This report describes the study carried out to extend the potential of the Multi-Criteria Cost Benefit Analysis (MCA – CBA) methodology of smart grid projects to the evaluation of flexibility services for the distribution system.
The activity, which is also referred to in Annex 3 ‘Cost Benefits’ of the IEA ISGAN initiative, is part of a research line that aims to develop a generally valid methodology for the design evaluation of development alternatives in the field of smart grids, which considers non-monetary impacts and externalities.
This research phase was motivated by the increasingly pressing need to introduce active management of the network and the resources connected to it, including flexibility services, into modern planning approaches. Since the cost of flexibility can affect the choice of planning alternatives, it is necessary to properly evaluate the amount to be used and its monetary value.
The goal of the activity was the definition of a systematic procedure for evaluating flexibility benefits and costs, which allows for the definition of the price range that makes the exploitation of flexibility services advantageous for the parties involved, ensuring economic efficiency as well as economic sustainability compared to alternative measures for solving network problems (such as the strengthening of network structures).
The fundamental elements for a correct evaluation of the flexibility value were first analyzed, taking into account the point of view of the DSO and the ‘Flexibility System Provider’, including the figure of the aggregator. The evaluation of the economic sustainability of flexibility services was therefore explored by means of a CBA and a suitable procedure was proposed for planning purposes. A flexibility estimate was then made by applying the methodology to a real distribution network. In order to provide a general discussion on the application of the proposed methodology, after an in-depth analysis of the economic model used, the focus was placed on a theoretical case study relating to a low voltage distribution network in Italy. Finally, the case study was integrated by a sensitivity analysis based on the volume of flexibility services needed, which showed the applicability of the method to different scenarios.