Once appointed, two of the market facilitator’s key roles will be determining which market would take precedence if an asset is called upon by two different markets at the same time, and also creating stacking rules. Understanding how the different markets will interact is one of the biggest challenges facing DSOs who are trying to put together an attractive revenue case for participation in their local flexibility markets.

NGED’s Ben Godfrey says the value of deferred network reinforcement should only be the “cherry on the cake” for providers of flexibility, with the “cake” being built up by different markets stacking together.

He adds that NGED is moving away from just thinking about stack-ability, and is now looking at split-ability, jump-ability and co-ordination of services. It currently falls to the ESO to determine if assets cannot co-deliver to different markets for technical reasons, or commercial ones. “If it’s just a commercial reason then that’s really not good enough. Pulling apart these rules is quite difficult for the ESO to do and they do have a really important job maintaining the security of the system,” says Godfrey.

“But I was disappointed at the ESO for not allowing DSO services to be stackable with the DFS – they were seeking participation from domestic customers which is at a low-voltage level. Those assets have to be harvestable by the DSOs. It’s critical that we work together as we are both going to need access to those assets. We as DSOs have made all our services stackable and we really implore the ESO to do the same.”

Flexitricity’s Martin agrees that the lack of agreed interactions between the ESO and DSOs is the big outstanding issue for enabling an efficient system to develop. He adds that individual DSOs have made really good progress, but networks could find themselves with primacy rules that are “good enough” thrust upon them due to their inaction as a whole.

“The Open Networks programme has had plenty of opportunity to resolve that problem well in advance of the creation of the FSO and to establish a good model that would have created the precedent. They had the chance to do that and they have not done it. The Open Networks programme needs a very hard push to actually get these lose ends tied up.”

To build a strong revenue case, flexibility providers will need to be aware and understand the different markets and opportunities available to them. Zafar says that a lack of customer awareness is one of the biggest unanswered questions from Ofgem’s point of view, and it would like to be receiving more answers from energy suppliers about how this is going to be tackled.

“When we did the call for evidence on the customer journey, we asked whose responsibility it is to tell the consumer? Almost all energy suppliers said: “don’t worry about it, we’ve got it, clean up your own house,” But they didn’t tell us how.”

She continues: “We are investing billions of pounds in building a flexibility market but we have no idea if the 27 million EVs forecasted by 2035 will be 27GW of flexible load or if that equates to 27GW of additional demand that we have to meet. We are building the system around the belief that somebody will create a solution that hopefully won’t see customers constantly checking prices and switching on and off appliances.”

The choice of energy suppliers to design the DFS service around email and text prompts will not have allayed the regulator’s fears. But Zafar adds that she doesn’t think Ofgem should be intervening in what the customer journey should be, although it should have more of an idea of what the solutions in the pipeline are.

Allkins welcomes the new level of engagement energy retailers are seeing from Ofgem but says Ovo is bringing forward new propositions, and what it needs help with is removing the barriers. “We don’t need [policymakers] to innovate in the market for us, what we need is for them to deliver the landscape to allow us to do that.

“Like smart meters, we need more policy and more direction from government to say that actually smart meters are really critical to the energy transition and we need stronger incentives for customers to take part in that.”

The next step on the journey towards removing these barriers is a major consultation due to be published by Ofgem in the spring of 2024 over its plans for the FDI and also the contenders in the race for the market facilitator role.

In parallel, the creation of Utility Week’s Flexibility Forum will ensure sustained coverage and informed debate over the best and most pragmatic options for ensuring we build momentum in the development of demand side flexibility opportunities and the realisation of its value to the energy system.