Optimising how the electricity and heat markets are organised

The electricity market has changed in a relatively short period of time from a state monopoly to a competitive one. And many more changes are in the pipeline as a result of new technologies, revenue models, suppliers and energy sources. ECN part of TNO is investigating how this developing market can best function and what regulation is needed.

There are many questions, for the national government and municipalities in their new role, energy companies, new service providers, consumers as individuals or local collectives. The answers require knowledge of technology, energy sources, the operation of supply and demand.

A coherent energy supply

Nowadays, different energy carriers are used for different energy functions: oil for transport, gas for heating and electricity for power and light. But a lot is changing in the energy supply: electricity may replace petrol as an energy carrier in passenger transport and also partly take over the role of natural gas in the heat supply for homes and business premises. ECN part of TNO is studying the relationship between the various energy functions, such as heat supply and transport, the energy carriers and their production. The aim is to build a sustainable and reliable energy system.

Development of supply and demand

The electricity market was the territory of provincial and municipal suppliers for decades. Customers had no choice, either in terms of product (electricity and gas) or in terms of price or delivery terms. The producers, the power plants, supplied as much energy as was needed. With an increasing supply of renewable energy such as sun and wind, that model is no longer tenable. At the same time, a problem arises: sun and wind usually do not produce exactly the amount of electricity required by the market. ECN part of TNO is investigating how supply and demand will develop in the near future and what is needed for this.

Heating business case

The same issues arise in the heating market where the emerging changes may be even greater. Consumers will have more choice. District heating still comes from a single source at a single temperature to the customer via a single supplier. There will soon be intelligent heating grids in which more suppliers will be active, heating will come from different renewable sources such as geothermal, solar or thermal energy, and the heating will be offered at different temperatures. This is a good development from the point of view of sustainability, but there are no conclusive business cases yet.

Vision of regulation

The electricity market is a national one but with international ramifications. Heating, for instance, is developing into a regional, local, market up to neighbourhood level. This requires not only different revenue models, but also a new vision of regulation. The starting point for this is freedom of choice for the consumer. Our research focuses on the future heat supply in which freedom of choice, security of supply, regulation and supervision are optimally organised.

Towards broad support for the energy transition
Contact

Dr Jos Sijm

  • Energy use Fuels & Markets
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