In the fifth webinar of Smart Talks with Jovan, we had the pleasure of hosting esteemed guests Ištvan Papp, Professor at the Faculty of Technical Sciences, University of Novi Sad and VP Engineering at OBLO living, Boris Turha, Senior Development Engineer in the Technological Development Department at Electro Ljubljana and Tomaž Dostal, member of the Task Force “Next Generation Smart Metering” within the ESMIG working group and Head of the Strategic Engineering Management Team at Iskraemeco.

During this engaging session, we explored various topics, including the options available to distribution companies, the autonomy of Home Energy Management Systems, and much more.

Is it better for the distribution companies to limit the consumer energy consumption instead of directly managing the household devices consumption?

Boris Turha:

In the past, power plants regulated the production of energy according to consumption, but nowadays, because of the volatility of PVs, and wind turbines, consumption must adapt. In Slovenia, most PVs are connected to the distribution grid and they increase the voltage. DSOs could solve this by investing in new transformers and lines, but this means that the net tariffs for all customers must rise. But we don’t want this, so we try another solution where the DSOs sign contracts for flexibility with customers and aggregators. If the distribution grid is overloaded, flexibility providers have to lower consumption. In case of increased voltage, consumers with PV systems have to decrease their power or increase their consumption.

Now, flexibility providers get paid by the Distribution Company. How flexibility is managed depends on the customers. At Elektro Ljubljana, we established a flexibility platform integrated into an existing unified portal for metering data. The platform enables customers to first register their flexibility or authorize an aggregator to apply on their behalf in flexibility tenders. The second step is, if there is an actual need for flexibility, we, as DSO, publish a tender, and flexibility providers compete with each other through daily auctions. Just next week, we intend to publish a new flexibility tender for winter.

Tomaz Dostal:

The main question was actually – Should distribution companies limit consumption or production, or just control devices directly? I say no, distribution companies should not be able to directly control the devices in the house. There are several reasons for this. One is that we have a regulated and unregulated world. On the regulated side, it heavily involves DSOs, making it difficult for external control. Behind the meter, consumers are having a freedom, so I don’t think consumers themselves would be willing to have someone external, also considered as a “bad guy”, control the devices directly.

So, I guess the interface between the regulated world and unregulated world should be defined. A smart meter could be a very good device for doing that, providing some limitations and information on what these limits should be. Then, HEMS will comply with that, and behind that, the consumer has a contract with flexibility providers and must comply with the demand for flexibility, otherwise, they are contractually obliged to do so.

I guess let’s leave the device management to the consumer, to the owner, and let’s have some information from the DSO on what should be done to comply with the situation in the grid.

Istvan Papp:

I don’t think it is realistic to limit energy consumption. As you said, we are seeing growth in energy demand and usage. My belief is a bit biased with my background, but I believe that we need to use what we have today in a more efficient way. There are the energy sources, the production, the existing distribution grid, and also optimizing usage in the home.

I totally agree that it’s not realistic for utility companies to control specific devices in the home. I believe that through digitalization and the transformation in the energy market, users should be more like partners in this ecosystem, not just buyers. We see different roles for consumers and others. From today, or maybe even yesterday, users cannot clearly be labeled as buyers of the energy – they need to be cooperative partners in this system to optimize overall usage.

I think this will benefit everyone – users will gain by reducing costs, and other partners will be able to plan and evolve the energy system more optimally, avoiding over-dimensioning and making maintenance, installation, and development easier.

Is it necessary for Home Energy Management System to be autonomous in its operation in order for the homeowner to have the maximum benefit from its use?

Istvan Papp:

Yes, I believe that level of autonomy is required, and I will share some thoughts on that.

First of all, the optimal way would be to optimize everything, but I would say that cannot be done. It would be too big a system to optimize. We have seen a lot of variety in this market, there are some geopolitical, business, or technical limitations that prevent us from optimizing the entire system. Also, we have unpredictable events such as weather, incidents, people, etc.

This is a system that is changing all the time, so I don’t think global optimization can be done. The answer could be the decentralization of energy management. This would allow us to get a manageable system that might be suboptimal but should give good enough results. If we look at the system top-down, starting from the producers and distribution companies up to the smart meter or energy meter at home, the technology and business aspects are quite well defined.

However, after the smart meter, things become a bit messy. Every household is different – some may have PV systems, batteries, or electric cars. Different people live in different households with different habits, making it hard to deal with all those different aspects of energy consumption.

Therefore, I believe this can be well managed with an autonomous HEMS, which would not only consider top-level statistical data but also personal preferences and habits of the household. This concept might not be limited to households but can also cover bigger facilities. I believe that a HEMS should be autonomous but also operate in sync with the rest of the energy system.

Boris Turha:

I totally agree with Istvan. Generally, it should be autonomous because it serves its purpose, but maybe it depends on the appliances. For example, if you start charging the electric vehicle and you are in a rush and need to fill up within the next two hours, you don’t want the HEMS to prevent you from charging the car.

So yes, it depends on the appliances that HEMS controls.

Tomaz Dostal:

First of all, autonomous means it still must be connected somehow to the smart grid. I would say the smart meter is a good gateway to connect the two worlds. In the end, autonomous systems can involve artificial intelligence and similar technologies, but there are still people behind them. It’s a changing world, a dynamic and unpredictable world. Without any influence from the user or homeowner, this cannot work. The user knows, for example, that they are okay with the temperature in the house being two degrees lower than they prefer at a given moment, and they want to influence this somehow. Therefore, the consumer must have some influence over the autonomous operation.

There could be parameters for this influence. Ideally, you want to automate this so the user does not have to respond to requests from the DSO to reduce consumption at specific times. This would be too complicated, and people are unlikely to do that.

