Distribution System Operators need to evolve to maximise the potential of flexibility platforms

Distribution System Operators need to evolve: The second in the series of the future network research papers from Cornwall Insight has been released. Future Networks – Flexibility Platforms, focuses on how the role of Distribution System Operators (DSOs) will evolve if flexibility exchange platforms – tools that enable providers to trade flexibility in multiple markets – become widespread.

Key findings of the report are:

  • Flexibility exchange platforms offer many benefits including simplicity, reduced costs and increased participation
  • DSOs will have a different role if flexibility exchange platforms become widespread compared to if flexibility was procured through bilateral contracts between DSOs and customers connected to their networks
  • If DSO and flexibility exchange platform activities are optimised, the exchange platform will be able to signal requirements ahead of need, establish contracts to meet that need and operate those contracts including analysing their effectiveness

Andrew Enzor, Senior Consultant at Cornwall Insight, said:

“Regional flexibility markets are continuing to emerge as network and system operators seek to procure flexibility services to manage network constraints. Flexibility exchange platforms have massive potential in this area.

“From the perspective of a party procuring flexibility – for example, a network company – they enable a high volume of transactions to be completed quickly and at low cost. While flexibility providers, on the other hand, can engage with a single platform for assets in any location and potentially engage with multiple markets and multiple buyers through a single platform. This reduces their costs and removes barriers to participation – in turn, increasing market liquidity and leading to lower clearing prices.

“Platforms can carry out a range of functions but will be at their most effective if they can oversee an end-to-end process, from signalling the requirement for flexibility through to establishing contracts with flexibility providers and operating those contracts. This will enable the platform to be a ‘one-stop-shop’ for both providers and buyers, and crucially mean the platform has the complete picture against which to provide analytics on the entire process.

“If flexibility platforms become widespread and provide this full range of functions, the DSO role will no longer involve establishing contracts with individual flexibility providers. Rather, it will be to continue to standardise services and to provide information to the platform to enable it to operate effectively.”

Article by Cornwall Insight

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