In the third blog in our series on the development of local flexibility, we explore the role of the local flexibility market itself, drawing on our work with Open Utility and their experience developing an online marketplace .

See our first blog that looks at the live local flexibility trial projects here

See our second blog discussing the benefits for DSOs here

In any marketplace there are potentially three key parties, the buyer (i.e. procurer), the seller (i.e. provider) and the market facilitator. The market for local flexibility services has multiple participants under each of these categories that are looking to interface and complete transactions.

These parties could interact, either directly through extensions to existing contracts, through open tenders or through the development of a marketplace where needs and services can be matched in a dynamic and simplified way. This could open up the market to any potential groups of providers, not just embedded industry incumbents.

The development of a online marketplace is intended to simplify the trading of flexibility services for all market actors, opening up the potential for smaller, local responses to meet local system challenges. A local flexibility market platform needs to be open, easy and quick to use.

A first stage is to itemise the needs of potential procurers, such as:

  • The System Operator looking to balance the wider electricity system through local solutions
  • DSOs turning to local flexibility to manage local networks
  • Energy suppliers seeking to manage their electricity volume imbalance position.

These needs can then to be matched to providers of flexibility (aka Distributed Energy Resources or DERs), which could come from:

  • Generation asset owners flexing their generation output
  • Large energy users flexing on-site demand
  • Storage operators charging up or discharging their assets
  • The aggregation of smaller local loads such as community owned generation or even remotely controlled domestic demand[1]

The relative value of these DERs will depend on factors such as the scale of flexible capacity, the speed of response/ramp up time (sub-second, seconds, minutes), the duration of response and the physical location, in terms of which substation the DER may be connected to.

The fourth blog in our series will look at how a local flexibility platform might operate in practice.

Author: Merlin Hyman

[1] A number of European trials of the Universal Smart Energy Framework (or USEF), which is one of the underlying frameworks of some of the UK DSO trials, target the automated remote control of domestic appliances as a class of local flexibility. See examples of USEF demonstration projects here: https://www.usef.energy/download-the-framework/demonstration-projects/