Your ad blocker is interfering with the navigation and interactive features of this document. PLEASE DISABLE TO ENJOY THE FULL READING EXPERIENCE.
Barriers to progress
The energy industry faces an uphill battle in increasing the level of participation in flexibility markets from small-scale distributed assets and residential customers.
These barriers include delays in the arrival of market-wide half-hourly settlement (MHHS), restrictive system codes and market rules, outdated IT systems and challenges building revenue cases for market participation due to a lack of clarity on how flexibility markets will operate. These challenges are linked to persistent questions over the requirement for some kind of market facilitator to help address challenges and govern a smoothly operating flexibility marketplace.
In its Future of Distributed Flexibility call for input, these barriers were identified by the regulator, Ofgem, who grouped them – and others – into four key underlying market failures: imperfect information, limited oligopsony market coordination, a structural lack of trust, and market-specific issues.
Ofgem is trying to address a number of these failures and underlying challenges for flexibility market participants through the creation of a common digital energy infrastructure or Flexibility Digital Infrastructure (FDI). It hopes this will improve market transparency and coordination and its work has been broadly welcomed by industry as a positive step. However, there are concerns over the timeline for implementation.
Indeed, questions are being asked about how to balance a desire to achieve consensus on the right market arrangements with the need to drive change forwards and hit targets for cost-effective system decarbonisation. Even with Ofgem taking a mandate to address market failures, can the necessary momentum be created across the market to deliver required changes?
In this report, produced by Utility Week in association with CGI, we explore these questions with leading industry commentators. Their reflections are grouped into three main areas:
A new Flexibility Forum
This report marks the beginning of a major new initiative from Utility Week, designed to support momentum and ambition in tackling barriers to development of vibrant energy flexibility markets across Britain.
Our Flexibility Forum, delivered with strategic partnership from CGI, will bring together leading minds in the development of energy flexibility and create a platform for unbiased sharing of opinions and ideas on necessary action to address market failures and challenges.
The first meeting of Utility Week’s Flexibility Forum will take place in January 2024 with confirmed senior participation from varied and influential market players.
This January meeting will set the tone for an extended series of activity and content to be delivered by Utility Week, in association with our strategic partner CGI, over the course of 2024 and beyond.
Activities will include topical briefing sessions, industry debates and more.
Commenting on the creation of the Utility Week Flexibility Forum, CGI’s vice president digital utilities, Richard Hampshire says: “Ofgem’s Call for Input on the Future of Distributed Flexibility has the opportunity to build on the insights from innovation projects such as the TEF projects (TRANSITION, EFFS and FUSION) funded through their own Network Innovation Competition, as well as experience from other markets. By using its reach across the sector to create the Flexibility Forum and secure the participation of senior actors from across the entire electricity value chain, Utility Week has created a platform to surface and explore the challenges in establishing fair, well-functioning markets for flexibility services – markets that enable whole-system price discovery and, ultimately, empower consumers.”
A new Flexibility Forum
This report marks the beginning of a major new initiative from Utility Week, designed to support momentum and ambition in tackling barriers to development of vibrant energy flexibility markets across Britain.
Our Flexibility Forum, delivered with strategic partnership from CGI, will bring together leading minds in the development of energy flexibility and create a platform for unbiased sharing of opinions and ideas on necessary action to address market failures and challenges.
The first meeting of Utility Week’s Flexibility Forum will take place in January 2024 with confirmed senior participation from varied and influential market players.
This January meeting will set the tone for an extended series of activity and content to be delivered by Utility Week, in association with our strategic partner CGI, over the course of 2024 and beyond.
Activities will include topical briefing sessions, industry debates and more.
Commenting on the creation of the Utility Week Flexibility Forum, CGI’s vice president digital utilities, Richard Hampshire says: “Ofgem’s Call for Input on the Future of Distributed Flexibility has the opportunity to build on the insights from innovation projects such as the TEF projects (TRANSITION, EFFS and FUSION) funded through their own Network Innovation Competition, as well as experience from other markets. By using its reach across the sector to create the Flexibility Forum and secure the participation of senior actors from across the entire electricity value chain, Utility Week has created a platform to surface and explore the challenges in establishing fair, well-functioning markets for flexibility services – markets that enable whole-system price discovery and, ultimately, empower consumers.”
in association with
