The full value of using energy in a flexible way is not yet fully realised, and as the markets develop and hopefully become more integrated, simplified and stackable, more people will be able to benefit. Local flexibility markets are being developed now by Distribution Network Operators (DNOs) and some are in their second year of running these market as business as usual. At Regen we believe it is important community energy organisations are engaged from the outset so they can help shape these markets as they grow, and benefit from the value they create. We pay for our use of the electricity network through our energy bills (23.15%), but beyond the amorphous savings on customer bills, it’s not obvious how small community energy organisations or indeed customers/the people will benefit from flexibility. The government and Ofgem require DNOs to buy flexibility before spending millions on reinforcing the electricity network, because this should be cheaper for customers. However, uncertainty comes from the fact that the network will need to be reinforced at some point in the future anyway, to accommodate the increase in renewables we will need to meet our zero carbon by 2050 target.
Flexibility services are about having some or all of your assets available to respond to a call to operate from a DNO or National Grid Electricity System Operator, for specific periods of time, and receiving a payment in return. The calls for services are essentially to reduce the amount of power being used, or to put more electricity onto the network at particular times. To reduce electricity demand, ideally we’d first find a way to support energy saving by, for example, helping people have warmer, dryer, healthier homes. South Dartmoor Community Energy, 361 in North Devon, and Brighton & Hove Energy Services Co-operative are all good examples of community energy organisations tackling energy efficiency and fuel poverty (notably a very different issue that might increase demand) in clever ways on tiny budgets.
The savvy DNOs are looking at ways to support energy efficiency work in areas where they need to reduce electricity demand on their networks at specific times of day, plus it’s great PR, socially responsible, and the right thing to do. Have a look at Scottish and Southern Electricity Networks (SSEN) Solent Achieving Value from Efficiency, and Electricity North West’s Power Savers Challenge innovation trials. SSEN are taking this concept forward by accounting for social factors in their procurement of flexibility in two areas they are calling ‘Social Constraint Managed Zones’. In these areas SSEN plan to impact energy demand by working with community groups to install LED lighting, battery storage and other technologies, and work to encourage behaviour change.
It’s relatively easy to get flexibility from supermarkets who can turn off refrigeration at peak times, factories and universities who can turn off air conditioning for an hour or two, or hospitals who can turn on back-up generators to increase generation when there is peak demand. This is usually facilitated by aggregators who do the metering and settlement process on behalf of the flexibility provider for a fee. However, if we want more small-scale flexibility from domestic customers, to meet potential rises in demand, accommodate more low carbon renewable energy generation, and the electrification of heat and transport, it’s going to have to be easier and there needs to be real benefit for the householder. This will be more achievable with:
- The proliferation of time of use tariffs that more accurately reflect the wholesale energy market price, which is most expensive in the evenings from 5-7pm. However, so many people don’t switch suppliers regularly that this isn’t going to resolve the problem on its own.
- Half hourly (HH) metering and verification, if this was sufficient to prove demand side response (DSR) of domestic energy consumption. Smart meters give us the HH data for energy consumption, however, DNOs require minute by minute metering which is costly to install. It could be argued that DNOs should change this rule to enable domestic DSR to participate using the known maximum power consumed in each HH interval, rather than minute by minute metering. The loads providing demand reduction in homes (mainly electric vehicles (EVs), immersion heaters, and electric heating) provide fairly continuous load profiles, so could be used to infer demand reduction from energy, and therefore HH data should be sufficient in aggregate.
- More education and awareness to create a better understanding of household load. Lights and household appliances don’t use a lot of power (especially if they are new LEDs and smart appliances) but charging an EV at home can double a household load, and when EVs are charged will have a huge impact on the network. A domestic battery can help us store energy generated from solar panels during the day, to use in the evening or even discharge power back onto the network to balance supply and demand, but the cost of domestic batteries is still a bit high to get sufficient payback. Powervault and EDF offer a discounted domestic battery if you have solar panels on your roof and sign up to their grid services package, where they manage the power and sell the flexibility from your and other home batteries. Moixa pay customers £50 to manage and use your home battery, and Kiwi are offering £5-£35 of vouchers a year for people who reduce demand at peak times using an app. Some people with PV divert excess electricity into an immersion heater as a form of storage, rather than exporting it to the grid. Electric heating and heat pumps can also be good sources of controllable and flexible load in households.
- Ultimately for domestic customers to benefit from flexibility, they will need to work through an aggregator or Energy Community Aggregator Service (ECAS), who will bundle together hundreds of households to create a larger amount of flexibility that can be controlled through automation and sold to anyone who wants to buy it, including DNOs, the National Grid Electricity System Operator, and suppliers. This means householders signing a contract with an aggregator to use their data and control loads within their house. This will require trust and the option to opt out, so if for example a car was needed in an hour during a peak period when the flexibility was also needed, you could override the automated control to charge the car overnight.
This is a brave new world for communities and local authorities to get involved in, and could result in new revenue streams that support new low carbon generation. However as I’ve explored in this series of blogs, it’s not quite that simple… the energy market never is.
I’ve spent the last two years talking to hundreds of community and local energy organisations across the UK about flexibility in our energy system, working on detailed projects exploring DSR, and exploring the potential opportunities and value flexibility markets could bring to new local energy business models. At Regen we have been pioneering this capacity building through events and projects that help upskill communities to start engaging in the conversation. We do this because we believe a smart decarbonised energy system needs everyone to be involved, and if communities participate from the outset, they will be able to influence the design of emerging flexibility markets, and benefit fairly from the value they offer. If you’d like to fine out more, join us as a member of Regen, have a look at our recent Power to Participate publication or any of the content from over 16 events on flexibility we’ve delivered for communities.