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14 | 9TH - 15TH JUNE 2017 | UTILITY WEEK Policy & Regulation The energy sector must work together As part of this research, Utility Week and CGI hosted a working party on DSF. Three groups of participants attended: suppliers; networks; and aggregators. Speaking among themselves, it was fascinating to see how the suppliers focused on what the networks needed to do differently to enable a more flexible system. The aggregators focused on problems with the suppliers, particularly with vertical integration. The networks, meanwhile, focused on engineering challenges and how to provide system resilience. Energy suppliers agreed that the "size of the prize" could be signifi- cant, though the nature of the prize was focused more on system value than on commercial gain. It was felt that early movers in the provision of demand-side services will gain commercial advantage, but the political environment around energy supply currently makes it unacceptable for 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 major- ity of businesses are taking a limited or cau- tious approach to DSF. Overall, 57 per cent of respondents gave a cautious response, say- ing 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 respond- ent group, there is considerable variation in the approach taken. Unsurprisingly, aggrega- tors were once again the most enthusiastic, with 75 per cent saying it was central to their business strategy and 25 per cent saying its role would depend upon the removal of regu- latory and market barriers. A relatively high proportion (42 per cent) of DNO respondents said DSF was already central to their busi- ness 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 that its role depends on the extent to which regulatory and market barri- ers are removed (25 per cent). Once again, suppliers were the least enthusiastic group, with a significant minor- ity (22 per cent) that did not expect DSF to play a significant role in their business's strategy in the foreseeable future. However there was wide variance within this group, with 28 per cent saying it already did play a significant role, 22 per cent saying it would do in the future but not for the next three to five years, and 28 per cent saying it depends on the removal of market and regulatory bar- 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 WHICH OF THE FOLLOWING BEST DESCRIBES YOUR BUSINESS'S DSF STRATEGY? TO WHAT EXTENT DO YOU AGREE OR DISAGREE WITH EACH OF THE FOLLOWING STATEMENTS? Overall DNO Aggregator Supplier Trader Flexibility provider Other 9% 24% 24% 43% 42% 33% 25% 25% 75% 28% 22% 28% 22% 33% 17% 50% 67% 11% 22% 36% 27% 36% NB where figures do not add up to 100, this is due to rounding TOWARDS A DSF MARKET CUSTOMERS AND DSF OUTCOMES OF DSF PROJECTS What, if any, have been the most successful outcomes of the DSF projects your business has worked on to date? Financial return for customers 46% Financial return for your business 32% Reduced pressure on infrastructure/reduced demand for new infrastructure 32% Reduced energy demand 28% Other 20% Not seen any successful outcomes 16% Strongly disagree Tend to disagree Neither agree nor disagree Tend to agree Strongly agree The lack of adequate price incentives is the main barrier to non-domestic take-up of DSF A lack of consumer awareness is the main barrier to non-domestic take-up of DSF Customer concerns over autonomy and/or privacy and security are the main barrier to non-domestic take-up of DSF While the opportunities for domestic take-up of DSF are currently limited, the low level of awareness of such solutions will hamper their rollout in the future While the opportunities for domestic take-up of DSF are currently limited, customer concerns over autonomy and/or privacy and security will hamper their rollout in future The design, labelling and regulation of smart appliances is key to the future take-up of domestic DSF 4% 6% 12% 2% 2% 22% 20% 12% 33% 20% 20% 12% 18% 20% 12% 18% 24% 39% 33% 27% 43% 73% 41% 24% 22% 8% 18% 18% 10%