Engaging consumers on the journey to a decarbonised and flexible future energy system
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Ofgem is seeking input on how to best attract domestic energy users on a journey to becoming flexible energy consumers able to reap the benefits of a net zero energy system.
Today Ofgem has issued a call for input on how best to engage domestic consumers in Demand Side Response (DSR). This concept enables Great Britain’s rising electricity consumption – resulting from growing numbers of electric vehicles (EVs) and electric heating systems – to better match GB’s increasing number of intermittent renewable energy sources, such as wind and solar power.
Domestic DSR is a key element in achieving Government plans to decarbonise the energy system by 2035. It is a concept driven by domestic consumers adjusting their consumption in response to the needs and requirements of the energy system and being rewarded through reduced bills.
It’s anticipated there will be many different ways for consumers to engage with Domestic DSR both manually and via automation. The simplest and most common method of engagement is expected to be automated DSR. This could involve consumers who wish to engage in DSR configuring smart devices such as EV charge points and heat pumps with default off-peak time settings, optimising consumption against Time of Use Tariffs and choosing to have a third party manage their participation in flexibility markets. For example, when wind is generating lots of electricity, consumers could take advantage of flexibility by charging an Electric Vehicle (EV) on lower time of use tariff prices.
New market reforms and regulations are being developed and implemented to manage the expanding domestic DSR market and ensure consumers and the energy system are protected, both now and in the future. All of this is underpinned by greater digitalisation and decentralisation, which enables better monitoring and response to grid activity, and better use of an increasing number of local grid assets, such as wind and solar farms.
However, for domestic DSR to work at scale and provide benefits to the energy system and consumers, it also needs large scale consumer participation – something which is by no means a given. So, Ofgem is seeking input from stakeholders on how to facilitate the transition to consumers becoming flexible energy consumers.
Marzia Zafar, Deputy Director of Digitalization and Innovation at Ofgem, said: “Domestic Demand Side Response (DSR) is about optimising the way we consume energy, so it works best for a decarbonised energy system and consumers. The key to unlocking high consumer uptake is making it both attractive and easy to participate in.”
She added: “It is not Ofgem’s role to specify what this domestic DSR journey should look like, but it is important that it is not left to chance. Therefore, as the regulator we are seeking input from a wide range of stakeholders including those working in industry, the providers of smart home and transport assets, consumer representatives and other parties' interested in flexibility.
“This will help build a shared vision of what the emerging domestic DSR customer journey should look like and how to make that vision a reality.”
Ofgem plans to hold a series of workshops this autumn which will consider the responses received to the call for input.
The call for input is now open and will close on Friday 29 September 2023.
Anyone interested in being involved, can read the document or express an interest in participating in the workshops by emailing consumerflexibility@ofgem.gov.uk.
Notes to editors
The Government have committed to decarbonising Britain’s electricity system by 2035 and to bring all greenhouse gas emissions to net zero by 2050.
As a result of Government net zero demands the number of electric vehicles (EVs) in the UK is currently predicted to increase from over 1 million today to 11 million by 2030. The Government has also set a goal of deploying 600,000 electric heat pumps per year by 2028. Consequently, electricity demand is predicted to increase by 50% by 2035. This will put significant pressure on the electricity networks and require significant additional energy generation and investment in additional network capacity.
At the same time, Britain will increasingly rely on renewable energy to meet decarbonisation goals. For example, there are already plans in place to increase the UK’s offshore wind capacity from 13.7GW in 2022 to 50GW by 2030. It is expected that solar capacity could reach 70GW compared to 14GW capacity today. However, unlike fossil fuel generation, such as gas fired power plants which can be turned on and off as needed, many forms of renewable generation provide an intermittent supply.
These changes present a challenge for balancing supply and demand in the electricity system, as we will be moving from a system where supply was almost always varied to match demand, to one where we will require rising demand to be more flexible to match more intermittent supply. To manage this challenge, we need to ensure that electricity demand can better correspond with less predictable supply.
Increasing flexibility in the energy system is an essential component of effectively managing these challenges to our system, as previously set out in the joint Ofgem and the government’s ‘Smart Systems and Flexibility Plan 2021’ and government consultations such as ‘Delivering a smart and secure energy system’.
Flexibility can significantly reduce the amount of new generation and network infrastructure investment needed by reducing peak load on the system and ensuring that our future energy system is efficient, adaptable, and resilient. To achieve this, previous work by Government and Ofgem suggests the amount of flexibility in the energy system may need to increase from 10GW in 2021 to 30GW by 2030, and 60GW by 2050.
Flexibility can be delivered by both supply and demand side. One cost-effective form of flexibility is Demand Side Response (DSR), which entails consumers adjusting their energy consumption in response to the needs and requirements of the energy system, while still enabling consumers to use the electricity they need. Consumers could do this manually or automatically through a third party.