Expert contributor: Chris Broadhurst, CCO, Electron
One of the big debates in flexibility at the moment in the UK and in Europe – and one I discussed in a recent webinar – is how we can unlock flexibility at scale. How can we grow the volume of flexibility and create more value for that flexibility? The discussion often centres around who should be building certain parts of the system. Who should own that specific API or who should be responsible for running that specific data service.
These are all valid questions. But just as important is the digital infrastructure on which these services are built. That’s why we believe an open ecosystem is the way forward.
What’s an open ecosystem?
An ecosystem is an interconnected system with different participants, whether companies, individuals, government, etc.
They collaborate, exchange information, and interact with one another for some form of mutual benefit. A real example of that is the internet. To create this blog you’re reading, we’ve built on top of shared open protocols and standards like HTTPS.
But what do we mean by “open”? This means that the infrastructure that supports the system is shared and accessible to all. Again, thinking of the internet, HTTP and FTP – these protocols are accessible and publicly available. Everyone can interact and share information in a very standardised and publicly accessible way.
The opposite is a monolithic system, where all the parts are controlled and operated by one single entity or company. Transparency and access to the data within it is limited. This makes sense with secure applications or use cases to have this type of closed system. But this brings drawbacks around interoperability – and access to data.
Using data transparency to avoid a walled garden
Who owns the data is a good question – but is that data open and accessible, and can it be portable and moved from system to system?
Without that open ecosystem, we will end up with some walled gardens where data ends up in silos. That slows down progress as it becomes more difficult to interact across the system and to access that data, creating friction.
There’s a huge opportunity in the energy transition to deliver this at pace and at the lowest cost.
But a key building block to that foundational layer is an open ecosystem that can allow for competition and innovation to happen, to avoid these walled gardens.
The benefit for market actors
Let’s think on the main actors in this system and how they benefit from this transparent data access in an open ecosystem – and how it can lead to scaled flexibility.
System Operators
The lack of standardisation in the underlying data – about the assets that are taking part, the products that are being traded, or the ability to communicate this to other network systems – all leads to operational bottlenecks.
This impairs System Operator abilities to create more opportunities for flex providers. If we can make it more efficient to create and launch more market opportunities with flexibility through better shared data and common interfaces, we can run more opportunities – so we’re increasing the volume of flexibility.
But this standardisation also has another benefit – by improving operational efficiency, we’re improving the unit economics of flexibility itself. It’s easier, takes less effort to launch, operate, and participate in flexibility markets. This means more value back to System Operators and crucially, flexibility providers. Which brings us onto the next key group.
Flexibility Service Providers
For Flexibility Service Providers (FSPs), there’s an over-reliance on spreadsheets and repetitive data entry because of this lack of standardisation or an open interface to interact with. So, just like for System Operators, this makes it costly and time intensive to take part. That drives up the cost of participation and creates a higher barrier to entry.
This higher bar to entry also means that smaller resources, particularly at the consumer level, will find it difficult to take part unless it becomes a lot cheaper and easier. One of the key ways Distribution System Operators (DSOs) can access more volume is to go to the lower voltage levels of the network where these Consumer Energy Resources (CERs) exists. To do that, we have to make it easier, cheaper, faster to participate in flexibility. And that’s why we need to get those standards and open protocols in place.
Market platforms
The open ecosystem will also promote competition and innovation between providers like us at Electron. We provide a market platform to facilitate this local flexibility. We’re incentivised in this competitive environment to deliver the best possible experience for flex providers and for market operators, and to continually push the envelope.
It’s our job as a market platform to continually strip out complexity and remove those points of friction. The shared digital infrastructure and an open ecosystem is the key to fostering this innovation and competition. That allows multiple providers to exist and interact, without sacrificing the quality of data or introducing too much friction in the data.
To borrow a quote from Simon Evans, Global Digital Energy Leader at Arup, in our joint webinar: we need to collaborate on the rules and compete on the game. An open ecosystem, designed in this way, is how we build the fastest, lowest cost path to Net Zero.
