The value pool that only a HEMS can unlock

What is the financial added value of a cross-sector and vendor-independent home energy management system? This is a question we are often asked. In this blog, we provide our answer.

Combining distributed energy devices with a home energy management system (HEMS) unlocks a saving of up to €1400 per user annually. 

In addition to this direct cost saving, a cross-sector and vendor-independent HEMS is also the key to bringing the energy transition to the mass market. After all, only when the various energy devices are easily installed and optimized for self-consumption and in coordination with the energy market and grid demand, can we tap the full potential of renewable energies.

Value pool: Optimizing self-consumption (1-3, turquoise)

PV users should ideally run their heat pumps and charge their EVs using their own solar power (1 and 2). Especially in times of rapidly rising electricity costs, optimized self-consumption and the resulting independence are more important than ever. 

This value pool can be tapped into by a HEMS without the need for a smart metering system, i.e. without connecting it to a Smart Meter Gateway, meaning homeowners can do this without being dependent on the grid operator or electricity provider. Depending on the total annual consumption, the size of the PV system and the battery capacity, the use of a HEMS enables end customers to save up to €800 in electricity costs per year.

Although the third use case in this group, Vehicle-to-Home (V2H), is not yet market-ready, it will become the most exciting use case for bidirectional charging in the coming two years – ahead of vehicle-to-grid (V2G). We explore its potential in detail in our blog about HEMS and V2H.

Value pool: Smart electricity tariffs (4-7, kiwi green)

Time-of-use tariffs, where the price varies by the hour, already exist in Germany (4 and 5). They are based on the day-ahead price of EPEX Spot. Even a 15-minute price variation that would increase the added value even further is possible, as 15-minute products are also traded on energy wholesale markets. Time-based tariffs provide end customers with an incentive to schedule their electricity consumption at times when the price of electricity is at its lowest during the day. To correctly balance and bill time-based consumption, these tariffs require the installation of a smart meter and must be concluded with an appropriate electricity provider. Kiwigrid is cooperating with Lumenaza, one of the leading providers of innovative smart green tariffs.

A HEMS allows the smart charging of EVs and operation of heat pumps in accordance with time-based electricity prices to be better coordinated, as more parameters such as desired departure time, EV load, room temperature and PV yield forecast can be included in the optimization. For end customers, the cost of residual electricity can be further reduced, resulting in savings of up to €200.

In addition to time-of-use tariffs, it is also possible to charge the EV or operate the heat pump in response to grid imbalances by managing the devices in response to grid operator incentives (6 and 7). At the moment, a high feed-in of renewables leads to renewable plants having to reduce their output if the electricity generated cannot be used. Setting the appropriate incentives would allow for EVs and heat pumps to absorb this electricity instead of it being curtailed.

The potential of this technology cannot yet be exploited in Germany, because grid fees are currently static; one price applies for the entire day. Additionally, when renewable power generation is high and grid congestion imminent, PV and wind power plants are being shut down by grid operators, while the renewable plant operators are being compensated for their loss. 

Instead of this wasteful practice, high renewable yields should be intelligently distributed. Various pilot projects are working on demonstrating how dynamic network charges can be established. MITNETZ Strom, Germany's fifth-largest distribution system operator, is implementing the NetzFlex project working with the Kiwigrid platform. In combination with a HEMS, an additional €200 could be saved by responding to grid incentives.

Value pool: Flexibility trading (8-9, orange)

Transmission system operators must keep their grids' frequency and voltage as constant as possible in order to ensure grid stability. Currently, conventional gas and coal power plants are used to ensure secure grid operation. Assets in the home play only a minor role at present. With the phase-out of fossil power plants and the expansion of heat pumps and e-mobility, the energy system is fundamentally changing and the huge potential on the demand-side will need to be exploited. This will require a HEMS that switches connected devices on or off in a matter of seconds (8 and 9). 

In Germany, only pilot projects and limited commercial applications exist for these technologies, as implementation is still very expensive and complex. End customers who want to provide their flexibility on the energy market would have to connect their devices to an additional meter and a transmission system operator would have to prequalify each device. The costs and bureaucracy involved are very high. In the Netherlands, France and the UK, this is already easier. When the technology is ready for the market, end customers can be rewarded with up to €200 for offering their flexibility. 

Theoretically, a separate energy management system could be used for each of these value pools. In practice, this would greatly complicate installation, optimization and maintenance, and cause unnecessary costs, therefore critically limiting the scaling of decentralized energy solutions on the mass market. We cannot and will not allow that. We need a future-proof HEMS now that can handle all these use cases. 

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