The Electricity System Operator (ESO) has just launched the 2023/24 Demand Flexibility Service.

This is an incentive scheme to get businesses and customers to reduce their power requirements at certain times. We have previously blogged about the 22/23 scheme, which was judged a success, with 1.6 million households taking part and saving over 3,300MWh of electricity.

The focus for 23/24 remains on learning about demand flexibility, with a series of planned test events “and where necessary, live events.” There are 12 planned test events for Nov 23 – March 24.

Automation of the process continues to evolve across the entire scheme, from the interactions with end-consumes through to evolving the service to be able to deliver a real time alert from the ESO.

Octopus Energy, in true Octopus style, have gamified the test events, calling them Savings Sessions and offering customers the opportunity to earn “Octoplus points.” We think this is great, principally as a way to try and engage more people in taking an interest in their energy consumption.

The underlying premise of the Demand Flexibility Service though is to be able to respond to a serious “event”. This is more likely to be an unplanned power plant shut down rather than an expected shortfall in supply from renewables. A prolonged renewables shortfall is going to need more than simply cooking your dinner one hour later.

Virtual Power Plant

Eventually we would expect some form of automation to be involved, whereby the ESO sends out a short notice alert, and then draws power from home storage batteries and electric vehicles. This additional power drawn from a distributed virtual power plant could realistically stand the gap for a few hours whilst additional generation capacity is brought online.

We expect this is technically feasible now, since the API between Octopus and GivEnergy means that when to charge is an automatic feature of the service. Perhaps there would be some kind of agreement between the end-user and the supplier, whereby in a live alert situation, the supplier is authorised to draw a maximum proportion of the remaining battery power at no-notice, but agrees to put that power back into the battery within 3 hours, for instance.

An alternative to the emergency situation where power is automatically drawn, is simply to offer to pay customers a genuine market price for any electricity they export to the grid at certain times. This seems to be in scope judging by this comment from Octopus:

“Yes, customers who generate and export electricity (via solar panels, for example) can take part in Saving Sessions, and we’ll credit you for any extra exporting you do compared to usual.”

It would seem reasonable that in a live / real situation, the payment to the customer supplying energy is at least on a par with the cost levied to consumers drawing power at that time. So if the standard rate is 29 pence per kWh, then customers should be paid something approaching 29 pence compared to the 4-8pence they are presently paid.

If you wail “but the cost of electricity reflects more than simply the generation cost”, then we would point out that Octopus Agile pricing varies greatly during routine conditions, with prices as high as 60-70 pence per kWh not uncommon. It therefore seems perfectly legitimate to pay battery owners at least 29 pence per kWh of energy discharged during emergency events.

Afterall, the owners of the batteries have provided all the capital investment required for their batteries at no cost to the network, so this is a very inexpensive solution for the ESO to avoid a shutdown across its network.

We look forward to seeing how the Demand Flexibility Service evolves.

Brimstone Energy – For the Green Energy Transition.