Demand Flexibility Service

[edit] Introduction

The Demand Flexibility Service (DFS) was developed by the National Grid Electricity System Operator (ESO) and began on November 1 2022. The intention is to allow the ESO to access additional flexibility when the national electricity demand is at its highest, during peak winter days.

[edit] Background

The Demand Flexibility Service (DFS) is one element in a range of tools designed to help manage the electricity system over winter, by collaborating with energy suppliers and aggregators to allow participating consumers and businesses to reduce their bills by shifting their demand times. In early 2021 a trial was run with Octopus Energy, which proved the concept for the demand flexibility service. Since then working with suppliers, aggregators and consumer groups ESO has been aiming to scale up the scheme.

[edit] Balancing

The innovation works on the same principles as longstanding energy tariffs such as Economy 7, 9 and 10 and so called time-of-use tariffs or smart electricity tariffs, that were bring offered to customers after having installed half hour smart meters. They are all routes to balance energy demand with energy supply, which is increasingly variable as a result of the continuing expansion of wind and solar contributions.

In the more established examples such as economy 7 customers are encouraged to use energy at night, (with a separate meter) when demand is low in return for cost savings. The DFS on the other hand encourages customers to delay the use of electricity when demand is high.

[edit] Requirements

The DFS service allows consumers, as well as some industrial and commercial users (through suppliers/aggregators), to be incentivised for voluntarily flexing the time when they use their electricity. ESO say the service is open to as many participants as possible, who meet the following requirements:

• All assets require half-hourly metering.
• All assets must be able to respond for a minimum of 30 minutes.
• 1 MW min unit size / 100 MW max unit size.
• Providers need to be able to respond to an instruction for day-ahead delivery.
• Providers must provide relevant metering and base line data to demonstrate delivery of demand reduction.

The following exclusions applied:

• Assets that are dispatchable via the Balancing Mechanism, or participate in Ancillary services or DNO services.
• Assets that have a Capacity Market contract.

The DFS began on 1 November 2022 but was open to later sign ins, intended to run for a maximum of 12 tests for participants, where participants receive dispatch instructions with the opportunity to receive a Guaranteed Acceptance Price for tests. For those signed up, four tests occurred over the first full month followed by two tests in each subsequent month. Once bids from participants are accepted, participants contact end consumers / asset owners and request that they deliver a demand turn down for the specified bid window.

Only certain organisations can provide the service but individual consumers wishing to support and benefit from the service, can do so via approved energy suppliers, as well as a number of organisations who can provide access to the service by linking directly to smart meter data accessed via an app or online.

[edit] Update in 2023

In January 2023 the National Grid ESO reported "World-first Demand Flexibility Service exceeds expectations with businesses saving thousands of pounds while reducing carbon emissions" .

Data from the first two demand flexibility events (specific prearranged dates where demand and supply would be tight) confirmed great engagement with the service. During the first test, participants delivered a 50% increase in electricity reduction compared to expectation and across the second test, participants reduced their electricity use by 35% more than expected.

On 23 January the first live demand flexibility event was launched between 5-6pm with huge support. As well as households engaging with demand flexibility events, businesses benefitted from taking part. In many cases businesses reduced their working day with no impact on productivity, whilst one business generated £34,025 for their clients by taking part and a reduction of 200 tonnes of CO2 was projected by a single company.

Visit the National Grid ESO website for more information and to read examples of companies that have taken part. Here

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