Capturing value in managing energy flexibility
August 25, 2020
August 25, 2020
Flexibility is the grid’s ability to manage variability and volatility to balance supply and demand. Three main ways to source flexibility are: implicit flexibility (such as tariffs), network flexibility (such as smart grids) and flexibility services (storage, demand response, generation). In our report we focus on the novel approaches emerging to leverage inherent flexibility and provide flexibility services to the grid. These approaches look to control energy demand and supply volatility across several points:
Beyond traditional utility companies, a range of diverse players are pursuing these approaches including large automotive players, traders as well as other new entrants. This variety in developing approaches and business models is resulting in a array of value pools, including electricity produced or sold, managing the assets, providing ancillary services to the grid, providing local back-up capacity, connecting buyers and sellers, and providing additional services.
The current energy landscape presents new approaches to managing and delivering flexibility across the value chain.
In this report, Accenture selected 35 cases from the hundreds in the market, to bring to life what’s currently happening to the structure and flows of the energy market. We contrasted the largest pure-play, grid-scale storage investments, to the local aggregation and management of DERs, with in-front-of-meter storage and demand management. We uncovered five observations:
The market is constantly changing, and utilities need to track the big picture for their priority markets. They need to understand which value pools to pursue and which investments are key to their growth strategies, compared to those that need to be piloted to test a concept or technology. Each approach requires a set of new capabilities, so finding the right partners and making appropriate alliances should be a key part of the strategy.
There are a few critical items for all players to consider. Given the pace of change, they all need to track the big picture. Their pilots should be driven by the value pools they are targeting. There needs to be clarity and differentiation between a big bet investment and a pilot. The consumer is one of the biggest sources of change, so staying close to the consumer is critical. Finally, it’s unlikely that any company can operate alone—partnerships and alliances are critical.