Distributed Energy Generation (DERs) and electrification of the transport sector will result in more grid challenges at a regional and local level. The Local DNOs/DSOs are best placed to understand how these challenges should be managed, whether that be a non-wire alternative such as using flexibility or whether it should be reinforcement of the grid in the affected area. By becoming more of an active participant in the energy system DSOs will be able to solve problems locally, before they become a challenge nationally, alleviating some of the pressure on the ESO and enabling it (ESO) to focus more on maintaining the frequency and system stability in the overall electricity system.

How can we enable flexibility to be available to all levels of the grid?

“The challenge we have at the moment is that both the DSO’s and the ESO are trying to gain access to flexibility in an uncoordinated manor” says Richard Sarti, CEO of NODES market. “The ESO has been trying to gain access to flexibility in the lower levels of the grid, first through the ODFM arrangements and now through the DFS arrangements, utilising assets which could otherwise have been used to help the DSO resolve local constraint issues. Whilst at the same time the DSOs are also running tender processes to secure flexibility within their license areas”

The lack of coordination between the DSO and ESO means that it becomes increasingly difficult to determine where there is flexibility availability and scarcity within the grid, this in turn creates an opaqueness around price discovery for flexibility.

If markets are the answer to unlocking flexibility within the electricity grid, then we need interoperability between marketplaces. “The interoperability between marketplaces will help lower barriers to the value stacking of assets across the different markets as well as create greater transparency around price formation for the activation of flexibility. “ observes Sarti

Are the DNOs/DSOs ready to activate flexibility from a market?

Currently, flexibility is primarily bought through tenders, where a call for a certain amount of flexibility is being requested over a period of time. Respondents are largely those types of assets which are of a reasonable size and have a predictable profile, meaning they can guarantee their availability far in advance. This represents a challenge, as a lot of these larger assets which come from the industrial sector, do not wish to be activated despite offering their availability. On the other hand smaller, more unpredictable assets which could provide flexibility are excluded from these tenders, but in turn could be offering a significant volume of flexibility which could be activated at a lower price.

To gain access to these assets DSOs need to look at how to be able to procure flexibility much closer to the operating hour. “NODES have demonstrated how this can work through projects like Intraflex, where flexibility offered into a continuous close to real-time marketplace was able to bring domestic flexibility and EV chargers into the offering.” Says Richard

For local flexibility markets to develop, the DSOs need a different toolkit compared to what they have been using to date. The need for better analytical and forecasting tools is essential if they are to optimise the grid in a more dynamic way, enabling the DSOs to enter into markets and coordinate the longterm need with the short-term activation of flexibility.


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