
Written by
Joulen,
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We are living in a time of considerable geopolitical instability. The most immediate impacts are being felt by the people living in regions at war or under bombardment, but the effects have also been felt across the world – especially in the form of higher energy prices. These higher prices flow through to more general inflation of products and services that rely on energy inputs, and they also threaten production and economic growth. The better insulated an economy is from these price shocks, the more resilient it will be in the face of geopolitical uncertainty. It is no exaggeration to say that energy security is national security.
One of the ways we achieve this security is to generate more of our energy here in the UK, so that we rely less on imports. But the prices consumers pay for energy are not only driven by imports; they are often set by the marginal price (the cost of generating one more unit of power) – which in the UK is almost always the price of gas. This price responds to international markets in a way that no level of drilling in the North Sea will remove. The best response is to rapidly transition to a clean power system. Fortunately this is exactly what the Government has decided to do: it has described a vision in which “Great Britain will be powered by a smart, secure, and decarbonised electricity system with clean flexibility at its core. This vision is of a future where flexibility is not just a technical solution – it is a foundational principle shaping a resilient, low-cost, and consumer-driven energy system.” (Clean Flexibility Roadmap). The most affordable and achievable pathway requires between 10 and 12GW of customer-led flexibility (CLF) by the end of 2030.
So, as gas prices rise and the UK Government considers reforms to national pricing, this is a perfect time to repeat that there will be no clean power system unless we make CLF a priority. This week I met with colleagues in the sector at Energy Technology Live and the Distributed Energy Show to discuss how we make markets and technology work together to achieve this.
As the moderator of the session “Flexibility in action: Technology and networks shaping the future system”, I asked the panel of experts to discuss the role of a “Flexibility First” model in a world where data centres are the new challenge to electrical load, and to consider what technical and regulatory innovations are on the horizon in our race to a clean power system alongside rapid electrification, especially of road transport, heat, and industry. Does more electrical load have to mean more infrastructure, or is there a better way? We discussed how flexibility can address this problem: what are the technical and operational barriers, and how to deliver the transition we need.
Flexibility is an exercise in simplification. We have to meet domestic consumers where they are: with clear, simple and accessible propositions that also recognise the different needs of customer segments. There is a balance to be struck here, and it is not always easy to find. A diverse market, with diverse propositions, is essential.
One of the keys to this simplicity is automation, which will be fundamental to scaling flexibility. AI-enabled platforms will increasingly coordinate distributed assets, an area where Joulen continues to innovate through our PARIS platform. Forecasting weather, market changes, tariffs and more, while staying within the parameters and preferences set by consumers, is a complex task. But that complexity can be largely “hidden” from the consumer. There is no ideal consumer in this sense: we want consumers to engage with consumer led flex (CLF), to trust it and be excited about it, but we also want a mass market full of people who know next to nothing about flexibility (as most people don’t understand or care about energy markets, how a television works or any number of other technologies we use every day without a second thought).
Industrial and commercial consumers we need a more hands-on approach and a more structured commercial offering. We need a better understanding of the pain points that these organisations feel as operations transition from static consumption to flexible participation in energy markets.
For many businesses, flexibility is as much about resilience and risk management as it is about cost reduction.
The panel was a great mix of big ideas and principles alongside some more niche policy issues. One was the urgency of the GB smart metering rollout: this really is essential and needs to progress with pace and urgency.
It was also good to go into some of the detail of the UK Government’s Smart & Secure Electricity System workstream, and related work to streamline the registration of flexibility assets into the market. The Flexibility Market Asset Register (FMAR) will be a single, central ‘one-stop shop’ through which aggregators register flexible assets with their network operator, DSO or NESO. This work is far from done, and Government is looking to industry to inform how this registration can be as seamless and efficient as possible. You can find out more here: Flexibility assets – Flexibility Markets and there is a questionnaire for FSPs and aggregators, open until 13 March, here: Help shape asset registration: survey for Flexibility Service Providers – Flexibility Markets.
The discussion of data centres was particularly important. Data centres are the fastest growing new load on the grid and incorporating them into a flexible Virtual Power Plant (VPP) comes with its own challenges. The technology is moving so fast, and regulation will struggle to keep up with innovation.
We need better integration between flexibility provision and network system operators. This means more local flex, sharper price signals, more behind-the-meter assets and more engagement. There seemed to be general agreement that we need a greater focus on flexibility: whether that’s local flex, aggregation of loads into a VPP, reducing battery skip rates (or all of the above).
That will save billions of pounds in reduced need for generation, transmission and distribution infrastructure. Flexibility is simply the best way to bring down customer bills.
That is why it is so important that DNOs make sensible, informed planning decisions: so that infrastructure investment is targeted and proportionate, taking into account where flexibility is a better, cheaper, more reliable solution. This is where RESPs come in. Regional Energy Strategic Plans are the mechanism NESO uses to advise DNOs on infrastructure investment, and where to build in advance of need. The methodology does not seem to include CLF, contracted flexibility or industrial decarbonization pathways – though the Clean Flexibility Roadmap suggests that they should. If flexibility providers are locked out this process, it will be all build and no flex. So DNOs will assume there will be no flexibility and build unnecessary infrastructure to compensate. Customer bills will rise, and we will have expensive posts and wires but not enough constraint to make flexibility services worthwhile. Everyone loses in this scenario.
You can find more about RESPs and get involved here: Regional Energy Strategic Planning (RESP) | National Energy System Operator. But if you’d like to discuss this in more detail, please don’t hesitate to get in touch with me.
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