Existing markets for flexible demand and generation won’t be able to provide the necessary flexibility.
The market, supported by technological innovation, is already evolving to help unlock additional flexibility and, with so many alternative sources available, it seems likely that solutions will be found.
As the power system decarbonises and new areas of the economy are electrified, it will be increasingly valuable to efficiently match both the provision and use of power. Doing so will involve harnessing both new and existing sources of flexibility in the energy system, for example by changing the time when electric vehicles are charged to reflect the availability of cheap power.
New markets, products and actors are already popping up to help add flexibility to the system and make sure it is used efficiently. New marketplaces are being created, for example NorFlex in Norway and the Cornwall Local Energy Market in the United Kingdom, to bring buyers and sellers together. New products, like fast-acting battery reserves and demand turn-down services, are being created by power networks to help them make use of flexibility; and new actors, like Next Kraftwerke in Germany, are identifying new sources of flexibility and finding ways to monetise them.
Similarly, the fact that more flexibility will be needed in future is not inherently a problem, given the wide variety of sources that can provide it. Indeed, the process of electrification will bring both new sources of demand and new potential sources of flexibility. The electrification of transport, for example, implies that large numbers of batteries, in the electric vehicles themselves, will at any time be connected and distributed throughout the power system. This represents a significant net source of potential flexibility and helps to demonstrate electrification’s potential to contribute to smarter and cheaper customer participation in the provision of flexibility.
Overall, therefore, the market is already evolving to meet the system’s future requirements for flexibility and electrification itself may help to bring new sources of flexibility to the energy system.