Flexitricity is to launch a new energy trading service called Flexitricity+ with the aim of “cracking open” the balancing mechanism to demand-side response (DSR).
The aggregator claims the service will give industrial and commercial energy users unprecedented access to the valuable market for flexibility, whilst cutting bills for consumers across the board.
The balancing mechanism is used by National Grid around 3,000 times per day to match supply and demand in close to real time. The market is worth roughly £350 million per year – a cost which is passed on to consumers – with prices reaching up to £2,500/MWh.
Industry rules mean, for the time being, energy users can only sell DSR in the balancing mechanism via their supplier.
Flexitricity says many of the big incumbents also have their own competing generation assets and therefore have little incentive to offer their customers’ flexibility to the system operator. For this reason, DSR has only made small inroads into the market.
To gain direct access to the balancing mechanism, the company has itself become a licensed supplier. Energy users who wish to use the service will also need to sign up to Flexitricity as their supplier.
“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,” said founder and chief strategy officer Alastair Martin.
“But there’s a 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.
“This is about being customer-centric and creating value that has been hidden behind a locked door until now. At Flexitricity, we do not have our own big energy assets to trade like the big six, therefore, we have no conflict.”
The new service, which is due to launch in October, will initially be targeted at businesses and public sector organisations. Flexitricity says it will be particularly well suited to operators of community energy schemes, combined heat and power (CHP) generators and cold stores, as well as developers of gas peaking plants and battery storage facilities.
The company will carry out trades on behalf of customers according to constraints and instructions set out in advance. In exchange, the firm will receive a share of the proceeds.
Chief executive Ron Ramage, said: “This is the first time anything like this has been done in the balancing mechanism 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.”
Despite its claims, Flexitricity will not be the first aggregator to bid to DSR into the balancing mechanism. Smartest Energy already uses its supply licence to offer the service to its customers.
Elexon is planning to introduce changes to the Balancing and Settlement Code (BSC) central services in 2019 to open the balancing mechanism to independent aggregators. Last week, the code administrator published a white paper setting out its view on how the services could be adapted to enable customers to buy electricity from multiple suppliers.