Capturing value in managing energy flexibility

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:

• At the point of demand, by reducing the amount of renewables consumers put into the grid by using tools such as behind-the-meter storage, demand response and smart charging.
• At the point of distribution, by balancing demand through pooling and the use of batteries before it gets to the distribution grid; i.e., “islanding” to reduce dependence on the grid and reduce the need to go back and forth with renewables to the main grid.
• At the point of transmission, by aggregating generation fleets or by pooling individual generation commitments instead of each wind or solar farm having an individual commitment to the grid or adding storage to smooth out supply.
• At the point of supply, using different storage solutions to help the grid, such as standalone batteries, batteries bundled with solar and wind, smart inverters to manage solar generation, vehicle-to-grid and technologies like hydrogen generated from renewables.

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.