Energy networks have a vital role to play to enable stakeholders across our regions to reach net zero as soon as they want to – in some cases up to two decades ahead of UK and Welsh Government targets of 2050.
At Western Power Distribution (WPD) we have made a commitment to keeping customer bills flat over the RIIO-ED2 price control period irrespective of other wholesale cost increases or regulatory recovery mechanisms. To ensure we keep the network portion of customer bills affordable, it’s vital that we maximise the utilisation of the existing network before new infrastructure is required.
Flexibility services are therefore disrupting the traditional energy market and introducing new opportunities for customers to interact with the electricity network, becoming active market participants rather than simply using energy from the grid. The potential of flexibility services and the democratisation they provide are key to placing local communities at the heart of the net zero transition and empowering them to play an active role in a smarter, low carbon energy future. In turn, managing peak load through flexibility helps reduce costs to consumers because it means network operators don’t have to invest in a permanent upgrade to meet a temporary spike in demand.
The energy system is currently undergoing its biggest transformation in decades in order to help our stakeholders to decarbonise and reach net zero. This creates exciting new opportunities for network operators like WPD to interact with its customers and ensure that everyone stands to benefit from a smarter electricity system.
The introduction of low-carbon technologies (LCTs) is creating two-way power flows, meaning networks are required to operate in ways that were never envisaged when they were built. In turn, as heat pumps and electric vehicles become more mainstream, customer requirements and expectations from their local electricity networks are changing, with an even greater reliance on a reliable supply of electricity to go about their daily routines.
In simple terms the average annual demand from an electric vehicle can be similar to a domestic home, but it isn’t feasible or cost effective to essentially double the capacity of the existing grid by building new, larger assets to significantly reinforce the network. Instead, network operators are rising to the challenge of becoming smarter and more dynamic, and in doing so avoiding adding costs to customers’ bills.
This is where flexibility comes in as it offers a solution for both consumers and their changing energy needs along with the network’s drive to decarbonise. To give an idea of scale, in its business plan for the next regulatory period RIIO-ED2, WPD (which operates the network for 25% of Great Britain) has committed to accommodate at least an additional 1.5 million electric vehicles and 600,000 heat pumps over a five-year period. The use of flexibility will be key to ensuring customers can connect these technologies quickly and at an affordable cost.
The energy system exists for our customers – it forms a vital part of their lives from keeping the lights and Wi-Fi on, to charging their phones. As we look to the future, customers will also have the opportunity to actively engage with their network via a range of innovative new energy services and utilise it for their own carbon reduction goals.
Currently, flexibility is mostly procured from industrial and commercial customers operating generation, but in the future we see domestic flexibility as providing the largest proportion of flexibility volumes.
Currently domestic customers make up 152MW out of the 709MW that WPD contracted via Flexible Power in 2021. However, WPD is striving to a future where all consumers can generate income from their energy habits while contributing to a low carbon future.
Western Power Distribution (WPD) is leading the way with this technology, and this has been recognised within the industry as a whole. Our Flexible Power platform recently took the award in the disruptor category at the Utility Week Awards.
Flexible Power allows distribution network operators (DNOs) to publish, procure, dispatch and settle flexibility requirements. It started its life as a WPD innovation project but it has been successfully developed by WPD’s distribution system operator function in deploying flexibility on a widespread scale that it is now being used across the UK and is the template for flexibility markets across the world.
While Flexible Power was disruptive when it entered the market, it is now the norm within the UK’s energy system as five out of the six DNO’s use the portal, meaning it is being used to the benefit of around 75% of customers in Great Britain. And we want to go even further.
WPD is now expanding flexibility across multiple time periods, complementing longer and shorter term contracts, plus domestic specific flexibility products to open up more opportunities in the market. Our ground-breaking Intraflex trial allows flexibility services to be continuously traded in close to real time, delivering cost savings and dismantling barriers between DNOs and customers.
This is only the start. At WPD our focus is not just on contracts signed, but on real world dispatching of flexibility services to support the operation of the existing network. We believe flexibility services will become standard as part of a low carbon economy.
During 2021, we contracted for 709MW of flexibility and called on 25GWh of flexibility to support our network operations, despite none of these innovative services being forecast by companies, the regulator or wider stakeholders when the RIIO-ED1 business plan was agreed.
This agile and adaptive approach presents a fantastic platform to build on as we look to turbo-charge the route to net zero for our customers. In our business plan for RIIO-ED2, we’ve committed to a ‘flexibility first’ approach for all reinforcement needs identified on the network. We anticipate saving customers more than £94 million in avoided reinforcement costs over the next five years, while continuing to accelerate the connection of LCTs and community energy projects.
Overall, WPD is creating an environment where flexibility services are accessible to everyone so that businesses and consumers alike can shape the net zero energy system and be rewarded for their involvement. Flexibility in turn will ensure that the energy system is responsive to local needs, connecting LCTs quicker than ever before and ultimately driving the transition to net zero.