Understanding flexibility services
What are the different flexibility services available?
Flexibility services are a range of existing and developing solutions that electricity system users can provide to help balance demand and supply in the electricity network and support its efficient use.
Our definition:
Making temporary changes in the way you consume, generate, or store electricity when requested, to support a more efficient use of the energy network.
A flexibility provider is a user who provides flexibility services by making temporary changes to the way they consume, generate, or store electricity when requested.
Characteristics of different flexibility services
Flexibility services cover a range of services. Their characteristics include:
The type of flexibility you are providing
For example:
- Generators (this can range from people in their homes through to large solar parks and power stations) can offer to increase or decrease their generation level
- Energy consumers (from individuals to industry) to can increase or decrease their consumption level
- Energy storage such as batteries or heat/cold stores can increase or reduce their level of storage
- Generators and energy users can trade capacity – contracted rights they may have – to import or export a level of electricity at any one time between themselves.
The market with which you contract
Flexibility services are generally traded through markets that use auctions to match buyers and sellers. There are three key markets for flexibility services:
- Energy System Operator (ESO)
National Grid buys flexibility to balance national demand and generation across the electricity system in real-time.
- Distribution Systems Operators (DSO)
The operator of your local distribution network (DNO) may buy flexibility to manage constraints and congestion in the distribution network. This can help prevent a fault developing on the network or assist in reinstating the network following a fault should one occur. In the longer term, as the DNO transitions to its new role as a DSO it may use flexibility services to avoid additional investment in new equipment, enable more renewables to connect to the network and support the decarbonisation of heat and transport. - Other electricity system users may wish to contract directly with each other (peer to peer) so they can increase the amount of electricity they can generate or consume at a particular time without causing stress on the network.
The minimum flexibility level to take part
There is usually a minimum amount of flexibility you need to be able to offer in order to participate in a market. This varies by market, but current minimum levels exclude the vast majority of potential flexibility providers from participating, unless they can combine their flexibility with others.
Whether the contract is direct or indirect via a third party
Large flexibility providers can participate directly in the markets. Providers with less flexibility to offer may be able to use the services of third parties who help pool, or aggregate, the flexibility from a number of smaller providers so they can participate collectively.
The auction period you have to make your offer
Flexibility markets usually operate using auctions. Auctions for flexibility are open from a few hours (for flexibility delivery that day) through to months (for flexibility to be delivered months or years in the future). This depends on the market and type of flexibility service.
The delivery notice requesting your flex delivery
The notice period that winners of auctions get to deliver their flexibility varies from a few seconds to a month depending on the market and type of flexibility service.
The delivery duration of your flexibility
Flexibility services are typically delivered for periods ranging from 30 seconds through to eight hours. Specialist services to support planned changes to the network could last for months.
The maturity of the market
Some services are long established, others are still under development or only operating as trials.
The details of a flexibility service to be provided are set out in the contract between the flexibility provider and the buyer. The contract will cover:
- What: The flexibility service to be provided.
- When: The start and end of the delivery period.
- How much: The amount of flexibility to be provided (in kW) and the price.
Who can take part in flexibility markets?
In theory, any equipment that generates, uses, or stores electricity (an ‘energy asset’) has the potential to be a source of flexibility. In practice however, not all are suitable or capable of providing flexibility in a way that’s useful, or meets the needs of the flexibility markets. For example, they may not:
- respond quickly enough to meet the flexibility service requirements
- meet the minimum duration period required
- provide the minimum level of flexibility required
- be located in the area where the flexibility needs to be delivered.
In addition to understanding which flexibility services they are best suited to delivering, a potential flexibility provider also requires:
- a control and measurement system that enables the asset to respond to signals and monitors its activity
- direct or indirect access to a market into which to sell their flexibility.
Glossary
We’ve also published a glossary to some of the technical terms used by Project LEO.
Find out more about the different flexibility services on the cards below
The Balancing Mechanism is the main means by which National Grid balance generation and demand. It is a market that allows National Grid to buy additional increase in generation or reduction in demand in order to balance the generation and demand predicted for each half hour period of the day.
To participate in the Balancing Mechanism your asset needs to be able to respond within three minutes notice and for varying lengths of time. You also need to know that your asset is available to generate. This is therefore not appropriate for wind or solar, but could be delivered by a battery.
The Capacity Market is the means by which National Grid ensures that it can meet the highest peaks in demand that occur in the electricity system. It has traditionally been met by power stations who are paid to be on stand by to respond quickly to meet peaks in demand.
Assets can either increase generation or decrease demand and must be able to respond within four hours for varying lengths of time. You need to know that your asset is available to generate. This is therefore not appropriate for wind or solar, but could be delivered by a battery and other flexible generation, like gas turbines or turning down demand.
Dynamic Containment is a new service that is designed for delivery by batteries and requires a very fast response time of one second.
It is used when there is an unexpected imbalance in the system (not anticipated through Balancing Mechanism) which affects the quality (frequency) of power. It’s used to quickly bring the system back into balance.
This is a new service created in response to an increasingly decentralised electricity generation model. Others like this may be needed in the future.
Optional Downwards Flexibility Management is a new service that has been developed to respond to extremely low levels of demand on the network.
