In our blog series on the core pillars for a Net Zero grid, we have so far outlined the importance of a whole-system mandate to support the architecture of a neutral flexibility marketplace. In the UK, the Future System Operator (FSO) will fulfil this role – with a strategic oversight leaving scope for flexibility markets to evolve with future needs.
But now, we need to take this a step further. To unlock the full value of flexibility and accelerate the path to Net Zero, we need to create an open ecosystem where competition and innovation can thrive.
Open vs. monolithic system design
An open ecosystem involves multiple systems working together to create an end-to-end process, enabled by bilateral data exchange. This contrasts with a monolithic approach, where a single platform shoulders responsibility for all software functionality.
There’s no right or wrong answer when choosing which design to follow. It’s all about what the user needs and what the desired outcomes are.
When it comes to low carbon flexibility, unlocking the value of flexibility at scale isn’t a solved problem yet. We need to continuously improve the experience for providers and market operators. That will help lower barriers to entry, improve operational efficiency, and, ultimately, deliver a better experience for end consumers.
To do that, we need to foster greater competition and innovation. In a closed, monolithic system there’s inherently no competition, leading to vendor lock-in with little incentive for innovation.
That’s why we’re strong advocates at Electron for an open, ecosystem-led approach, where providers, system operators, and end consumers can realise the system’s full value.
Beyond markets: The importance of interoperability
At Electron, we’ve built our flexibility market platform – ElectronConnect – with this open ecosystem in mind. ElectronConnect is a local flexibility platform that allows network utilities to launch, operate and scale multiple types of flexibility market – from long-term procurement to Day-Ahead markets and secondary trading.
However, market platforms like ElectronConnect are only part of the solution.
For competition and innovation to thrive – and therefore for market platforms like ElectronConnect and others to co-exist – we need to establish a set of standards, protocols, and common interfaces so that interoperability is possible.
This standardisation can also help streamline some of the non-discretionary activities within the flexibility value chain – common, repetitive tasks and processes where little value is created for the user.
This process of standardisation and interoperability is something we can build together with customers and partners from the wider energy ecosystem.
This is an approach we articulated in our response to Ofgem’s Call for Input on the Future of Distributed Flexibility.
An open ecosystem and the future of distributed flexibility
Our response outlined an architecture for combining shared, standardised services with “best-of-breed” solutions for specific parts of the system, with common inputs and outputs, at each stage of the workflow. (see Figure 1.).
That would still leave scope for assets or flexibility providers to enter markets through various platforms, based on the maximum value they can obtain through revenue stacking. Giving them this choice – and ease of access through standardisation – will play a big part in scaling flex volumes.
This will also lay the groundwork for true coordination by a neutral market facilitator such as the FSO.
The next steps
So, we’ve established that the open ecosystem is the best structure to help drive innovation and competition within our architecture for a neutral flexibility marketplace.
Within that ecosystem, we now need the tools and digital infrastructure to bring it to life – and that’s what the final blog in this series will explore.
