RESEARCH REPORT

In brief

In brief

  • Growing renewables generation, especially variable sources like wind and solar, is increasing the instability of the electricity grid.
  • Flexibility is the grid’s ability to manage variability and volatility to balance energy supply and demand.
  • A new energy landscape presents novel approaches to managing and delivering flexibility across the utilities value chain.
  • Learn how smoothing renewables volatility could help reduce the need for flexibility, while also creating more flexibility in the system.


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.

The current energy landscape presents new approaches to managing and delivering flexibility across the value chain.

Five key observations

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:

  1. Batteries and innovative commercial optimization models are unlocking value pools to help improve grid stability and increase security of supply.
  2. Industrial and residential consumers are increasingly moving toward renewable purchasing and self-generation.
  3. New entrants with new approaches to managing energy demand and supply are entering and disrupting the market.
  4. Most players are piloting multiple models to manage flexibility.
  5. The landscape of emerging flexibility models varies by geography and continues to evolve.

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.



Critical success factors

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.

Track the big picture

Know the points of flexibility, areas of growth, the players and where new technologies are having an impact and at what pace.

Focus on select value pools

Understand the growth of value pools and decide where to target. Confirm your portfolio, capability and investment match.

Clarify big bet versus a pilot

Decide which investments will deliver your strategy vs. those that may/may not scale, and how to manage them.

Stay close to consumer trends and attitudes

Consumers drive pace of change. New models should reflect digital service in other areas of their lives.

Collaborate via partnerships and alliances

Understand who your partners are, who they should be and build your network and collaborate accordingly.

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