Demand response aggregator, Flexitricity has announced plans to become an energy supplier. As well as offering specialist gas and electricity contracts to “targeted customers” from mid-2018, Flexitricity plans to use its supply licence to gain access to the Balancing Mechanism (BM).
Announcing it wants to “shake up how the National Grid is balanced”, the company said it aims to take the flexibility of industrial, commercial and public-sector energy users right into the BM. It said the move will allow it to give customers a slice of that premium market, while cutting the cost for National Grid and all energy users.
The BM is the real-time flexible electricity market National Grid uses to balance supply and demand. Becoming a supplier of electricity and gas will allow the Edinburgh-based company to take its customers right into National Grid’s BM, which is currently the preserve of traditional energy suppliers.
BM can reach £2,500/MWh, compared to around £50/MW in wholesale markets. The market is used around 3,000 times per day at a cost of £350 million per year – a cost which is passed on to the bill payers.
Flexitricity’s founder and chief strategy officer, Dr Alastair Martin, said: “We work with over 50 organisations across around 20 sectors, and we’re going to keep doing that, whoever they buy their electricity and gas from.
“But there’s a niche customer base out there who could do more if they had the opportunity. That’s what this is about. We’re cracking open the most important market in flexible energy for those who can both earn from it and contribute to it.”
Initially the new service will be targeted at businesses and public-sector organisations, and those who operate community energy schemes, combined heat and power (CHP) generators and cold stores, as well as battery developers.
Ron Ramage, Flexitricity’s CEO, added: “The new energy trading proposition is a natural evolution of Flexitricity’s business model, taking advantage of our technical capability to exploit a gap in the market we believe represents real value for our customers.”
Flexitricity will be working with three organisations to help create and deliver its energy supply offering: ENSEK, Quorum Development and Jules Energy.
Ramage added: “This is the first time anything like this has been done in the BM and we think it will be transformational – we are unlocking value for our customers as well as for bill-payers across the country by making our electricity system more efficient.”
Last year Flexitricity hit back at comments made by GMB that suggested demand-side response is “fanciful nonsense”, insisting the mechanism is “vital” for the UK’s energy security.