Full chain flexibility
Our flexibility vision
Our vision is for a secure, affordable, net-zero system where all connected resources can flexibly respond to available energy and network capacity.
A more flexible energy system could reduce future system costs dramatically. It will also help reduce the amount of new generation, storage and network infrastructure that has to be built.
The future energy system will differ vastly from the energy system of 2021.
What is flexibility?
We define flexibility as "modifying generation and/or consumption patterns in reaction to an external signal (such as a change in price) to provide a service within the energy system".
To date, the energy industry has typically provided flexibility on the ‘supply-side’. For example, electricity power stations have changed how much they produce in order to make sure supply always matches demand; network operators have built enough cables to make sure electricity can always be transported to consumers.
But our energy system is changing, and continuing to rely on supply-side solutions alone would be expensive. New ways of providing flexibility are emerging. They can help us deliver against our carbon commitments, while providing reliable and secure supply at minimum cost.
Short-term challenges
From 2020-2030 we will see some huge changes and face some short-term challenges that we will need to overcome, including:
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the retirement of traditional fossil-fuel generators
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an increasing proportion of renewable generation, often in more remote locations, driving up network costs and making system management more challenging
- much higher demand for electricity through electric vehicle uptake and the decarbonisation of heat.
These short-term challenges have the potential to put upward pressure on system costs, but they also offer new opportunities as well.
We’ve identified three priority areas where we think we can maximise the opportunities that come with full chain flexibility:
1. System planning and operation
We need a smart, digital electricity system that can effectively use smaller distributed resources to maintain stability and manage the distribution network in more active ways.
2. Signals to incentivise flexible behaviour and investment
We need accurate and widespread signals of flexibility value, including prices, markets and other incentives.
3. Behaviours to deliver flexibility
We need consumers and suppliers to become major new providers of flexibility.
Our role
Our role is to ensure we meet net zero in a fair, sustainable way that does not overburden current or future generations with the costs of hitting net zero.
Full Chain Flexibility is a key strategic priority for us. We want to be able to take advantage of a fully flexible system to bring more renewable generation online whilst simultaneously keeping costs down for all consumers – domestic, commercial and industrial.
In July 2021, we published our second joint Smart Systems and Flexibility Plan with government. This sets out a vision, analysis and suite of clear policy actions to drive a net zero energy system. The Smart Systems Forum was created to help implement and steer the Smart Systems and Flexibility Plan.
We are now developing a programme of work based on this plan, working with trade associations and representative groups of all interested parties in the energy sector.
For more information on this work please contact flexibility@ofgem.gov.uk .