National Grid ESO puts out call for input as Demand Flexibility Service trial nears end

National Grid ESO has put out a call for input regarding its Demand Flexibility Service (DFS) as the trial period comes to an end.

Announced initially in a webinar last week, the operator said it is keen to continue collaborating with the energy industry. It now has the opportunity to process the success of the DFS, overcoming and removing some of the barriers facing the industry and developing opportunities to maximise a potential future service, it stated.

As such, it is calling on the industry to provide feedback to inform the future of DFS, with a closing date for responses of Monday 3 April at 10am.

“We appreciate this is a tight turn around however the information from this Call for input will inform the content of four deep dives workshops which will take place in April, see below for the provisional dates,” stated the ESO.

Following the close of the call for evidence, National Grid ESO will release registration details for these deep dives, and confirm the topics they will focus on.

These will be run on:

• Deep Dive Session 1 – 18th April 10:00 – 12:00
• Deep Dive Session 2 – 18th April 14:00 – 16:00
• Deep Dive Session 3 – 20th April 10:00 – 12:00
• Deep Dive Session 4 – 20th April 14:00 – 16:00

DFS was launched back in November 2022 as a new Enhanced Action available to the ESO for the winter period, which was expected to be exceptionally tight. Its initial trial period is set to finish at the end of March, meaning the learnings from the service are becoming increasingly clear.

The ESO runs two test events a month over an hour during weekday evening periods, as well as additional onboarding tests as and when they are needed.

There are now 31 approved DFS providers, providing c.350MW of contracted capacity.

Providers that joined in November have been able to participate in a maximum of 12 test events throughout the period, as suppliers all get two onboarding tests, and are subsequently able to play into the two monthly tests.

In total, there have now been 18 test events throughout the period (see chart below). As of the ESO’s presentation last week – therefore before the most recent two tests – DFS test events had delivered c >1.6GWh of capacity.

As well as the test events, there has also been two live uses of DFS. The first of which ran from 17:00 and 18:00 on 23 January, and saw the operator request 323MW in the first half an hour and 336MW in the second.

The second live event ran just the day after on 24 January between 16:30 and 18:00, with 274MW required for the first half an hour, 330MW for the second and 341MW for the final half an hour. Combined the live events have delivered c.0.6GWh.

DFS has generally been viewed as a success, highlighting the value of domestic demand flexibility in Britain. Indeed, Octopus Energy called for the end of back-up coal generation given the potential of DFS to scale to meet the total requirement.

But one remaining challenge as highlighted by the ESO’s presentation is the cost of the service in its current form, with the operator spending around £5.6 million on the tests, and £3 million on the live events.

For the trial period the ESO set a guaranteed acceptance price of £3,000/MWh (£3/KWh) for providers of flexibility within the service. This has proved to be well above the average Day Ahead prices over the winter, which have been kept stable due to mild weather and strong wind generation.

Indeed, even during a stress event earlier in March where the operator had to use its other Enhanced Action options – the contingency coal units – while imbalance prices did surge, they still sat below the £3,000/MWh mark, at £1,950/MWh.

The cost of the service will be a key consideration for the ESO as the trial period comes to an end, and it is able to look at the future use of it.

With the worst of the winter weather expected to be past us, wholesale prices down dramatically on Q4 2022, and lower demand during the summer on the horizon, the operator, the industry and the government can start to plan for the 2023/24 winter, taking into account this years learnings.

As such, the Government last week called on the ESO to explore the potential of signing contingency coal contracts for the coming winter.

However, Drax, EDF and Uniper – who all signed contracts to provide coal-based back-up services this winter – have confirmed to Current± that their assets will not be available for the next year. This could potentially add weight to the operators plans for DFS going forwards.

To respond to the ESO’s Call for input: The future of the Demand Flexibility Service (DFS)  follow this link.

DFS Test Events: