Creating a shared market platform to upscale use of customer flexibility

Alex Howard, product manager for DSO market platform, at UK Power Networks (UKPN) outlines how the company plans to make it easier and more rewarding to participate in local flexibility markets and discusses its recently launched consultation.

It’s no secret that the electricity system is in the midst of a generational shift away from fossil fuels and towards sustainable energy sources. At UKPN we have come a long way in the last decade, in particular in deploying smart technology to make it quicker and cheaper for renewable energy and low carbon technology like electric vehicles (EVs) to connect to the network.

But change is still needed. The products, processes and technology that got us to this point will not get us to where we need to be. That is why we are publishing our consultation on delivering ‘A step change in local flexibility’. We want to start a conversation on how we scale up our procurement and use of customer flexibility.

Late last year, we published our business plan for 2023-28, committing to establish a legally separate distribution system operator (DSO), which would save more than £400 million over the next five years and accelerate the connection of low carbon technologies like EVs, heat pumps and solar generation.

Since then, we’ve been working hard to get everything in place to deliver.

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Closely linked challenges

We have a proud track record of pioneering the use of local flexibility – from running the first open tender to awarding the first contracts for EVs.

We’ve worked hard to apply what we’ve learnt to deliver real customer benefits and to share good practices across the industry with other distribution network operators (DNOs). We’ve saved customers £330 million through innovation since 2015.

Taking the next vital steps towards net zero requires a refined approach. One of the key challenges is to encourage more participation from flexible assets of all types. This helps us to only build more infrastructure where it’s really needed and minimises the cost of the network for all customers.

Another challenge is to coordinate more closely with the national electricity system operator (ESO) as flexible assets like electric vehicles and batteries increasingly connect to our network. They can help both to balance energy across Britain, while also reducing peak demands more locally.

These challenges are closely linked – making it easier and more rewarding for providers to work with both DSO and ESO is central to growing participation in local flexibility schemes.

Driving a step change

In our recently launched consultation, we are proposing some changes to our products and procurement approach – for example, buying some flexibility the day ahead of delivery – as a first step towards this.

But in the long term we believe that greater efficiency requires a shared market platform – technology independent of DSO and ESO, that can take requirements from both and allocate shared flexible resources in a transparent way that maximises value for bill payers.

We believe we have a role in establishing such a platform and are keen to collaborate with other system operators to ensure that this platform can support their needs too.

Below are our priority actions and the reasons they are critical in establishing thriving local flexibility markets, as well as UKPN’s proposed approach.

Do you share our view of the challenges in today’s markets? And do you think that the solutions we’re proposing will address those challenges?

We need both your support and challenge to drive a step change in local flexibility, and all the financial and environmental benefits that will bring.

UKPN will publish a summary of responses and next steps shortly after the consultation closes on 28 October.

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