It is run through an auction and pays large renewable generators, such as wind and solar (recouping them for lost generation sales) to shut down.
It was developed in response to low demand created by the Covid-19 pandemic, but could be used again, especially in summer periods when there is lots of solar PV generation and low level of demand.
In principle this service could be delivered by both community-scale wind and solar farms. You need to be able to control the asset and so this requires some investment in hardware installed onsite.
Short Term Operating Reserve (STOR) is a service similar to Dynamic Containment in that it responds to unpredicted imbalances in generation and demand, but works on a slightly longer response time.
If the imbalance persists and the Dynamic Containment response cannot deliver for a long enough period of time to solve the problem, then other providers (that perhaps can’t respond quickly) are able to provide this service for a longer period of time until the issue is addressed.
To participate your asset needs to generate when called upon and so isn’t suitable for wind or solar, but could be delivered by a battery, although gas and diesel are frequent providers.
This service has currently been suspended by National Grid but they are looking at using it again in the future.
Sustain Peak Management is a service used in ‘winter tea time’ situations in which the demand for electricity is predictably at its highest. This creates stress on parts of the network, such as overloading a transformer.
To prevent this, the DSO will ask and pay for an increase in generation, decrease in demand, or call on locally stored power in batteries.
To participate the flexibility provider must know they will be able to generate (or discharge) power at this time therefore it is not suitable for wind or solar, but could be delivered by a battery, demand response or hydro.
Sustain Export Peak Management is a service to prevent parts of the electricity infrastructure (such as a transformer) being overloaded by an excess of electricity generation.
It is similar to Sustain Peak Management but instead of responding to increase in demand, it is responding to too much generation.
It can be delivered by batteries or a hydroelectric plant.
Secure DSO Constraint Management (pre-fault) is a flexibility service that increases generation (or discharges a battery) or decreases demand in order to address an emerging issue that could result in an unplanned outage if not addressed.
For example if part of the network has two transformer operational, but one develops a fault. As a result the transformer that remains operational will be overloaded if action isn’t taken to mitigate excess generation or demand.
These situations are not predictable and so to participate, a provider must be able to respond quickly and possibly for longer periods of time. It is not suitable for wind or solar generation.
Dynamic DSO Constraint Management (post-fault) is similar to the pre-fault service, but is designed for restoring the system back to normal operations following a fault.
It delivers flexibility after an unplanned outage to help restore electricity to a network area or relieve pressure on the system so it can recover.
Exceeding Maximum Export Capacity (MEC) is when a generator trades a portion or all of their export capacity so that another generator can increase its export capacity for an agreed period of time without affecting the network.
Every generation site has a contractual agreement stating how much electricity it can export to the grid, but in reality they may be able to produce more than this. E.g. a solar park may be capable of generating more, but is capped contractually as to the amount it is allowed to export into the grid. You can rent out, or trade, this capacity to other energy assets.
These can only happen with DNO agreement and each partner needs to be connected to the grid at the same point for it to work, ie. primary or secondary sub station.
Exceeding Maximum Import Capacity (MIC) is when one sites trades a portion of their import capacity to allow another site to increase their import capacity for an agreed period of time without affecting the network.
The Maximum Import Capacity (MIC) is the upper limit on the total electricity a customer can take at any one time. These limits are established as part of their contractual agreement with their network operator. One energy generator/consumer can restrict the use of its import and sell this to another generator/consumer so they can increase their own import by the same amount.
These can only happen with DNO agreement and each partner needs to be connected to the grid at the same point for it to work, ie. primary or secondary sub station.
Offsetting happens in a constrained area, which is where there is limit to the amount of generation or demand that can happen in that section of the grid.
It is where you find a way of matching a local increase in demand with local increase in generation at an agreed time.
This gives a net zero effect, cancelling out the impact on the network and yet allowing more energy to be generated and used.
Assets involved in the provision of flexibility services may also trade electricity supply in the wholesale electricity markets.
This means, an energy asset with the ability to increase generation or reduce demand will announce it has X amount of flexibility for this period of time. This is offered to the market, usually a day ahead or on the day. This service is conducted by aggregators, generators, suppliers and traders.
Time of Use Tariffs provide an incentive, via tariff price signals, to the customer to manage when or how much electricity they consume in order to access reduced electricity costs in response to the tariff price signals.
This is relevant to small businesses and residential consumers.
A few suppliers also offer more generic Time of Use tariffs that could benefit those customers who can use flexibility to manage demand to reduce electricity costs in response to the tariff price signals or who due to their lifestyles consume most electricity outside of peak time.
Large industrial and commercial customers are exposed to additional charges based on their electricity consumption on the three half-hours of the year when electricity demand in the UK is at its highest.
This charge is used to motivate reduction in overall peak demand on the system and customers who are able to use flexibility from generation on site or reduction in demand could acheive substaintial reduction on their bills by reducing consumption at these three half-hours.
Typically these half-hours occur between October and March and are separated by at least 10 days.
Small and medium industrial and commercial customers are exposed to additional charges on their bills from the Distribution Network Operator that is based on their electricity consumption during the peak demand periods on the local network – known as ‘Red Band’ and ‘Superred’ periods.
Customers with electricity generation could receive a benefit if exporting power during these peak demand periods.