Demand Flexibility Service 2023/24 threshold for competitive market pricing announced

On 31 August, we submitted our plans to the regulator for the return of the Demand Flexibility Service (DFS) this winter and the updated contract terms. Since then, we have been engaging with industry partners and a variety of stakeholders to drive awareness and participation in DFS this winter, ahead of formal regulatory approval. 

Creating more flexibility on our electricity system is vital for running the clean, green and fair system of the future. DFS is a real breakthrough and gives households and businesses a direct opportunity to participate in flexibility services, with 1.6 million homes and businesses participating in the service last winter. 

The service will provide the ESO with an additional tool to balance the network this winter and enable consumers in homes and businesses to be rewarded for shifting their energy away from peak demand times.

Registered DFS providers will be invited to take part in a series of up to 12 test events between November 2023 and March 2024. These events will offer commercial incentives for providers to reward end-consumers for delivering flexibility. 

The first six tests, planned between November and December 2023, will offer a Guaranteed Acceptance Price (GAP) of £3,000/MWh. Any of these test events that have not taken place by 31 December will carry over and be considered as additional to any remaining tests between January – March 2024.

What’s new?

Following the publication of Winter Outlook 2023/24, we have shared our latest Market Information Report which outlines that following the first six tests, we’ll be setting a volume threshold of 1.25GW for when tests will move to be competitively run. 

This winter, we’re also introducing the flexibility to utilise two additional procurement timescales to test and move the service closer to real time. These will be day ahead, within day - morning and within day - midday. For any delivery period, we will only select one of these timescales.

For more details on our testing regime this winter, view our October Market Information Report.

What about live uses of the service?

If we need to run live DFS events due to low system margins, there is no Guaranteed Acceptance Price. The DFS bids we accept will be determined by the published Service Requirement volume, with the bids accepted in merit order, from the lowest to highest price until the volume requirement is met.

How can I get involved?

Eligible households and businesses will be able to participate in DFS via Registered Service Providers, such as energy suppliers or aggregators. A list will be published on our website in the near future, subject to regulatory approval, and will be updated throughout winter. 

Some businesses can also directly contract with the ESO, subject to a 1MW threshold and ability to undertake the required data processes.

Our team is on hand to support parties that would like to sign up as a Registered Service Provider for DFS, contact us here.  If you are an end consumer, please reach out to a Registered Service Provider to learn more.

Demand Flexibility Service 2023/24