Smart Energy Europe warns over threat to IEM open market rules with proposed exemptions for ancillary services

Smart Energy Europe has raised an alarm over proposed changes in the proposed design of the EU’s Internal Energy Market that would allow transmission system operators (TSO) to own and operate storage and provide more ancillary services themselves.

The group warned that proposed changes would breach fundamental market rules, which bar TSOs from owning assets like generation or storage to ensure “transparent, non- discriminating and market based procurement” of power and associated services

The proposed changes would allow TSOs to own and operate storage. They would also mean market rules would not apply to all ancillary services, “potentially allowing TSOs to discriminate against other market players capable of delivering such services”.

Ancillary services like frequency response and inertia have been most often provided by fossil fuel plants with a large rotating machinery in the past, and are sometimes mandated services. However, Smart Energy Europe notes that some services can be provided at lower cost by new market participants – renewable energy projects as well as storage – and new, cheaper, ways of delivering the services are being developed fast. That is necessary to avoid maintaining old plant on the system purely to provide such service and having diverse service providers is more efficient.

The group said, “To ensure cost efficient procurement of these services, it is essential that their delivery is open to all interested market players. Creating a market place for ancillary services would both ensure the necessary competition to drive down costs, and – equally important – send the right investment signals to future owners of generation capacity, demand response and storage facilities.” It pointed out that existing market rules allow TSOs to provide storage and such services where the market fails to deliver.

Read the group’s letter here

Smart Energy Europe (previously the Smart Energy Demand Coalition)  represents decentralised and digital smart power companies.

Further reading

OPINION: DSOs and storage? Give the market a chance

Storage ‘should be defined as load, not generation’

New real-time inertia measurement will cut the cost of managing the grid

Fossil generators’ system stability role could be fulfilled by renewables, says UKERC report

KiWi Power financing behind-the-meter storage, seeks more sites

Anesco opens subsidy-free PV/storage project

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