In late 2019 we completed a major study into the market status, challenges and lessons learnt for European Distribution System Operators (DSOs) using demand side flexibility to manage their networks.
The study identified that the UK is the leading market in Europe – and probably the world - in terms of DSOs utilising demand side flexibility, with the Netherlands quite close behind. In most other countries, projects have not moved beyond pilots or trials.
Activity remains at a high level. It seems like barely a week goes by without a new announcement related to DSO flexibility. Admittedly most of the recent announcements are still coming from UK DNOs*, many of which have released statements in the past three months related to new rounds of the commercial procurement of flexibility.
The kicking off of WPD’s IntraFlex project is just one example of a recent exciting development. This project is likely to cement WPD’s position as one of the leading DNOs/DSOs when it comes to using flexibility to help manage their network.
But this is not to say that things aren’t happening in the rest of Europe too. There is also a lot of activity across Europe in terms of research projects and trials. One of the key drivers is the Clean Energy Package (CEP). The CEP is going to see DSOs and EU member state regulators take flexibility more seriously, whether they like it or not! Member states have until 2021 to fully translate the CEP into national law. So, it seems the days when the solution to most DSOs’ problems was digging up the road to put in a bigger cable are coming to an end.
However, it won’t all be plain sailing. In particular, I believe regulators have a critical role to play and will significantly influence how quickly demand side flexibility can become business as normal. In many cases they are simply supporting the use of flexibility through high-level incentives and encouraging statements rather than mandating any specific actions. In my view, in many countries it seems regulators are lagging behind the market, and there is clear value in learning from new and best practices over the border.
Another factor that will shape the future market is the type of flexibility / asset responses that DSOs value most. The different network operators all have their minimum response requirements and we have seen these rapidly evolving. One trend that has been clear is for DSOs to decrease the minimum allowed asset size. Some DSOs started off their flexibility procurement rounds with a minimum assets size of ~1MW. In many cases this minimum asset size has now decreased, even to as low as a few kWs. In the case of WPD, they have no minimum asset size at all!
So how quickly will demand side flexibility become business as usual? Based on what Delta-EE is seeing in the UK, Netherlands and across Europe, we will be surprised if this doesn’t happen within the next 3-5 years in the leading markets.
If you are looking to get on top of what is happening in this space and make the most of this rapidly evolving market – please get in touch.
* What the UK calls DNOs are called DSOs in the rest of Europe.