In October, four of the six distribution network operators in Great Britain – SP Energy Networks, Scottish and Southern Electricity Networks, Northern Powergrid and Western Power Distribution (WPD) – announced they would henceforth conduct all of their flexibility tenders through a single, joint marketplace – a revamped version of the Flexible Power platform developed and already in use by WPD.
Energy technology company and aggregator Kiwi Power has been involved in the Flexible Power project since its inception.
Jan Ydens, the firm’s head of product, describes it as “a real milestone” for the sector “to have four DNOs adopt a common platform for procuring, managing and operating flexibility.”
He says WPD wanted to develop an “end-to-end” process from market design to flexibility procurement to operations: “That last piece is where Kiwi Power delivers real value. We believe the proposition created is quite unique for DNOs. Until recently a lot of attention and effort has been on market design and flexibility procurement while the operational aspects have gone largely unaddressed, which is where this solution focuses.
“And that, I think, plays to Kiwi Power’s expertise from years of operating flexibility from the transmission-level programmes with National Grid and further afield.”
“This is not something that DNOs have needed to be well practised in until recently,” he adds. “And it’s no easy task.
“The challenges range from identifying operational requirements closer to real time to process design, data management, identifying energy resources and managing those.”
Nevertheless, Ydens says WPD has “very quickly” moved from innovation to business-as-usual: “Whilst it was a piece of work pioneered by their innovation team, it’s now all part of their regular day-to-day operating processes. They have teams dedicated to managing this programme and we’re in the process of onboarding other DNOs onto the platform.”
He says bringing the other DNOs on the Flexible Power platform has so far required “very little” in the way of adaption: “The functionality could stay unchanged and we had to just change the branding and website to reflect it being a truly shared platform.”
“Kiwi Power has grown rapidly over the past decade,” he explains. “Operating globally in different markets, jurisdictions and regions – each one of those has its own characteristics and changing on different timescales – requires a platform that is very adaptable and flexible.”
Ydens believes one of the big benefits of a joint flexibility marketplace is the standardisation it will bring from the perspective of providers: “There is a push that I’ve witnessed all the way from BEIS and Ofgem through to the Energy Networks Association through to the DNOs themselves about trying to standardise these services and make it easier for flexibility suppliers to participate.
“In the early days, each of the DNOs was doing something slightly different and unique – they had different programmes, they had very different procurement cycles, their market design was different, the contracts themselves were different – and I think we’ve just seen that general push, particularly on the procurement side, towards standardisation.”
“As a logical next step, I think now we’re starting to see standardisation on the operational side of things.”
He continues: “I think one of the real strengths of the overall market design and our technology is that we’ve always tried to keep things as simple as they can be. I think through that simplicity, it makes it much easier for the flexibility providers to participate.”
“My view is that the complexity of the energy market is one of the biggest barriers to entry to potential flexibility providers, particularly those who are unfamiliar with the industry,” he remarks.
“The industry is complex enough and I believe there’s a significant risk that digitisation of the industry will only further complicate matters. A key tenet of our philosophy and decision-making process is keep it simple. Standardisation is part of that.”
Ydens says their successes have not gone unnoticed: “It’s generating a lot of international interest. The UK is a leading and innovative flexibility market and there are other markets overseas looking at the UK and seeing what’s being done here and looking to emulate that.”
“There are a lot projects in America trying to tackle this same problem,” he says. “Not many of them have been very successful to date at getting past the innovation stage, and that’s partly regulations that prevent that.”
Giving a nod to the regulator, he says Ofgem and their RIIO price controls are “often cited as a key enabler”.
Going forward, Ydens says their work will be characterised by “incremental change, continuous improvement.” This includes streamlining the transition between procurement, contracting and operations: “At the moment, the procurement is done online. Then it’s a bit of an offline process for contracting and then online again for operations.”
He says there are also the challenges of generating and leveraging data – “getting data, making that data available to others who can continue to innovate” – as well as warding off cyber security threats, which will “only ever increase”.