Demand flexibility – what to look out for this winter

DSR’s possible with electric assets that you, as a consumer, can turn up, down, on or off. Organisations are recognising that they own non-generation or storage assets that are suitable for DSR too. Refrigeration units, air conditioning systems and EV chargers can also help the Grid and boost financial rewards.

When NESO (then NGESO) published its Future Energy Scenarios in 2024, all possible routes to net zero depended on substantial growth in DSR from domestic and industrial and commercial (I&C) consumers. So, rather than the Grid requesting more generation to meet electricity demand, it’ll be relying on the opposite – consumers to flex their demand according to available supply.

Flexibility barriers are coming down

It’s becoming simpler for consumers to participate in flexibility markets. While consumers historically had to rely on their supplier to manage everything about their contract – including its trading potential – they’re now able to take more control.

The Demand Flexibility Service (DFS), which NESO introduced to encourage widespread DSR participation in November 2022, will be moving into its third winter. But it’s evolving – and other flexibility opportunities are arriving to join it.

The new-look DFS

DFS is still the easiest route into exploring the potential of flexibility for many organisations.

Personally, I’m relieved that – despite forthcoming changes – it’s seemingly here to stay, providing a simple way for customers to generate revenue from flexibility. This shows the service’s validity as a method to help the Grid with balancing.

DFS is set to go year-round. So, when consumers start looking to benefit from flexibility rewards this winter, they won’t need to stop early next spring.

Another positive change is the introduction of stacking – the ability to simultaneously use flexibility from an asset across DFS and other markets. This holds the potential for significant increases in revenue for organisations willing to invest in optimisation expertise.

However, there are some changes I’m more concerned about.

Until now, consumers have had guarantees relating to payment price and both number and notification of events. NESO has removed these assurances.

There are no more test events and signals from now on will only be ‘within day’, making participation more difficult for smaller businesses that don’t operate set consumption patterns. DFS’s switch to an ‘in-merit’ service means it’ll also have to compete with generators and other flexibility markets before it can post signals and offer rewards.

These elements combined are likely to make DFS less of an attractive proposition to organisations and households.

P415 – consumers in control

Elexon’s introducing P415 this month. This represents the removal of a large barrier, and a potential big-earner for organisations in years to come.

P415 allows non-suppliers – consumers like domestic users and organisations – to work with third parties to trade wholesale power on their behalf. Previously, consumers signing an energy agreement meant their supplier controlled everything. If the supplier didn’t offer flexibility services, the consumer couldn’t participate in them.

Optimisation’s more important than ever

With the removal of barriers and the increase in flexibility opportunities comes added complexity. And those with optimisation expertise will fare best financially.

• It’s now possible to enter individual assets into flexibility markets, rather than being tied to the consumption of all assets connected to a meter.
• The times at which one flexibility market holds more potential value than another can change quickly. The net effect of this could see your EV chargers, your solar panels and your manufacturing processes participating in different markets simultaneously.
• And flexibility’s not a fad. Its importance in setting the UK on the path to net zero means flexibility opportunities are only going to increase over the coming years.

A good optimising partner will understand your assets and be able to maximise the value of their flexibility potential. They’ll also be able to navigate the nuances – and the real-time changes – in available flexibility markets to change where and when an asset’s participating.

It’s a case of following the value to maximise the revenue.

Retain a focus on operational needs

Of course, there could come a point at which chasing flexibility revenue damages your primary business function.

It’s therefore important to work within set parameters. In order to define these, you need to understand your operational requirements so you can make flexibility work around them.

Doing so will enable you – or your optimisation specialist – to maximise the financial potential flexibility has to offer your organisation.

In summary

NESO’s requirement for flexibility’s increasing – so the opportunities for participating are growing too. We’re unlikely to see the same DFS revenue peaks again. But the service is moving to year-round, stacking with other markets brings new possibilities, and P415 looks set to expand flexibility accessibility.

All in all, flexibility optimisation’s more important – and more complex – than ever, so it’ll pay to upskill or partner with an expert to maximise the benefits.