Control of small customer electricity demand with market prices

Control of small customer electricity demand, or dynamic timing according to market price, is technically feasible. Such control would offer significant benefits for the consumer and lower the peak demand in Finland. While the main barriers are related to the electricity market legislation, technological advances also remain to be made.

VTT's research project was based on the hour-based pricing model introduced by Turku Energia Oy, which the company also offers to its small customers. During the project, the power consumption of ten homeowners who use electrical heating and a few apartment buildings that did not have electric heating was monitored throughout two heating seasons. All of the consumers monitored were customers of Turku Energia.

Savings potential, particularly in electric heating

Savings potential was found, particularly in electric heating, which is suitable for dynamic control without causing any inconvenience or expense to the consumers. The current pricing models for electric heating mainly apply fixed time-of-use tariffs (two or three time zones).

The simulations carried out in the research project demonstrated that during 16 week last winter, automatic price-based control would have saved homeowners 6–7 per cent, or EUR 50, in electricity costs. Compared with no control, the savings achieved would have amounted to some 11 per cent, or EUR 90. The systems controlled in the simulations were floor electric heating with storing capabilioty, direct electric heating and heating of household water.

Barriers exist, but they can be overcome

The optimisation methods needed for control are also applicable to small customer settlements with tolerably low cost, even though in the pilot homes the cost of control was prohibitive due to the acquisition of consumption data based on remote metering and deficient temperature control systems in the one-family houses.

The cost-related problem will be solved by taking price control and energy efficiency requirements into consideration when implementing new remote-readable meters. Cost-efficiency can be improved by integrating the control with the overall building automation technology and through standardisation, which also enables mass production.

The major non-technological barriers are either directly or indirectly associated with the Decree on the Electricity Market and its interpretations. The decree should be amended to allow balance settlement for small consumers on the basis of actual hourly consumption.

Flexible demand – alternative to peak power

While the majority of the demand response potential in large-scale industry in Finland is already covered by flexible pricing models, the demand response potential in the more than 600,000 individual homes using electric heating was estimated to average 1–2 kW per home. This means an additional aggregated demand response potential of some 600–1200 MW. This potential is an alternative to power generation by means of hydropower or gas turbines to satisfy peak demand. Flexibility in the demand also reduces the fluctuation in the market prices of electricity.

In addition to VTT, the project involved the participation of Turku Energia, the network companies of its customer and ISS Security Oy/Estera. The project was funded by Tekes, Fingrid Oyj, Finnish Energy industries, Sähköturvallisuuden Edistämiskeskus ry, Turku Energia and VTT.


Additional information

VTT is an impartial expert organisation. Its objective is to develop new technologies, create new innovations and value added thus increasing customer's competencies. With its know how VTT produces research, development, testing and information services to public sector and companies as well as international organisations.