Why fleets are dream participants for NESO’s Demand Flexibility Service
As winter 2024/25 approaches, National Electricity System Operator (NESO) has announced the return – and expansion – of its Demand Flexibility Service, presenting fleets with a golden opportunity to profit from smarter energy use.
For the UK energy grid to run smoothly, electricity supply and demand must match in real time. Any imbalance can lead to blackouts or damage to infrastructure, as the grid operates at 50Hz, where even a small fluctuation of 0.2% can cause major disruptions.
This challenge is increasing with the growing use of renewable energy, which depends on favourable weather conditions. However, DSR solutions will be the future of balancing supply and demand by optimising the use of electric assets.
Electric fleets are ideal for demand side response (DSR) solutions
As an EV fleet operator, you hold a unique position because your fleet vehicles often remain plugged in for longer periods, particularly overnight, when demand is lower. This predictable and controllable charging pattern makes you the perfect participant in DSR initiatives, contributing to grid stability while reducing fleet costs.
Fleet optimisations and scheduling are prime cases of participating in DSR services. For example, vehicles that complete their routes in the daytime can charge at specific times in the night when grid demand is lower. Where possible, vehicle operations and charging can be scheduled during off-peak times. This simple scheduling adjustment can contribute to grid stability while cutting costs.
You also don’t have to do it alone. With a partner like Drax, your business insights will be strategically aligned with market insights to build the optimal strategy and be executed for you. We worked with vehicle manufacturer Ford and SME FI Real Estate Management to reduce their collective power demand, including optimising their EV fleets. This additional flexibility helped balance supply and demand amid the energy crisis caused by Russia’s invasion of Ukraine.
John Corker, Advisor to the Managing Director and Chief Operating Officer at FI Real Estate Management, said: “We are constantly reviewing how we can reduce the environmental impact of our real estate portfolio, so we jumped at the opportunity to support this important UK initiative and look forward to increasing our participation in the scheme as future opportunities arise.”
What DSR markets are available for fleets?
As the grid continues to adapt to higher levels of renewable sources, its needs are evolving. This evolution brings with it new opportunities for organisations with responsive assets. A range of markets can offer revenue to power users’ meters on a half-hourly basis. However, the user must be able to operate DSR on their site successfully.
Demand Flexibility Service (DFS)
NESO introduced Demand Flexibility Service during the winter of 2022/23 as part of its winter contingency toolkit. DFS supports the normal electricity market in accessing additional megawatts during high national demand. DFS allows fleets to contribute to grid stability while earning revenue during periods of high national demand.
Last winter 2023/24, there were over 2.6 million participants, saving over 3,700MWh. In the 2023/24 scheme, our customers earned the highest dividends of any I&C-only provider, with nearly £1.2m in combined revenue. By balancing supply and demand, they helped the Grid ‘keep the lights on’ and received real financial benefits through smart energy management.
Eligible businesses can join DFS throughout winter. For details on participating, visit the NESO website.
The Capacity Market (CM)
The Capacity Market can offer additional revenue for fleet flexibility, giving providers more ways to monetise their energy assets. Providers receive payments based on capacity, price and the de-rating factor of their technology. CM revenues are also ‘stackable’, meaning participants can combine revenues from CM flexibility with those from other non-CM events.
Although we haven’t seen any CM events, NESO will give providers four hours’ notice when it schedules one. NESO expects providers to comply with the requirements of the scheme and be able to demonstrate the delivery of their flexibility during test events.
Distribution network operator flexibility provision
Distribution network operators (DNOs) are also increasingly procuring services from local energy flexibility providers to minimise operational and reinforcement costs. However, the opportunity to provide these services is geographically limited and depends on which parts of the distribution system need the most support.
Websites such as PicloFlex can help you determine whether there is an appropriate opportunity for flexibility in your area.
ElectriFlex with Drax
We combine technical EV expertise with market access, helping you unlock the full benefits of DSR. ElectriFlex is a simple and commitment-free service that operates year-round. You can explore these demand flexibility opportunities and opt in or out of each request.
This incorporates NESO’s Demand Flexibility Service and features no penalties if you commit to flexing but can’t deliver. Businesses that partner with us can receive financial rewards for flexing energy consumption all year round with no drawbacks.
NESO is also expected to request more demand turn-up in the future, allowing fleets to take advantage of surplus electricity. This will further open opportunities for fleet managers to access cheaper, or even negatively priced, energy during periods of oversupply.
Participating in DSR is not just about saving money on energy; it’s about ensuring your fleet supports the UK energy system. Fleet managers who embrace these opportunities can play a crucial role in grid stability, all while enhancing profitability.
Download our Guide to Demand Side Response for a complete look at the opportunities of DSR.
Download our guide to DSR
