Project Summary

CrowdFlex will meet the aims of the SIF Innovation Challenge by establishing domestic flexibility as a novel, reliable flexibility resource of national significance, alongside BAU alternatives in system balancing services, generation capacity or network reinforcement. 

• By offering consumers simple and effective incentives, reflecting whole system challenges (e.g. grid responsive tariffs), it will reduce complexity, bureaucracy and barriers to entry for aggregators to deliver domestic flexibility.  
• This will improve coordination between networks and other system participants, building on the work of the ENA Open Networks Project.
• By trialling consumer interventions (financial and informational) targeting different system challenges, CrowdFlex will clarify consumers’ preferences and inform future market designs.  
• Initially, by derating the stochastic portfolio capacity, it will overcome barriers to enable domestic flexibility to participate in deterministic energy markets and flexibility services. In parallel, CrowdFlex will develop innovative approaches that deliver domestic flexibility stochastically improving coordination of emerging innovations across the system.

CrowdFlex will work to address these challenges, offsetting system peak increases, which are projected to increase 19% between 2020-2030 (Consumer Transformation, FES 2021), with an unprecedented resource of domestic flexibility (~7GW turn-down, and >10GW turn-up). ESO and DSOs could use domestic flexibility to address a host of operational challenges, across reserve, energy balancing, addressing network constraints as well as supporting capacity and network investment planning. 
 
Network innovation is central to CrowdFlex. It covers key network load growth challenges as heat and transport decarbonisation, addressing baseline load and flexibility. By trialling fully system transactive tariffs, including load reshaping and system stress events, CrowdFlex will support network planning and investment decisions. Similarly, investigating responsive load management will improve the economics of existing network assets and target future network and system investments. 
 
Discovery confirmed the value of domestic flexibility and improved visibility of baseline demand, and the need to address constraint costs. It identified that portfolios would initially be declared as firm capacities, but a spectrum approach would also mature novel and more valuable stochastic services. 
 
CrowdFlex brings together partners spanning the energy system, best placed to address whole system challenges in the following ways: 

• NGESO are the ESO for the entire of GB. They design and procure flexibility services, balance energy following gate closure, and model demand and generation in the FES to plan capacity and network infrastructure investments.
• Octopus are an energy supplier with a focus on renewable energy and offering their customers innovative tariffs and services to encourage the uptake of flexibility.
• CNZ provide world-leading expertise in their modeling capabilities, data science, and consumer engagement work. As CrowdFlex seeks to mature stochastic nature of domestic flexibility, they’re expertise will be crucial to model this.
• SSEN and WPD are DSOs with >1GW of combined flexibility services contracted. The DSOs will provide detailed insight into the their needs and steer on how the conflicts between the needs of ESO and DSOs can be avoided/mitigated.
• Ohme are a home EV CPO providing smart charging and flexibility services. They are experts in consumer segmentation and have experience in providing domestic flexibility via EV charging.
• Element Energy are a leading low-carbon energy consultancy. They work across all major low carbon energy sectors, bringing together the different levels of the power system explored in CrowdFlex. They have supported CrowdFlex partners in the previous phases of the project. 

CrowdFlex aims to develop novel flexibility services and modelling, and evidence delivery reliability to solve whole system challenges. ESO/DSOs can use this innovation to reduce operational costs and reduce capacity and network investments. The system savings from ESO/DSOs and a proportion of the revenue from flexibility services will be passed down to consumers, reducing their energy bills.

Innovation Justification

CrowdFlex addresses several Whole System challenges; as more variable renewable energy (VRE) generation comes online, the power system must develop the residential sector as a large and deep source of flexibility. Similarly, domestic flexibility is vital to limit the adverse impacts of the rollout of low carbon technologies (LCTs). Without this nascent but large resource, supply and demand side challenges would require uneconomic generation capacity and network investments, significantly raising consumer bills. Domestic flexibility could reduce the energy sector’s reliance on large-scale thermal generation during peak times, times of low VRE generation, and for flexibility services. By accounting for households on ToU tariffs with reduced demand in the evening peak into network planning, TSOs and DSOs can plan their investments more intelligently, minimizing unnecessary upgrades. 
 
