Energy-as-a-Service 2.0: When life gives you lemons

Politicians and regulators are currently preparing the smart meter rollout in Germany. With optimism, one can interpret the signals from BMWK, BNetzA and BSI to mean that the nationwide installation of smart metering systems (iMSys) will start next year.

This will initially result in additional costs for prosumers. Anyone who installs a PV system with an installed capacity of more than 7 kWp will also receive an iMSys from a basic metering point operator (MSB), and an annual bill of at least 100 euros. If the customer then also uses some of their electricity themself, the MSB also sets the iMSys to TAF 7, the quarter-hourly sharp reading on the following day. This is because, according to §12 StromNZV, a standard load profile may no longer be used for these customers. This means suppliers cannot use standardized data for balancing group management, but must create forecasts, process real-time data, and trade forecast errors intraday in order to avoid high balancing energy costs. They will want to pass these additional costs on to the end customer - a burden on top of already high prices.

You might think this is bad news for prosumers. But it actually presents a great opportunity for them, their suppliers, and the entire electric system as well. With a clever combination of hardware, energy management system and contracts for direct marketing, as well as electricity supply, a very attractive package can be put together for the end customer.

Direct marketing of small systems becomes profitable

Electricity prices are currently at an all-time high. After prices for new contracts have already climbed to unprecedented heights, suppliers are now following suit and are also gradually adjusting their existing customers’ tariffs. This, of course, makes self-supply increasingly lucrative. But the value of excess feed-in from a rooftop system is also rising, in theory. Theoretically because with a fixed feed-in tariff, household customers do not benefit. Already today, the market value of PV is four times the feed-in tariff. In August, for example, one kWh was traded for 40 cents, while the fixed feed-in tariff paid only 8.6 cents (see netztransparenz.de). Anyone who puts their PV system on the direct market can currently earn several hundred euros extra per year. Direct marketing also strengthens the integration of solar power into the energy system.

Dynamic tariff as a fair and transparent residual power offer 

This direct marketing offer can also be supplemented by a residual electricity contract. Since no standard load profile can be applied to these customers, a dynamic tariff, for example, is a suitable option. If you pass on the price of electricity from the EPEX Spot day-ahead auction, plus grid charges, levies, surcharges and taxes directly to the customer, this results in a fair offer. With such a tariff, suppliers can honestly claim that they have no interest in customers buying more electricity. Prosumers, however, can profit considerably by shifting electricity consumption, for example, from their electric vehicle to cheaper hours. And if you watch the current exchange electricity prices, it is not uncommon to see spreads of 30 to 40 cents/kWh within a day. A flexible prosumer can thus achieve savings of several hundred euros per year. And ultimately, this means there is less need for conventional peak load power plants, as consumption is shifted to hours of high renewable generation.

EMS as link between physics and market

To ensure that no prosumer has to chase electricity prices every quarter hour, an intelligent control system is needed - an energy management system (EMS). It manages power consumption to maximize self-sufficiency and minimize costs - sustainably *and* cheaply. It also offers marketers and suppliers other advantages. In contrast to data exchange via the iMSys, an EMS can transmit measured values for feed-in and consumption in real time. In addition, the EMS already forecasts expected loads and generation as part of its optimization, which can also be used by the balancing group manager. Thus, not only the procurement of quantities day-ahead can be improved, but short-term trading can also be achieved by improving intraday forecasts and avoiding expensive balancing energy.

In the medium term, additional benefits can be created by intelligently linking EMS and trading. The flexibility of the plants can also be used to optimize the portfolio. 

Shaping the future now

In my last blog post, I noted with disillusionment that the flexibility of distributed assets, such as household batteries or wallboxes, cannot be marketed economically today. Due to high regulatory hurdles, the costs are still much higher than the potential revenues. The smart meter rollout will change this to some extent. Direct marketing and dynamic tariffs will then offer interesting options. The high complexity of all these topics, however, makes it necessary for market players to develop a sensible overall concept. We need holistic and simple offers for the end customer. The time to develop these offers is now.