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NETWORK / 27 / JUNE 2017 The potential of DSF Our research first set out to establish the importance of DSF to businesses in the energy sector in particular, and to the UK in general. Our respondents were clear on the importance of DSF to their businesses, now and increasingly in the future. Asked to rate the importance today on a scale of 1 to 10, respondents scored it average of 6.7, rising 30 per cent to 8.7 by 2030. Breaking down the responses by group reveals some interesting variations. It is little surprise that aggregators rate the importance of DSF to their business the highest, at 9.9 both today and in 2030. Suppliers and traders rate the importance of flexibility the lowest, at 5.1 and 5.3 respectively today, rising to 7.7 for suppliers and, interestingly, to 9 for traders by 2030. This suggests that traders see significant potential for the development of a market for DSF, and opportunity for their businesses within that. Benefits of DSF Respondents were asked to rate potential benefits from DSF, scoring them out of a possible 10. The biggest potential benefit identified by respondents was the ability of DSF to reduce peak energy demand, at 8.4 out of 10. Not far behind was its potential to maintain system balance and in third place was its ability to compensate for the flexibility lost in the sys- tem by the move to intermittent generation. The potential economic benefits of DSF were ranked the lowest, with its potential to mitigate the need for investment in transmis- sion and distribution capacity, in generation capacity, and to keep customers' bills afford- able coming bottom of our table, though still with fairly high scores of 7.5, 7.4 and 7.3. This may suggest that some respondents are yet to be convinced that demand-side measures could replace investment in new capacity. Our respondents were also asked to rate the importance of DSF for the UK as a means of tackling the energy "trilemma" of sustainability, affordability and security of supply, today and in the future. Today, they responded, the importance of DSF is 6.4 out of a possible 10, rising to 9.1 by 2030 – ranking its importance for the UK as a whole above its importance for individual businesses. It is clear that our respondents believe DSF has a critical role to play in resolving the energy trilemma. Once again, aggregators were most enthusiastic about the importance of DSF, rating it 9.9 out of a possible 10. DNOs were not far behind, with 9 out of a possible 10, the second highest response. Traders, who as a group were clear on the potential of DSF for their own businesses, were more muted about its importance for the country as a whole, coming in the lowest of all the groups of respondents, though showing the greatest increase from today to 2030. Its importance today Its importance in 2030 Overall Overall DNO DNO Aggregator Aggregator Supplier Supplier Trader Trader Flexibility provider Flexibility provider Other Other 6.7 8.7 6.8 9.1 9.9 9.9 5.1 7.7 5.3 9.0 6.7 9.3 7.1 9.3 Source: Demand-side flexibility research April 2017 6.4 9.1 6.2 9.0 5.6 8.8 7.3 9.5 5.0 8.3 5.7 8.6 8.0 9.9 How important is DSF to your business, now and in future? Average rating out of 10 (10 = Extremely important) How important is DSF to the UK, now and in future? Average rating out of 10 (10 = Extremely important) Which of the following best describes your business's DSF strategy? Towards a DSF market While there is clear recognition of the potential of DSF to play a role in the energy market, the technology and its application are still in their early days. We asked our respondents about the degree to which they have engaged in DSF projects to date, and the results when they have. The responses demonstrated that a majority of businesses are taking a limited or cautious approach to DSF. Overall, 57 per cent of respondents gave a cautious response, saying either they do not expect DSF to play a significant role in their business's future (9 per cent) – the role it plays will depend on the extent to which regulatory and market barriers are removed (24 per cent) – or that DSF will have an important role in the future but plays a limited extent for the next three to five years (24 per cent). Breaking down the response by respondent group, there is considerable variation in the approach taken to DSF. Unsurprisingly, aggregators were once again the most enthusiastic, with 75 per cent saying it was central to their business strategy and the remaining 25 per cent saying its role would depend upon the removal of regulatory and market barriers. A relatively high proportion (42 per cent) of DNO respondents said DSF was already central to their business strategy, with the remainder saying it would be important in the future but have a limited role in the next three to five years (33 per cent); or DSF is central to my business's strategy DSF has a limited role for the next 3-5 years It depends upon the removal of regulatory and market barriers I do not expect DSF to play a significant role Overall DNO Aggregator Supplier Trader Flexibility provider Other 42% 43% 28% 50% 67% 36% 25% 9% 25% 22% 33% 22% 36% 33% 24% 75% 28% 17% 11% 27% 24% 22% In association with