At the Edge of Grid Innovation: Great Britain’s Flexibility Markets

Wood Mackenzie is the global insight business for renewables, energy and natural resources. Within Power & Renewables, the Grid Edge research team focuses on how utilities, asset developers and operators, technology providers, and investors are driving innovation in distributed energy resources (DERs) and electrification.

Among the “three D’s” of the energy transition – digitalization, decarbonization, and decentralization – it is the final one that implies the greatest challenge to electricity markets and their regulators. Countries around the world are still at an early stage of proving out how DERs can provide services to utilities in order to enhance reliability while reducing customer costs. But among all countries today, Great Britain (GB) stands out as having developed the most advanced model for distribution-level electricity markets, established under its RIIO regulation framework (itself the most advanced alternative to traditional cost of service regulation). The purpose of this project is to review the wealth of primary materials on the flexibility markets created by GB’s five largest distribution network operators (DNOs), speak with stakeholders, and to distill the key takeaways for a global audience of utilities, regulators, and DER providers.