Flexibility markets: a UK case study

James Johnston's presentation from Enlit 2022, featured at the Democratisation Hub

Transcript

1. © Open Utility Ltd
   Enlit 2022
   Flexibility Markets:
   A UK case study
   

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2. 2
   © Open Utility Ltd
   ● End-to-end platform to connect
   DSOs and flex service providers
   ● Competition-based approach to
   sourcing flex at lowest cost per MW
   ● Proven methods for engaging
   market & driving participation
   ● Ecosystem of FSPs to accelerate
   market liquidity
   Piclo is an independent marketplace for flexibility services
   Select clients
   2
   

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3. 3
   © Open Utility Ltd
   Local Flexibility markets set to be worth $10bn+ by 2029
   3
   DSO Flexibility Markets Participating Capacity and
   Revenue by Region, World Markets: 2020-2029
   Source: Chart data from Guidehouse Insights, Flexibility Markets and Enabling Technologies (Q3 2020)
   Flex revenue ($millions)
   

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4. 4
   © Open Utility Ltd
   Local flex
   flywheel effect
   4
   DSOs gain
   confidence
   ↑ need for
   flexibility
   ↑ FSP
   confidence
   ↑ market
   liquidity
   Increased stresses
   on the network
   Local flex
   transactions
   Stronger regulatory incentives
   More investment
   into flexibility assets
   Improved marketplace services
   

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5. 5
   © Open Utility Ltd
   Stronger regulatory incentives: RIIO-ED2 in the UK
   5
   The RIIO framework for Distribution System Operator revenues has shaped the UK into a leading market for flexibility
   services.
   New RIIO-ED2 begins in April 2023:
   ✓ Totex Incentive Model drives the most cost-effective solutions
   ✓ New DSO Incentive Mechanism
   ○ Baseline expectations: network development, network operation, market development
   ✓ £80m/year by 2028 on flexibility services outlined in DSO business plans
   Incentives
   Revenue Innovation Outputs
   + +
   =
   

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6. 6
   © Open Utility Ltd
   6
   DSOs are gaining confidence: UK market growth 2019 to 2022
   2019 2020/21 2022
   

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7. 7
   © Open Utility Ltd
   7
   Grids across Europe and US have accelerating levels of stresses based
   a multitude of factors:
   ● Continual increase in demand: new housing and growing urban
   centres, data centres and new industry
   ● Electrification of transportation and heat
   ● Distributed renewable generation
   ● Climate change and extreme weather
   ● Aging infrastructure
   Severe bottlenecks and grid stability issues are already present in
   multiple areas, these will only exacerbate further and spread across
   wider regions as we go through the energy transition.
   Increased stresses on the electricity networks
   

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8. 8
   © Open Utility Ltd
   Ad-hoc issues: support for maintenance works, abnormal power flows due to faults, extreme weather
   Voltage constraints: active and reactive power issues due to concentration of DER
   Network restoration: starting-up the local network again following power outages
   Increased need for flexibility
   8
   Forecast thermal congestion: reinforcement avoidance or deferral
   Unlocked with increased DSO ability
   Primary use case for local flex today
   Capacity allocation: better allocation and trading of capacity rights amongst connected parties
   Fault levels and inertia: ensuring system strength under high DER deployments
   Powerline loss: minimising losses through local balancing
   Asset conditioning: maximising lifetime of assets
   Networked microgrids: management of islandable, interconnected microgrids
   Future use cases
   Emerging use cases for local flex
   

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9. 9
   © Open Utility Ltd
   Improved marketplace services
   9
   

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10. 10
    © Open Utility Ltd
    Greater FSP confidence
    10
    Marketplaces translate greater need for flexibility into greater opportunities for Flexible Service Providers (FSPs).
    

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11. 11
    © Open Utility Ltd
    More investment into distributed flexible assets
    11
    Greater FSP participation leads to further
    investment into distributed flex assets - such
    as EVs, batteries, demand-response and
    generation.
    This is important as there is currently a
    greater need for flex than the current
    availability of flex.
    Assets registered on Piclo 2019–present day
    

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12. 12
    © Open Utility Ltd
    Increased market liquidity
    12
    Year
    Standalone
    capacity
    procured (MW)
    Number
    of bids
    Aggregate contract
    award (£M)
    2019 77 100 £1.1M
    2020 88 694 £14.5M
    2021 547 6,060 £40.0M
    Volume procured on Piclo by auction year Contracted volume by service month
    Sample of companies
    winning contracts
    

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13. 13
    © Open Utility Ltd
    Flywheel effect:
    lessons learned
    13
    DSOs gain
    confidence
    ↑ need for
    flexibility
    ↑ FSP
    confidence
    ↑ market
    liquidity
    Increased stresses
    on the network
    Local flex
    transactions
    Stronger regulatory incentives
    More investment
    into flexibility assets
    Improved marketplace services
    

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14. Book a demo
    comms@piclo.energy
    www.piclo.energy
    Get in contact
    

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