Following the success of the Demand Flexibility Service (DFS) last year, National Grid ESO (ESO) has confirmed the scheme will return this winter – but what’s changing?
The DFS was introduced in response to the volatility of the energy market this year to help maintain the secure operation of the electricity system.
Running from 3 November 2022 to 31 March 2023, the service sees the ESO send signals to DFS participants asking to reduce demand during constrained periods on the grid.
The scheme was hugely successful with 1.6 million households and businesses partaking in the service and shifting over 3,3000MWh of electricity.
ESO held a review of the winter 2022/23 DFS calling for industry input and hosting ‘deep dive sessions.’ The results of this review were collated into terms for consultation which were presented to the industry, before being reviewed again by ESO, and sent to Ofgem for review and approval.
The 2023/24 scheme is anticipated to go live in October 2024 subject to Ofgem approval.
ESO has confirmed that the DFS will remain an enhanced action for winter 2023/24, allowing the operator to deliver both test and live events. There is also no defined end-date to the service this time, to allow for further development of the scheme.
Significant updates
ESO highlighted that there will be a number is significant updates to this winter’s DFS scheme in response to the consultation – these include:
- Within-day dispatch options added as an alternative to day ahead (as used last winter) to bring the DFS closer to real-time dispatch.
- Removal of the domestic in-day baseline adjustment to counter perverse incentives.
- Providing opt-out options in which providers can settle on the net reduction, as well as opt-in whereby only positive reductions are settled to give flexibility on how the service is run.
- “Onboarding” and “regular” tests replaced with pure “DFS tests” meaning that all providers will be tested on the same day. There is a possibility that, due to volumes, tests will run at different hours, but always on the same day.
- Introducing automated daily checks for MPAN (unique electricity meter number) duplications.
- New rules around last entry sign-up having the right to MPAN, which caused issues last year.
- Asset metering allowed in place of boundary metering, providing certain criteria and conditions are met to ensure that behaviours out of a participant’s control don’t affecting their delivery. Asset metering can provide a lot of volume so ESO has aimed to open this up as much as possible.
- Half-hour settlements required for all participating meters, to mitigate perverse incentives. Exceptions to this include providers on a domestic boundary meter and Profile Class 3&4.
Smaller updates to the service include, introducing the ability to update the Weekly Indicative Forecast and adding a contractual obligations to evenly apportion individual MPAN over-and-under-delivery between units.
Altogether, the ESO expects to run a total of 12 test events between November 2023 and March 2024, with the Guaranteed Acceptance Price (GAP) for the initial six tests (until 1 January 2024) staying at £3,000/MWh.
The remaining tests could either continue at the GAP or, subject to participation numbers, could become competitive.
Initial indications suggest 2-3GW of total participating volume threshold for the 23/24 DFS, but this will be confirmed by ESO following its Winter Outlook Report.