So, in that sense, it should be getting information from the smart grid somehow and then operating accordingly. It should reduce the charging power, lower the temperature in the room when applicable, and manage similar tasks. For example, starting to heat some water, charging something else, or reducing power generation from the PV system.

All these tasks should be completely autonomous and automatic. However, it should still be able to be influenced by the consumer.

Also, I’ve been involved in several European projects dealing with demand response, and they all integrated artificial intelligence and some sophisticated models. However, these models were very volatile. Even a small change in the system, like someone buying a new vehicle with different charging characteristics, could cause the model to fail. So far, interaction between the user and the HEMS is still required.

It’s all about the flexibility capability. If a homeowner has many flexible devices on the generation, storage, and consumption side, they have a lot of flexibility. For example, as Boris mentioned before, if someone wants to drive off in 30 minutes, even if their power consumption is at its limit, they still need to charge their car. Otherwise, they will just stay home. The HEMS should be able to transfer power from heating, heat pumps, water heaters, or other sources to the car charging. Once the car is charged or no longer needs charging, the power can be redirected back to other consumption needs within the house.

This level of autonomy is possible even today. It’s not rocket science. We actually have solutions that can achieve this without requiring a lot of intelligence or significant investment. This can be done within certain limits, of course.

What is the biggest motivator for customers to give their flexibility to the DSOs and suppliers to manage it?

Tomaz Dostal:

What I see are actually two main motivators. The first one is, of course, money. I would be ready to offer my flexibility for the DSO’s usage if I benefit from it. With the new tariff scheme in Slovenia, the limits are set very low, so I’d be highly interested in reducing my energy fee. This is especially true for those with electrical heating, whose monthly bills are quite high. They would be willing to provide flexibility in this way.

The second motivator is to avoid certain limitations or permits. For example, today, if people are applying to install new PV systems in an area where there are already several installed, they might not get a permit or have very limited export power. However, if you have flexibility in generation, you can overcome this limitation. If you are flexible, and everyone else is flexible, you might get a temporary permit to export, say, 10 kW instead of 1 kW. But you must be able to reduce your generation when needed because the distribution network needs to maintain the grid within operating conditions. We don’t want to “overvolt” or overburden transformers, for instance.

For example. In Ljubljana, there was someone who wanted to install three or four EV chargers in his house, which would require almost 100 kW of connection power. This request was clearly denied by the DSO because they couldn’t provide that much power capacity. However, if the homeowner were flexible with the charging power, it would be simpler. Elektro Ljubljana could say, “Look, you can only use up to 25 kW, and whatever you do beyond that is your responsibility. You just cannot exceed the limit we set for you because we have no other options. We cannot change all the cables just because of your fancy idea to have five electric cars.”

Boris Turha:

The biggest motivation is financial benefits, but as a DSO, we see the business case for aggregators who will use consumer flexibility not only for us but also for TSOs and for themselves to balance their portfolios. The key is to achieve a multiplication of services offered to several buyers of flexibility. That’s my vision.

Istvan Papp:

Yes, cost reduction is certainly a motivator for everyone. However, throughout various projects, we have seen different limits. It’s always about some tradeoff—there’s some gain, some loss, and depending on the ratio, people will either accept it or not. What we have observed is that this is quite region-dependent, varying by country, mindset, or even between different households. It’s a very personal matter.

For example, a gain could be a cost reduction, but eco-consciousness can also drive some people. On the other hand, the loss might include not getting a permit, or losing some comfort or flexibility. Any gain is great. Even a small reduction in energy consumption, cost, or carbon footprint is beneficial. However, if there is a loss of flexibility and comfort, the threshold for the gain must be much higher. The savings need to be substantial for people to accept giving away something that affects their lives.

I believe that with HEMS that can learn the habits of people, the loss can be minimized. This would lead to greater acceptance and more significant gains for the users. If you put that on a large scale, it really makes a difference.

Today, the existing solutions tend to be very conservative, aiming to minimize the loss of comfort while providing some gain. However, I believe there is much more potential in this area. In our pilot projects, we allowed remote control of people’s AC units to reduce energy usage. We observed that people often change the temperature of the settings, and we perceive that as indication that their comfort was reduced to some extent. This is a key insight, and we are still learning more about it.

I think this is a place where sophisticated solutions are necessary in order to develop something that would be widely accepted by market.

Another thing that came to my mind while listening to my colleagues is the increasing sensitivity around data sharing. People are becoming more concerned about their data privacy, which is another argument in favor of autonomous HEMS. For example, a data leak could be considered a significant loss or risk. I feel this aspect needs to be taken care of.

Conclusion:

Distribution companies have to manage consumption and production on the customer’s side due to network balancing. So far, they have done this by increasing electricity prices, by setting power limitation for the whole household or by directly managing devices in the household, but it’s not realistic for distribution companies to control specific devices in the home. Home Energy Management System should do all this based on information received from DSO or suppliers. It should be an integrated part of the Smart Home and it should make decisions regarding the consumption or production management of devices in the household without compromising comfort for the homeowner.

For Home Energy Management System to work, some level of autonomy is required. HEMS must be able to automate actions that need to be performed on household devices to comply with the DSO’s requirements that depend on network conditions. However, it should still be able to be influenced by the consumer. This can be well managed with an autonomous HEMS, which would not only consider top-level statistical data but also personal preferences and habits of the household.

There are two main motivators for customers to give their flexibility to the DSOs. The first one are money incentives or reduced electricity cost benefits and the second one is to avoid certain limitations or permits on energy production side imposed by DSOs to control the production level. Eco-consciousness can also be a motivator for some people. The benefits must be substantial for customers to accept giving away something that affects their lives.