ESO: We need to step back from flexibility at some point

National Grid electricity system operator (ESO) has described its demand flexibility service (DFS) as a “means to an end” and called on suppliers to create wider opportunities for customers to flex their energy usage.

James Kerr, power responsive lead at the ESO, warned that blanket schemes like the DFS risk creating new demand peaks if they are the main gateway to flexibility. He called for a greater range of tariffs to suit the diverse energy needs of customers and take flexibility into the mainstream – eventually making the DFS redundant.

Meanwhile, SSEN’s Catherine Winning pointed to the potential for electricity distribution networks to develop load management services to help stagger demand from devices that consume lots of energy.

These were among the key takeaways from Utility Week’s latest energy flexibility webinar, which can be viewed in full here.

The discussion was centred around the best ways to engage domestic consumers on the benefits of flexibility.

Kerr began by highlighting some of the key figures from the first iteration of the DFS last winter, in which customers were paid £3 per kilowatt of electricity shifted outside of peak times on specified dates. Some 1.6 million households took part last year through 31 approved providers (including energy retailers and aggregators) with 3.3 gigawatt hours of energy shifted.

However, he also highlighted gaps in engagement, including renters, younger people, ethnic minorities and residents in certain locations, including Scotland.

Winning pointed out that while the numbers participating were impressive, they represented “a small proportion of the population” and that the DFS is currently “only hitting those really engaged users”.

Citizens Advice research has also highlighted the challenge for those with medical needs to engage in the service, the charity’s energy retail markets policy lead Alex Belsham-Harris said.

Kerr said this showed the need for greater tariff innovation in energy retail, adding: “What we really want to see is a diverse range of tariffs and opportunities out there so not everyone is chasing the same second, because that causes us a problem and it causes the distribution networks a problem by creating new peaks in the middle of the night.

“The DFS isn’t the be all and end all. It’s a means to an end. And the DSOs are doing fantastic work around local flexibility and local constraints. But I think what we see is that the ESO will step back at some point when there’s the ability for households to really participate….  in the balancing mechanism or in the retail market.”

Winning agreed and said this would require greater collaboration between networks and retailers around “clever solutions that manage everything in the background, because none of us really want to be thinking comparing our energy price per hour”.

Andy Sage, head of propositions and partnerships at Eon, agreed with the need for greater variation in tariffs but said that initiatives like DFS were necessary to introduce the public to the concept of energy flexibility in the first place.

The webinar also discussed the changes to the DFS for this year, including a clampdown on ‘gaming’ of the system, the need for a focus on turn-up as well as turn-down flexibility and for standardisation across different flexibility markets. Watch the full discussion here.