efficiently integrated into competitive electricity markets.

Participation in wholesale and ancillary service markets exposes prosumers to market prices and enables more flexibility in the system.

Price signals and adequate remuneration is crucial for prosumers to become flexibility providers.

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Innovative system operation co-ordinates transmission and distribution

With new technologies and a sound market design in place, the operation of the system changes to address new challenges.

Most consumers are connected to low- or medium-voltage distribution networks, operated by the distribution system operator (DSO). The transmission system operator (TSO) is responsible for operating the "high-voltage" transmission network.

Prosumers’ participation in the power market results in bi-directional flow of electricity. This requires innovative co-operation between the TSO and DSO to integrate prosumers and gain maximum system flexibility.

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Systemic innovation increases flexibility

For prosumers to provide services, the grid needs a wide range of new enabling technologies, business models, market design and system operation innovations.

Systemic innovation means matching and leveraging synergies in innovations throughout the power system.

This is key to increase flexibility, integrate high shares of wind and solar electricity and reduce system costs.

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