Elexon calls for nationwide flexibility exchanges

Code administrator Elexon is proposing that nationwide electricity flexibility platforms are set up so that local distribution network operators, suppliers and businesses can buy storage output or demand-side response (DSR) services.

In its latest policy view, published today (11 October), Elexon sets out how it believes the platforms can provide more open, transparent and competitive ways to trade DSR services.

Under the current arrangements aggregators, DSR providers and storage operators have no choice to but sell their services to the established distribution network operators (DNOs).

The proposed platforms would provide a route for trading spare capacity on DNO networks. Elexon says this could help to speed up connections for renewable generators, or other users by giving them options to buy capacity and get a grid connection more quickly.

Battery storage, and electric vehicle to grid technology are examples of how more flexibility can be provided to the electricity system.

For example, increasing consumption at times of the day when there is a surplus of electricity on the system, or export power on to the networks when supply and demand is tight.

Elexon believes energy regulator Ofgem could establish a regulatory framework governing the use of the exchanges.

Elexon chief executive, Mark Bygraves, said: “Creating more open and competitive markets is an important way to help the energy system to become smarter.

“The government is planning to support trials of up to three flexibility exchanges with £4 million funding.

“We will play a key role in the trials by providing our expertise in managing electricity settlement to the exchanges, and our insights on how they can be integrated with existing market arrangements.

“We believe further steps can be taken, by the government and Ofgem encouraging the industry to set up national flexibility platforms, building on best practice from these trials.

“Ultimately we believe that flexibility platforms can operate in a similar way to the wholesale electricity market, with buyers and sellers trading a variety of products openly, at prices set by the market.”

Responding to the report Louise Van Rensburg, head of flexibility and whole system coordination, energy system transition at Ofgem, said: “Decarbonisation, decentralisation and digitisation are driving rapid change to the distribution system.

“As we progress towards a low carbon economy – we require a more active, coordinated and effective energy system that is able to deliver this at the lowest cost to consumers.

“Flexibility platforms will be a key to enabling this, and we need to ensure the regulatory environment we oversee adapts to meet these goals, which is why we are working closely with stakeholders and currently consulting on our approach.

“We want flexibility providers to realise the value they bring to the system by encouraging efficient investment into these innovative technologies and business models.”