Utility Week

18 | 15TH - 21ST NOVEMBER 2019 | UTILITY WEEK Operations & Assets Analysis D omestic flexibility is not an entirely new concept in the UK. Aer all, there have been teleswitch meters fitted in British homes since the 1980s. But domestic flexibility nevertheless remains far less developed than industrial and commercial flexibility. Half-hourly metering and time-of-use tariffs are already the norm for the country's largest energy users. For years they have been able to lower their network charges by minimising their consumption during the three half-hours of peak demand each winter – also known as the triads. Industrial and commercial demand-side response (DSR) regularly wins frequency response contracts and is now being bid into the balancing mechanism by Limejump and Flexitricity. Despite the inability to secure the 15-year contracts available to new-build generation, it has also been relatively successful in the capacity auctions to date. Domestic flexibility is much further behind. Millions of households do now have half-hourly metering as a result of the smart meter rollout – yet very few are actually on time-of-use tariffs. Those that do exist are mostly glorified Economy 7 tariffs. Only Octopus Energy's Agile tariff offers half-hourly prices, and while it may be open to all customers, the company says it is effec- tively still in testing. So far, domestic flexibil- ity has only really been used to provide grid services as part of trials and is completely absent from the capacity market. This is hardly surprising. Flexibility from large energy users is, relatively speaking, the low-hanging fruit. Households may have plenty of flexibil- ity to offer collectively, but individual appli- ances can make very little difference on their own. It must therefore become cheap, quick and easy to combine them and operate them as so-called virtual power plants. Commercialisation close? "My impression is that it's on the verge of commercialisation," says Rick Parfett, policy manager for the Association for Decen- tralised Energy. With the right changes, he believes domestic flexibility could "ramp up quite quickly between the next two and five years". But his list of changes is long. Parfett says it will be important to be able to stack revenues from multiple services, including across local and national markets. Any exclusivity clauses that are not neces- sary must be removed, and the timings of contracts should be better aligned. There need to be clear prioritisation rules, he adds: "Basically, that involves National Grid and the DNOs [distribution network operators] sitting down and establishing hierarchies of priority. "If you're providing a service that helps you solve a network stability issue, then that probably takes precedence over a commercial service." There also needs to be clarity over when and where flexibility will be needed: "The nature of demand-side response means that you need to talk to customers quite early on, gain their trust, aggregate everything up and get in a nice portfolio. That takes time." The first flexibility auctions by DNOs have sometimes been held just a few months in advance, which "isn't anywhere near the time you need to start getting that flex- ibility, particularly if it's in quite a specific location". Processes and systems, most of which were designed to work with a few hundred large generators, must be streamlined and upgraded to accommodate vast fleets of millions of assets. Time to harness domestic flexibility Household appliances have flexibility to offer, but can make little difference on their own. Tom Grimwood asks what is needed to combine them as virtual power plants. They should also be standardised across DNOs: "It's really minor things, but minor things when you're trying to contract with individual domestic customers create quite a significant administrative burden." Poorly suited Parfett says the capacity market is one that is poorly suited to domestic flexibility at the moment: "They probably will need to reform things like minimum bid size and compo- nent reallocation. And if they really want domestic flexibility in there, they're going to have to radically simplify things like the prequalification process." He says even experienced industrial and commercial aggregators struggle: "Anything that can be done to make that less clunky and manual and improve the process would be very welcomed by everyone." Market operators will also need a com- pletely new mindset. They currently have the assurance of knowing exactly which assets "If I've got 10,000 washing machines that I've aggregated up, I don't know which ones are going to deliver, but I know by averages and by portfolio statistics that at any one time, 4,000 of the 10,000 will respond to a signal" RICK PARFETT, POLICY MANAGER, ASSOCIATION FOR DECENTRALISED ENERGY

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