01 / Introduction

Network flexibility is a foundational capability of a reliable, low carbon electricity system. The UK’s decarbonisation trajectory relies on increased use of renewable power. This will create a three-way challenge for the network: provision for more variable demand, network stability, and managing a much more complex system of generators and users. If the government’s objective of maximising the use of low-cost, low carbon energy is to be met, then network flexibility will play a critical role.

The problem that flexibility solves is demand shift and supply shift – managing the growing mismatch between when electricity is generated and used. Solutions including storage, smart grids, standby generation and load reduction all play a role in enabling a more flexible grid. Alongside the need for flexibility, there is a growing requirement for network services, including balancing, frequency control, variability, and capacity to enable the robust and economic operation of the grid. 

The UK has always had a flexibility market. Gas-fired power stations and pumped-hydro storage have long been used to boost supply in response to peaks of demand. The type of flexibility needed is now evolving, with a greater emphasis on long-duration storage to avoid curtailment of wind energy.

However, strategic planning for flexibility has been up-ended by the AI revolution. The latest generation of data centres have high-density 24/7 power demands that challenge a system built on intermittent energy sources. Furthermore, data-centre demand for connections risks crowding out the new generation and storage that the system needs. Critically, as demands on the network and its operation become less predictable, the opportunities for flexibility services will grow – correcting gaps between forecast supply and demand in real time. 

Growing demand for energy shift has created a wide range of markets for grid and network services. Indeed, Centrica’s CEO, Chris O’Shea, recently claimed that system charges including network services will account for over 60% of total electricity costs by 2030. A diverse revenue stack has given investors plenty of opportunity, with 60GW of short-duration storage at present competing for 35GW of connection capacity. 

As the whole energy system becomes more digitally enabled, commercial and domestic consumers can also participate in a market known as customer-led flexibility (CLF). New low-power market integrators are creating “virtual power plants” enabling photovoltaic (PV) systems, batteries, and even electric vehicles (EVs) to play a significant role in delivering the flexible grid.

This article examines the UK’s flexibility strategy and how this interacts with other network service requirements. We examine the technologies and how business models are evolving to attract new sources of investment into flexibility services. 

Read more…