The value of flexibility within the power system could increase tenfold over the coming years according to Ofgem’s Andrew Wright. The regulator’s senior partner for energy systems believes flexibility will ultimately become more valuable than energy efficiency within the energy system.
Speaking at National Grid’s Power Responsive conference, Wright said that the “real value is in [businesses’] flexibility. That value is going to increase, maybe by an order of magnitude”.
Failing to capitalise on flexibility would require step changes in technology to decarbonise the power system, Wright suggested.
“Without flexibility, you have to hope we can crack carbon capture and storage,” said Wright. “If we can’t, you wonder where cheap flexibility is going to come from.”
However, he acknowledged commercial challenges within demand-side response markets.
“There are a lot of parallels with energy efficiency. You are asking people to invest in something that has uncertain value going forward.” But he said that, as with energy efficiency, flexible power consumption would become the norm.
“Today, you wouldn’t dream of building a supermarket without thinking about energy efficiency,” said Wright. Flexibility, he added, would follow the same path to maturity “and [ultimately] become more valuable than energy efficiency”.
He said Ofgem would work to help enable the “marketisation” of flexibility and try to create a level playing field for providers, but warned those looking to exploit current charging arrangements that the gravy train may soon be coming to halt.
The government has called a review of so-called embedded benefits, which some market participants believe are overly generous to small generators, creating market distortions.
While Ofgem has not yet made any specific recommendations, but “[developers] should not be siting generation [on the distribution network] purely to exploit distortions in charging arrangements,” said Wright.
Energyst Media, along with National Grid, aggregators and suppliers, is running a demand-side response conference in September for businesses that want to learn more about making money from their flexibility. It is free for end-users. Find out more here.
Related stories:
Take our demand-side response survey
Free demand-side response conference, London, 8th September
Major changes to capacity market and distributed generation charging regime proposed
Energy brokers and TPIs warn early capacity market could add 5% to power bills
Capacity auction fails to incentivise new gas plant
National Grid, aggregators and suppliers join The Energyst for DSR Event
Early capacity market costs to hit energy bills
Higher credit cover and penalties for capacity market providers
Capacity market closes with no new gas as aggregators warn of £75/MW hour price spikes
Capacity market rule changes create opportunities for businesses that can turn down power use
Major changes planned for capacity market
Protection for energy intensives ‘will add 7% to third party costs on business energy bills’
Free download: Demand side response report
Click here to see if you qualify for a free subscription to the print magazine, or to renew.
Follow us at @EnergystMedia. For regular bulletins, sign up for the free newsletter.
