Utility Week

16 | 20TH - 26TH JULY 2018 | UTILITY WEEK Finance & Investment The appetite for flexibility The market is still waiting for frameworks to unlock the value of demand-side response and grid-scale storage, finds exclusive research from Utility Week in association with CGI. THE SIGNIFICANCE TO YOUR ORGANISATION OF GRID-SCALE STORAGE AND SYSTEM FLEXIBILITY THE IMPORTANCE OF GRID-SCALE STORAGE AND SYSTEM FLEXIBILITY T he need for alternative and increased sources of flexibility in the power sys- tem is now widely accepted. Industry, policymakers and regulators alike recognise that the provision of flexibility – through grid scale storage, demand side response, and interconnection – is critical if the power system is to cope with changed patterns of generation on one hand, and of consump- tion on the other. A flexible power system will also create opportunities for consumers as they move to electric vehicles – for example, through vehicle to grid storage, whereby EVs act as mobile batteries, enabling their owners to store power and use it to satisfy their own energy needs or even sell it back to the grid at times of peak demand (or have an agent do it for them). Against this backdrop of seismic change, Utility Week, in association with CGI, has been exploring the challenges and oppor- tunities of flexibility in the power system for the energy industry for three years. In a series of high-level events and targeted market research, we have charted opinion year on year from the different players in the energy value chain: system operators, dis- tribution network operators (DNOs), energy suppliers, energy traders, and aggregators and providers of flexibility. Their answers reveal the huge poten- tial that flexibility has to transform both the power system and the experience of the customers that use it. They show beyond a doubt that participants across the energy value chain recognise the value of flexibility, and believe that value will grow exponen- tially over the next decade and beyond. How- ever, they also reveal the myriad challenges that flexibility faces – economic, regulatory and customer focused. This year's insight is particularly inter- esting in how it differs from previous years. Greater variation is coming into respondents' answers and, while they still see a number of barriers to flexibility, those barriers are beginning to vary more by audience type. We suspect this is because flexibility pro- jects are becoming more "real", and as dif- ferent players engage in them, they become more focused on "on the ground" problems associated with delivery, than with obstacles to the overall implementation of a flexible power system. Meanwhile, the policy framework for flex- ibility is emerging. Three years ago, when this series of insight research reports began, flexibility was a relatively new concept among policymakers and regulators. There have been huge strides since then, beginning with the publication of the National Infra- structure Commission's Smart Power report in March 2016, which highlighted potential annual savings of £3-3.5 billion at the 2030 target level of 100gC02e/kWh. In the past year, the long-awaited Smart Systems and Flexibility plan has been pub- lished jointly by the Department for Busi- ness, Energy and Industrial Strategy and Ofgem, setting out their expectations on the shape of the new markets. While this paper undoubtedly leaves numerous ques- tions still to be answered, it sets the road- map for achieving the vision of a flexible power system. On a scale from 1 to 10, how would you rate the strategic significance of flexibility to your organisation today? On a scale from 1 to 10, where to you expect the strategic significance of flexibility to your organisation to be by 2030? Overall System operators Generators DNOs Suppliers and traders Aggregators and flexibility providers Strategic significance today Strategic significance by 2030 On a scale from 1 to 10, how would you rate the contribution of grid-scale storage and demand-side flexibility to current system needs? On a scale from 1 to 10, how would you rate where you think the level of contribution from grid-connected storage and demand-side flexibility towards meeting the systems needs will need to be by 2030? Overall System operators Generators DNOs Suppliers and traders Aggregators and flexibility providers Contribution to current systems needs Required contribution by 2030 Average scores (out of 10) Average scores (out of 10) 6.6 8.7 8.3 9.0 5.6 8.4 6.6 8.9 5.9 4.6 5.7 4.4 4.8 4.5 4.3 8.10 8.5 7.9 7.0 7.4 7.5 7.9 8.3 9.2 Analysis

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