Electricity system flexibility

Being flexible with how and when we consume and produce energy means we can make sure the power generated and delivered to us always matches the amount we use.

As the energy regulator for GB, we want to make sure that the rules governing how electricity is bought and delivered will allow consumers and industry to draw as much benefit as they can from network flexibility.

We define flexibility as ‘modifying generation and/or consumption patterns in reaction to an external signal (such as a change in price) to provide a service within the energy system’.

To date, the energy industry has typically provided flexibility on the ‘supply-side’. For example, to make sure supply always matches demand, electricity power stations have changed how much they produce. Network operators have also built enough cables to make sure electricity can always be transported to consumers. But our energy system is changing, and continuing to rely on supply-side solutions alone would be expensive. New ways of providing flexibility are emerging. They can help us deliver against our carbon commitments, while providing reliable and secure supply at minimum cost.

New flexibility methods

Demand-side response: Consumers (the ‘demand-side’) can sign up to special tariffs and schemes which reward them for changing how and when they use electricity (known as ‘demand-side response’). Smart meters and other technologies will make this easier than ever for domestic consumers. DSR is an important part of our vision for a flexible energy system. You can access our publications on DSR below.

Energy storage: We can use batteries or other forms of storage to store energy when it is plentiful, or when there is too much for network cables to carry. This energy can then be used at a time when it’s needed.

Distributed generation: We can use low carbon electricity we generate locally at home or at work, such as from a rooftop solar panel, to help reduce the costs of transporting it and save money on bills.

Doing more of all these things could help us to integrate more sustainable energy sources, like wind-power, into our supply system.

We’re looking at how current rules and regulations may prevent consumers and other system users, both old and new, from doing so.

Our work

We are prioritising a number of work areas to ensure that rules and regulations support an efficient, flexible energy system. See our position paper to find out how flexibility benefits consumers and other system users, both old and new.

Specifically, we are working to facilitate new roles for industry parties by: 

  • exploring how to support more large industrial and commercial customers to participate in providing flexibility 
  • encouraging Distribution Network Operators to take a more active role in network management, move to future Distribution System Operator roles and engage effectively with the System Operator. 

We are working to remove barriers for new business models by clarifying:

  • the role of aggregators in the market
  • the legal and commercial status of storage.

We are also considering whether distribution network tariffs need to change to support efficient flexibility across the value chain. 

We look forward to progressing these as part of the ‘Smart Flexibility Joint Project’ with DECC, intended to manage the transition to a smarter energy system. Outputs can be found in the publications and updates list below. Our workstreams also contribute to a wider portfolio of related work in Ofgem, looking at issues related to the future development of the energy network. You can find out more about these at:

  • Work Stream Six – a working group of the Smart Grid Forum looking at the commercial arrangements for DSR.
  • Promoting sustainability – for details on our sustainable development initiatives to promote energy saving and DSR.

Need help?

For further information on our work within energy network flexibility,  to share thoughts or comments, or register interest for an individual workstream, please email flexibility@ofgem.gov.uk

Publications and updates

  • Published: 10th Nov 2016
  • Reports & plans
  • 1 Associated documents
PA Consulting have produced a report for Ofgem on the provision of Demand Side Response services by independent Aggregators.

  • Published: 10th Nov 2016
  • Open letters & correspondence
  • 1 Associated documents
We want consumers to benefit from a Smart, Flexible Energy System and are following up our Flexibility position paper last year with a joint call for evidence with BEIS.

  • Published: 10th Nov 2016
  • Reports & plans
  • 1 Associated documents
This report by DNV-GL examines the regulation of electricity storage in three international locations: Ontario, Germany and PJM.

  • Published: 18th Oct 2016
  • Reports & plans
  • 2 Associated documents
Analysis of the responses to our survey about demand-side response (DSR) in the industrial and commercial sector.

  • Published: 4th Apr 2016
  • Consultations & responses
  • 0 Associated documents
We have conducted a survey about demand-side response (DSR). The survey closed on 31 May and we are analysing responses to better understand any barriers which may exist to industrial and commercial (I&C) consumers’ ability to provide DSR.

  • Published: 30th Sep 2015
  • Reports & plans
  • 1 Associated documents
This paper outlines the areas of work we will be taking forward as a priority in the coming year to ensure regulation supports an efficient, flexible energy system.

  • Published: 29th Jun 2015
  • Open letters & correspondence
  • 1 Associated documents
Demand-side response: How we will consider approaching enforcement action following DECC's policy intent that credit cover should be maintained at a level of £500/MW for demand-side units participating in the capacity market transitional auctions.

  • Published: 28th Jan 2015
  • Open letters & correspondence
  • 1 Associated documents
This letter explains our new Flexibility project and gives you an update on ongoing Ofgem projects that interact with this new piece of work.

  • Published: 16th Dec 2013
  • Consultations & responses
  • 1 Associated documents
This document outlines our conclusions from the April consultation ‘Creating the right environment for demand-side response’.

  • Published: 30th Apr 2013
  • Closed: 28th Jun 2013
  • Consultations & responses
  • 45 Associated documents
This consultation seeks stakeholders’ views on whether developments across the industry are sufficient to meet our longer-term objective; to create a market environment that supports efficient system-wide use of demand-side response.

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