Full-chain flexibility: what does it mean?

What is full-chain flexibility and why do we need it?

Ofgem defines flexibility as “modifying generation and/or consumption patterns in reaction to an external signal (such as a change in price) to provide a service within the energy system.”

The regulator is aiming for a “fully flexible system to bring more renewable generation online whilst simultaneously keeping costs down for all consumers – domestic, commercial and industrial.”

But why do we need more flexibility in the system in the first place?

We need greater flexibility in the electricity system because as we drive towards net zero, the way we’re using electricity is changing. In particular, the amount of electricity our country needs is expected to rise hugely in the next few decades.

There are a number of factors driving this. These include:

Decarbonisation of electricity generation

Decarbonising our power means that we’re going to rely more and more on renewable energy such as solar and wind turbines. For the foreseeable future, these will be dependent on the weather to generate electricity. So they can’t be turned up or down easily to cope with rising or falling demand.

These are also often further away from the places where the power they produce will be used. That means they need more infrastructure to get their electricity to where it’s needed. More infrastructure costs more money.

The more we make sure our demand for electricity is synchronised with the times it’s being produced, the less need there’ll be to store that power or move it around. That can help keep costs down.

The rise of electric vehicles

The predicted increase in the number of electric vehicles (EVs) on our roads will also mean a corresponding rise in the amount of electricity needed. But it’s also an opportunity provided we’re flexible. Because every charged EV could potentially send the energy stored in its batteries back to the grid at times of high demand with vehicle-to-grid (V2G) technology.

The decarbonisation of heat

As we move away from using fossil fuels to heat our homes and workplaces, we’re going to need yet more electricity. To give just one example, heat pumps will demand a great deal of power, especially on cold nights when everyone turns their heating on.

Dealing with this increased demand simply by adding extra capacity would be hugely expensive. It’s also unnecessary.

Meeting those changing needs in the same way we have done for the last century or so would require enormous levels of investment.

Adding more flexibility now could help keep the cost of building and maintaining the energy system of the future down.

It can do this by helping to reduce the need to generate and store electricity to meet the ever-growing demand that is expected as decarbonisation moves forward.

Estimates suggest that by adopting full flexibility, savings of £8 billion a year could be achieved by the end of the 2020s. By 2050, the savings have the potential to reach five times that figure.

Full-chain flexibility will help provide those savings – while keeping the lights on. It will do so by:

Adding more demand-side flexibility

Up until now, flexibility in the electricity system has always been on the supply side. We’ve become very efficient indeed at making sure there’s always precisely the right amount of electricity that the country needs. And systems are designed to ‘switch on’ extra generation automatically in a matter of seconds whenever more power is needed.

The greater flexibility we increasingly need will come from managing the demand side of the equation. Encouraging people to use less electricity when demand is at its highest, and to release stored energy to the system when it’s needed. In the future, the electricity released from your EV’s batteries could help keep the lights on in someone’s home.

In short, with the right support and early adoption, full-chain flexibility can help make sure that:

• Customers get the power they need, where and when they need it
• The cost of increasing zero carbon electricity generation and of building and maintaining the grid to deliver it will be kept to an acceptable level
• Customers have the opportunity to save money by changing their behaviour and using electricity at different times of day
• Customers will be able to use EVs to store electricity for their own use or to sell back to the grid

The benefits of full-chain flexibility are clear. It has the potential to give us the electricity we need – while keeping the costs of investment in infrastructure down – as we approach net zero.

With our industry experience and know-how, we can help electrify your organisation and optimise any existing assets so you can take control of your energy, minimise costs and reduce emissions.