TELMARK is an acronym for Technology Impacts on Load Profiling for Tariff Development and Deregulated European Electricity Markets.

The business environment for electricity distribution is continually changing. Two of the most significant areas are rapid changes in information technology coinciding with the evolution of liberalised electricity markets in Europe. The TELMARK project was set up to develop a research agenda for applying information technology to the specific needs of the European energy markets. The catalyst for this was the consideration of the effects and possibilities of new technology applied to the collection and use of load profiles. As the project progressed, the topic areas expanded, particularly because of the participation by many people from Eastern European countries.

PROJECT ACTIVITIES

The project had three main activities. Two international discussion forums were held in Kingston (UK) and in Bucharest (Romania) to bring together representatives from energy companies, academics, research organisations and solutions providers. This was followed by a smaller concertation meeting of key representatives from the discussion forums. At this meeting, people split into small groups and used ‘mind-mapping’ techniques to formulate the research agenda topics given below.

RESEARCH TOPIC: TARIFFS

Project TAR/1 Customer satisfaction and responsiveness to tariffs.
This project will investigate the range of tariffs that customers across European countries are prepared or willing to accept. It will include a survey and an evaluation of levels of satisfaction and understanding of current tariff structures by consumers.

Project TAR/2 Tariffs in the context of micro generation.
This project will investigate technology to support innovative tariff structures suitable for the presence of multiple renewable and small-scale generators connected to distribution networks. It will develop tools to analyse and support the operation of renewable generation combinations.

Issues to be considered include controllability of renewable and intermittent generation connected to distribution grids; adaptive metering; measurements and tools to support tariff designs for small consumer generators; power quality issues; network security constraints; communication issues. In addition a highly sensitive problem is to consider the effects of different levels of penetration of renewable generation.

Project TAR/3 Evaluation of the potential for flexible tariffs and responsiveness to market conditions.
This project will investigate the range of opportunities for consumers to manage electrical load in conjunction with retailers’ opportunity to manage demand. We expect that this will be implemented by a pilot project involving some of the following: dynamic tariffs, real-time pricing, interruptible and flexible time-of-use tariffs mediated by intelligent metering, and data management.

RESEARCH TOPIC: LOAD SHAPING

Project LS/1 A pan-European methodology to assist electrical load shaping.
This project will establish a pan-European methodology for the data gathering, analysis and processing to assist with electrical load shaping. Load shaping relates to actively modifying the shape of individual customers’ loads. The focus is on the development of common policies to facilitate uniform handling of this problem at a multi-national level. Key issues to be considered are data ownership rights and responsibilities, and the cost of data.

Project LS/2 Demand conditioning – distributed generation and storage.
This project will investigate load-shaping options for distributed generation (including micro generation) to take advantage of new opportunities for energy storage, automated data collection and market bidding techniques.

RESEARCH TOPIC: MARKET TOOLS FOR EVOLVING EUROPEAN MARKETS

Project MAR/1 Market research tools for electricity markets.
 This project will develop a set of market research tools for benchmarking in electricity markets. It will review national policies across Europe, focussing on identifying areas of commonality and good practices.

REASEARCH TOPIC: METERING AND DATA ACQUISITION SYSTEMS

Project MET/1 Identifying future metering needs.
This project aims to provide insights into state-of-the-art communications and IT technologies to improve the capability of metering units and explore opportunities for multi-utility metering. It will assess the impact of the increased presence of distributed and micro-generation on metering and the range of optional technical service

that metering units may be able to provide. Innovative design improvements for metering and automated secure data collection will be explored. The project will investigate the opportunities for integration of the meter with other technology services within customers’ premises.

The project is expected to propose a framework to protect customer data and information, and to provide rules on how data should be permitted to be used (for example, for billing, sale, or police evidence). This involves an assessment of the impact of regulation on ownership of meters and issues related to meter accuracy and calibration.

RESEARCH TOPIC: REGULATORY HARMONISATION FOR REGIONAL ELECTRICITY MARKETS

Project REG/1 Regulatory framework harmonisation for regional electricity markets.
This project will make proposals for a new regulatory framework to bridge the gaps and address inconsistencies between the existing set of EU directives and national regulations with regard to future pan-European electricity markets. It will identify aspects of EU directives that are inconsistent with national regulatory frameworks and their effect on regional markets and cross-border trade.

Project REG/2 Market unbundling – ways forward for establishing European regional markets.
The project will define the benefits, challenges and threats of unbundling from the point of view of network operation, and consider the requirements for the efficient operation of regional markets. It will assess the economic impacts on all market players during evolution towards regional markets. The project will evaluate the different perceptions of stranded costs within the region and propose harmonisation mechanisms to meet the economic expectations of the participants. It aims to identify the inconsistencies from implementation of the EU directive 2003/58 and explore potential adjustments in the regulatory framework to fit the requirements of market players. The project will make recommendations to be included in the regulatory framework that will promote transparency in business operations within the regional markets.

Figure 1: Energy & Financial Flows

Project REG/3 Power system data in value chains within regional markets.
This project will explore ownership arrangements for data related to power exchanges, trading and settlement. It aims to propound a consistent framework for standards or guidelines to support harmonisation of data ownership and provision across national borders, in order to facilitate the development of regional markets.

Project REG/4 Generation adequacy within the context of regional electricity markets.
This project aims to assess how the generation side of electricity markets should be handled with the advent of market expansion to regional level, and consider requirements for load data provision for forecasting and market operations. The project will undertake model or case studies for impacts on two EU accession countries and apply outcomes to others in similar circumstances. Lessons from mature markets will be reviewed. It will also consider the impacts on affected key entities, including transmission system operators and regulators.

