Securing Energy Futures: Exploring Belgium's Capacity Remuneration Mechanism

Abstract

This thesis explores the integration of low-voltage assets into Belgium’s Capacity Remuneration Mechanism (CRM), focusing on ThermoVault, a company that retrofits residential thermal appliances with intelligent IoT modules. The primary objective is to assess the feasibility and benefits of ThermoVault’s participation in the Y-4 auction for the 2028-2029 delivery period. The research includes an assessment about the need for capacity mechanisms and an overview of European capacity remuneration mechanisms, providing context for the CRM’s design. The Belgian CRM is then explored more in detail, leading to an analysis of ThermoVault’s possible participation in it. The analysis utilizes historical data from a pool of electric storage water heaters (ESWH) over 2023 to evaluate different baseline methodologies, focusing on the "High X of Y " method currently used in Belgium. Results indicate that ThermoVault’s assets can meet CRM requirements, although the unit remuneration values are relatively low. This necessitates an internal evaluation of whether the administrative efforts are justified. The study highlights the need to explore alternative baseline methodologies, such as the declarative baseline methodology, and suggests investigating the remuneration potential for other low-voltage Capacity Market Units (CMUs) in future research. This thesis offers insights into integrating low-voltage assets into capacity markets, providing valuable information for policymakers, industry stakeholders, and companies like ThermoVault in enhancing grid reliability and sustainability.