Distributed Energy Resource (DER) operators that choose to offer energy flexibility services up for System Operators to use can see a lot of benefits. Although I now work at Electron, my previous experience working with Lunar Energy – a company providing next generation home battery systems – gave me insights into what DER operators need to know when considering how to benefit from system flexibility and what the best approach may be. Here are some of my top tips.
1. Understand the simple steps required to participate in flexibility
For any DER operators considering offering flexibility services to System Operators – becoming a Flexibility Service Provider (FSP) – discovery must be the first port of call.
Unfortunately, there’s no one size fits all approach to participate in flex – but there are a few simple ways to get started:
- Consider which type of market(s) that you want to offer into. This will depend on your asset type and size. You’ll also need to consider whether you want to get paid for availability, output, or both
- Calculate how much instantaneous energy you’re able to provide, and how many kWh / MWh you can make available
- Consider the value of the energy you can offer. You’ll need to think about other potential earnings or savings that this energy could provide
- If your asset capacity is less than 1MW, consider joining an aggregator
One you’ve considered all these steps, you’ll need to enrol with a market platform operating in your area. This will involve:
- Registering on the platform
- Completing a pre-qualification questionnaire (PQQ)
- Reading and agreeing to a call-off contract
- Adding your asset details, either via spreadsheet, CSV, API, or a webpage, depending on the platform
- Monitoring the platform for flexibility opportunities to bid for
When you find an opportunity that you’re eligible for, you’ll need to offer a bidding price for this energy. Your bid will then compete with other potential service providers.
National Grid ESO has a useful guide which is a great place to start. It covers everything from how to generate revenue as a provider of flexibility services, to a new provider checklist.
2. Manage expectations and your team’s time and knowledge in the right way
Offering your flex services up for procurement gives you the chance to maximise the potential of your assets and, importantly, to maximise revenue.
However, one of the biggest hurdles is that it can be time consuming to get involved, due to the niche nature of flexibility. As long as you’re aware of this, you can manage expectations and properly allocate team time. You can even make managing flexibility a formal part of someone’s role, with associated goals and expectations around feeding into and receiving input from the wider team.
Additionally, you’ll need to ensure that the right tools are in place to support knowledge sharing. This could be the perfect time to review your processes to ensure flexibility is properly integrated in the organisation.
Getting set up in this way will make it easier to participate in flexibility and help you to maximise that revenue from your assets. Yet, the full value of flexibility still needs to be realised. The future potential of flex is massive – and that’s where participating in markets can help.
3. Use market platforms over programmes to avoid manual processes
From my experience as a DER operator, moving away from a contract-by-contract or programme-by-programme approach towards an open-ecosystem and market-based approach would help lower barriers to participation. Some System Operators are already embracing this angle. To my mind, it’s the only way to truly scale flexibility and facilitate a transition.
Individual contracts and programmes are the incumbent system in the energy transition. Those individual contracts were born out of the strategic niche-management approach necessary to enable energy flexibility. But energy flexibility is no longer being trialled and implemented as a niche. It’s a proven and vital technology – and it’s ready to be rolled out much more widely.
Neither grid operators nor FSPs can operate at the scale needed for the transition unless things become more open and adaptable. That’s what market platforms enable. They’re revolutionary and, at the same time, an obvious and natural progression.
They can help free up time and resources for all market actors, to help FSPs to scale and earn more. Market platforms can also lower barriers to entry, with one unified and simple system that gives access to a variety of markets and revenue streams. They give System Operators the ability to codify and manage DERs as business as usual rather than on an ad-hoc basis. Perhaps most importantly, they mean fair market value accessible to all.
Read “Your guide to flexibility market types and how they work” for some of the ways that System Operators use markets, and where FSPs fit in.