RESEARCH TOPIC: PRICING STRATEGIES

Project PST/1 Tools for pricing strategies for renewable energy generation.
This project will develop financial models, instruments and tools using load data inputs and IT solutions for renewable energy generators and for retailers. The aim is to identify strategies to mitigate risk, to address physical network constraints and consider the implications for market design in relation to the whole value chain, including generators, retailers and customers. The project will identify links to load data to enable better pricing strategies.

Project PST/2 Formulation of price signal models for retailer/small consumer interface.
This project will develop tools for electricity retailers that involve the use of transparent price signals for small and medium consumers that allow mitigation of price risk. An important component of the study will be the development of models that characterise operational features of different categories of physical storage. Aspects to be considered include price signals for consumers and new forecasting approaches for retailers; retailer exposure to contingencies and tools for risk management; contract structures, and short-term trade patterns.

Project PST/3 Scenarios for pricing open access to load data.
 
This project will develop a series of models to look at the effects of various levels of transparency for load data upon market operation. Issues to be investigated include the degree of open access to the data, other proprietary information and business processes. The project will consider the technical aspects of the wider penetration of information and computer technology to assist provision of load data to a range of stakeholders, including small consumers, competing retailers and distribution network operators. It will also consider the impact of metering and measuring technology in the provision and management of data.

RESEARCH TOPIC: DEMAND RESPONSE

Project DR/1 Cost/benefit of demand response.
This project will identify and evaluate how the allocation of cost/benefits from demand response programmes accrues to various beneficiaries in the value chain. It will propose options for sharing the cost of demand response measures in a European context, building on previous national experiences. It will explore the dual benefits of demand response for both customers and utilities/suppliers.

RESEARCH TOPIC: MICRO-NETWORKS

Project MN/1 The effect of private micro-networks on consumer benefits.
This project will consider the evolution of private micro-networks, either stand-alone or connected to the grid, and their effects on consumers in relation to the operation of energy markets. The project will involve modelling and analysis of how the distribution network is affected by grid connected micro-networks, and the generation mix within them. It will consider the small-scale generation technology mixes, including micro-CHP and renewable energy sources from the controllability viewpoint and in relation to power usage patterns. The project will review possible enhancements to metering systems for these scenarios.

RESEARCH TOPIC: RENEWABLE ENERGY INTEGRATION

Project RE/1 Harmonisation of financial instruments to support the integration of renewable energy.
This project will survey the existing financial instruments used in EU countries and elsewhere to provide incentives for the integration of renewable generation into electricity systems. The project involves modelling strategies for the mediating effect of storage on the intermittent nature of renewable energy sources with the aim of increasing the reliability of output. It will consider the trade-off between control technique features and technology provision. The project is expected to allow a greater transparency of subsidies and the valuation of renewable energy in relation to time of day and the demands of electricity markets.

RESEARCH TOPIC: CENTRE OF EXCELLENCE FOR LOAD DATA ANALYSIS TOOLS

Project LDA/1 European load data analysis tools.
Electrical load data comprises the fundamental information stream at all points in the networks for deregulated electricity markets, and is linked with financial flows.

This project will address the need for unified methodologies to increase data portability across EU countries, including the identification of characteristics of load data that are common to different regions, market sectors or consumer groups, as well as those characteristics which are only locally representative.

Project LDA/2 New tools and strategies for forecasting electrical demand trends.
This project will extend traditional forecasting techniques to take advantage of advances in information and communications technology to develop new tools and models for European consumers, aggregators and suppliers. The technical aspects will include the cross-linking of relevant databases and associated analysis tools. The project will consider the approaches to real-time price-based tools for different stakeholders, and will develop models that can be used to predict the costs of serving demand for different consumer groupings

RESEARCH TOPIC: DEREGULATION

Project DER/1 Deregulation and efficiency.
This project will develop tools for measuring efficiency, and evaluate and compare the performance of different categories of electricity market companies. It aims to provide benchmarking models within the deregulated framework for key types of company – for example distribution network operators, generators, and suppliers/retailers. Consideration will be given to the transferability of benchmarking models in a European and regional context.

Project DER/2 Reactive power provision and trade.
This project will research methods that could be used to develop incentives for provision of reactive power and reactive power trade within transmission and distribution systems. It will analyse and consider approaches that lead to market valuation of voltage support issues and reactive power supply and absorption. The project will explore voltage support control paradigms to mitigate the intermittent supply usually associated with a mix of renewable generation, and will propose some risk management approaches with respect to system stability and quality of supply.

Project DER/3 Impact of regulatory frameworks on distribution tariffs.
This project aims to summarise different approaches to tariff design for distribution businesses and how the level of transparency is carried through to the inclusion of Distribution Use of System (DUoS) tariffs as a component in consumer costs. Case studies from a range of countries considering the effects of different regulatory frameworks will be compared, best practice identified and recommendations made for EU-wide harmonisation.

CONCLUSION

The TELMARK programme has the ability to influence technology developments in the key areas of interaction between real-time electrical load data and financial data flows that underlie electricity market operations, both physical and financial.

The future success and competitiveness of companies operating in the challenging environment of liberalised electricity markets in Europe will be influenced by their willingness to innovate. We hope that an outcome of the TELMARK activities will be the formation of new R&D groupings and substantial pan-European or broader consortia to bid for EU and other funding, and take forward key elements of the research agenda.