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

Distributed Energy Resources (DERs) are transforming the utility services sector worldwide, prompting countries to explore their potential to bolster reliability and lower consumer costs. Among them, Great Britain (GB) has pioneered an advanced model for distribution-level electricity markets within its RIIO regulation framework. As GB’s electricity systems become increasingly decentralized, decarbonized, and digitized (“3D”), flexibility plays a crucial role in addressing local grid congestion due to the influx of DERs, cutting costs and delaying network reinforcement for network operators. The Columbia SIPA research team conducted extensive literature reviews and expert interviews with major distributed network operators (DNO), flexibility service providers (FSP) and regulatory bodies to seek insights on the market structure, market dynamic, and technology landscape.

The report delved into primary resources from the five major distribution network operators (DNOs) in GB, incorporating input from stakeholders via informational interviews. It elucidates the operational mechanics of the tender process, the evolution of contract terms, and their impact on market participation. Through this examination, successful practices, areas for improvement, and less effective elements were identified. Additionally, the report scrutinized the commercial and technological landscape, identifying key market players and assessing the capacities of various technologies, including fossil fuel, aggregator, stored energy, electric vehicle, demand side response and solar. It extracted valuable insights of the features and trends of different technology types.