The development of local electricity markets for flexibility services: the case of Milan congestion management

The increasing electrification of demand, which has traditionally relied on other energy vectors (e.g., heating, cooling, and fuelling of vehicles), and the progressive introduction of renewable and non-programmable generators pose serious challenges for managing distribution networks. This affects network management during peak periods like in summer with demand for cooling, risking overload. Uncertainties from non-programmable renewables complicate network management and its interface with the transmission network. This strains network hosting capacity for further renewables, threatening climate goals. Implementing local market mechanisms, in which flexibility is offered to Distribution System Operators (DSOs), shows promise in boosting electricity network managing capacity and expanding renewable energy use limiting costly infrastructure investments. This paper focuses on the forthcoming experience of the local flexibility market in Milan, detailing stakeholder interactions and market fundamentals rewarding availability and activation of flexibility. The proposed market scheme for congestion management could serve as a model for local ancillary services deployment. It is developed within the Horizon Europe project SENERGY-NETS, which is also investigating how this market can be leveraged by multi-carrier energy systems like Milan's district heating network.