DSR can play a major role in supporting the low-carbon economy, alongside other
flexibility services. Specifically, DSR can help:
- reduce carbon emissions, energy costs and avoid some investment required in
network and generation capacity through more efficient use of existing capacity;
- increase the scope of the electricity system to absorb high levels of renewable
- improve overall system balancing and efficiency.
There is potential to increase the contribution of DSR in maintaining secure and
sustainable energy supplies, by allowing it to be traded in a market. Flexibility services
(such as Short Term Operating Reserve) are currently contracted bilaterally. This
creates a number of barriers to their provision, including:
Limited financial incentives - DSR and storage can create benefits across the value
chain. The value to one party will often be lower than the total value across the value
chain. Allowing DSR and storage providers to access the full value of their service could
help increase the supply of these services;
High transaction costs - bilateral contracts can attract significant transaction costs,
including information requirements for the sellers of flexibility services. These costs may
be reduced by establishing a market; and
Low customer awareness of the potential to sell DSR - customer awareness of the
potential to sell DSR is low. A more transparent market and stronger financial signals
should help increase this awareness.
To reduce these barriers, a coordinated approach across the power industry for the
supply and demand of flexibility services is required to ensure that the potential of this
resource is maximised for the low-carbon economy.
The capacity market planned under the UK Government's Electricity Market Reform
Programme will allow participation of DSR, although its precise design and the manner
by which it will incorporate DSR is not yet known. The interaction of the GBFM with the
emerging design of the capacity market will be a key consideration of the Project.
Method type commercial
A market platform will be developed to enable providers and purchasers to actively
trade DSR and other services, which provide flexibility in a transparent manner.
The requirements from the TSO, DNOs and suppliers will be assessed and formulated
into DSR products. The Project will assess how the DSR resources can be coordinated to
increase efficient use.
The DSR providers will comprise large I&C customers directly participating in the GBFM
with smaller customers participating via third party intermediaries (specialist
aggregators and suppliers). The participation of network storage delivered by the CLNR
project and operated by Northern Powergrid will also be investigated.
The Project will assess the capabilities of these customer groups to deliver DSR and
other flexibility services.