January 5, 2024

National Grid returns with demand flexibility testing for a second year

Everything you need to know about participating in the ESO demand flexibility service

We’ve discussed in previous blogs, the significance of both flexibility and demand response for a stable and robust energy system.  Just last week, we saw the Energy System Operator (ESO) in the UK again reinforce their support on this topic.

The ESO is responsible for making sure that Great Britain has the essential energy it needs by ensuring supply meets demand every second of every day. 

Over the last two years the ESO has been conducting DFS (Demand Flexibility Service) testing on the national grid to ensure grid stability, resilience, and energy security.  Demand side response refers to the ability of consumers to adjust their electricity usage in response to signals from the grid operator, allowing consumers to play a role in balancing the grid.  On October 30, the tests for winter 2023/2024 were launched. 

The ESO is running these DFS tests for three core reasons;

  • Firstly, energy security; the tests aim to assess the grid’s effectiveness in managing demand fluctuations and mitigating potential supply shortages. Through DFS testing, the ESO assesses how well demand side flexibility measures can help balance supply and demand on the grid, thereby enhancing its stability
  • Secondly, grid optimisation;  the tests help identify any necessary improvements or adjustments needed for optimal performance.
  • Finally, consumer interest. Through DFS testing, the ESO can assess the willingness of consumers to turn down electricity consumption on demand

The DFS launch comes at a critical time for energy consumers

Ofgem (office of gas and electricity markets) just last week announced their new price caps for the period starting 1 January 2024. The price cap refers to the maximum amount that energy suppliers can charge customers per kilowatt-hour (kWh) of electricity consumed, as well as the standing charge.

For most consumers, this price cap will result in a 5% rise in their average energy bill.

Winter poses unique challenges for both energy systems and consumers alike due to increased heating requirements and higher overall electricity consumption. Households and businesses are faced with higher costs, and the grid is faced with the challenge of meeting this significant increase in demand and lower renewable supply (for example from solar). The DFS testing specifically focuses on evaluating how demand side response measures can mitigate these challenges during this critical period.

By participating in the DFS testing, participants can receive support for their energy payments by getting paid for their reduction in usage during peak times. The previous DFS service, which ran from November 2022 until March 2023, had 22 service events with 1.6 million households and businesses signed up. In total, participants in the 2022/2023 service managed to shift over 3,300MWh of electricity during peak times providing support for the grid during periods of increased strain.

What you need to know about participating in DFS testing

  • The ESO will run six tests between November 2023 and the end of December 2023
  • These test events will incorporate a guaranteed acceptance price, ensuring that if providers bid to participate at £3/KWh (kilowatt hour) or less they will be guaranteed to be accepted.  
  • DFS registered providers (will in turn reward households and businesses for shifting their electricity demand during this time.
  • The tests are front-loaded to encourage early participation in the service 
  • The ESO will look to run a further six tests from January 2024 to the end of March 2024
  • DFS tests will last for one hour.  It’s worth noting that live events (not tests) are likely to last for a longer period and could run up to four hours each. These would most likely be early evening on weekdays when demand for electricity is highest. 
  • Tests and live events are most likely to take place across weekday evening peaks.

The future of demand side flexibility with the ESO

This is the second year running that the ESO has had approval to run demand side flexibility from Ofgem.  It’s easy to see the benefits, with the ESO expecting around 1GW of capacity (compared to without the DFS tests) made available and the tests helping consumers be more engaged in their daily energy usage. 

The ESO are expecting this latest test will have three times as much capacity provided than last year, following the success of the 2022/2023 winter tests. By helping to prevent blackouts and shortages of supply during energy intensive winter months, and empowering consumers to play an active role in balancing the grid demand side flexibility will help shape the future of the energy system.