Source · Select Committees · Business and Trade Committee
Recommendation 53
53
Deferred
Paragraph: 217
Mandate National Grid ESO and Ofgem to develop transitional demand-side response services with industry.
Recommendation
To build on the success of the Demand Flexibility Service and ensure that demand- side response can become mainstream, the industry needs the opportunity to do more learning by doing. While necessary system reforms take place to create a more enabling environment for demand-side response, we recommend that National Grid ESO and Ofgem work with industry on developing a transitional demand-side response service that can support existing day-to-day balancing services.
Government Response Summary
ESO is currently evaluating the existing Demand Flexibility Service with industry participants and consumers, with outcomes to be published later in the summer to inform its future evolution. Ofgem will support this review for a potential further rollout for winter 2023/24.
Paragraph Reference:
217
Government Response
Deferred
HM Government
Deferred
122. [Response provided by ESO] Across Winter 22/23, 1.6 million households and businesses signed up to participate in 22 service events across the winter, covering both live events to balance Great Britain’s electricity network and monthly test events to deliver savings for consumers, demonstrating interest and enthusiasm for consumer flexibility on a scale not previously seen in the UK. 123. Introduced as an enhanced action to support operation of the network during Winter 22/23, the Demand Flexibility Service was used twice for live events in January 2023 to support the management of the electricity system. While the ESO’s day to day operational tools allowed it to operate the network as normal without the active use of the Demand Flexibility Service to manage margins, this service demonstrated the level of interest and engagement in consumer flexibility. 124. The national smart meter network, operated by the Data Communications Company (DCC), also played an important role in facilitating greater consumer participation, helping to connect consumers to a new range of smart applications used by providers for this service. 125. The ESO is undertaking a holistic review of the Demand Flexibility Service alongside industry participants and consumers to assess how the service could be improved in future. The outcomes of this review will be published later this summer, and will inform decision making around the future evolution of the Demand Flexibility Service. 126. [Response provided by Ofgem] ESO is gathering data and evaluating the Demand Flexibility Service, including through the appointment of the Centre for Sustainable Energy and Element Energy, to lead an innovation project exploring the customer experience of participating in the service. 127. Ofgem considers it is important to try to make demand flexibility both universal and automatic, so that consumers do not have to put in as much manual effort to participate and/or benefit from flexing their demand. 128. Ofgem will support the ESO’s evaluation activities as it reviews the service for a potential further rollout for winter 2023/24 and stands ready to act when necessary.