CrowdFlex will innovate the energy system by accelerating the transition of flexibility away from large, individual, generating assets to small, aggregated, demand side assets, removing the barriers to enable aggregated assets of a stochastic nature to enter deterministic flexibility services. It will develop digital forecasting tools for domestic demand and flexibility to permit all stakeholders to more accurately determine system needs improving existing network operation. CrowdFlex will clarify how to incentivise domestic flexibility most effectively. CrowdFlex will also design an approach for the development of new flexibility services that procure flexibility stochastically, via a Probability Distribution Function (PDF). This would be completely novel and require close collaboration with system operators. 
 
CrowdFlex:Discovery was preceded by CrowdFlex:NIA and the Domestic Reserve Scarcity trial (DRS), which measured the technical potential of domestic flexibility and the expected turn-out based on Octopus’ customer base. CrowdFlex:NIA demonstrated that consumers could be influenced by financial incentives, reducing their demand during the evening peak following a switch to a ToU tariff and the ability to provide a one-off response to information remedies. DRS collected useful data on consumer response to financial incentives and information remedies, which will feed into the design of the CrowdFlex trial. It examined 5-10 events over a short period, without knowledge of the technology participating and only considering the needs of ESO, without coordination with DSOs. Neither study demonstrated the ability to solve “whole system issues”, by delivering flexibility services, or whether flexibility can be procured on a commercially viable basis. CrowdFlex: Alpha and Trial will plan and carry out a trial to prove the viability of domestic flexibility for a range of system needs, including new stochastic flexibility services, meeting the needs of ESO and DSOs, not yet considered in any related project. 
 
Domestic flexibility will struggle to make a large-scale impact without being utilized to its full potential via CrowdFlex. Delivering innovations in domestic flexibility will reduce consumer bills by redirecting system operational and network and capacity investment savings back to consumers. The impact of not understanding the full potential of domestic flexibility would lead to continued reliance on large, more carbon-intensive flexible assets, especially during peak times and for flexibility services such as the capacity market. It will inevitably reduce the speed of grid decarbonization, delaying the roll out of LCTs, as the TSO and DSOs complete large and expensive network upgrades. 
 
Until the capability of this nascent resource is proven, it is unlikely to attract significant investment and cannot be funded by the price control mechanism. Similarly, proof of the capability of the asset class is needed, so that ESO/DSO can develop tools and services that can fully exploit and monetise it. To prove domestic flexibility could provide a reliable service, a large-scale trial is needed and innovation funding is required to support this.

Benefits

The domestic flexibility resource unlocked through CrowdFlex would generate value across the power system, both operationally as well as through more efficient strategic planning. These savings across the ESO, DSO and energy markets, represent multiple components of consumers electricity bills. By including ESO, DSO and an energy supplier, the project can leverage whole system savings and has a route to passing these savings onto customers. 
 
Following Discovery, we have updated our CBA model. This update includes amending the potential revenue streams to account for services that were originally excluded from consideration, but following discussions with the NGESO and the DNOs, should be included. Savings include wholesale arbitrage, reduced balancing costs, reserve, congestion management, and network and capacity investment avoidance costs. We believe our CBA is conservative, and there is significant upside, for example to reduce ESO Constraint costs. 
 
The potential revenue streams of domestic flexibility through existing energy markets and flexibility services are as follows: 

• Redispatch avoidance - £105/kW/yr (Element Energy analysis based on FES 2021),
• Wholesale arbitrage - £85/kW/yr (daily 4h price spread based on 2021 data),
• DNO network reinforcement - £64/kW/yr (Element Energy analysis),
• Balancing Mechanism - £47/kW/yr (Element Energy analysis),
• TSO reinforcement avoidance - £37/kW/yr (Element Energy analysis based on FES 2020/21),
• Capacity Market - £12/kW/yr (2021 T-4 clearing price; a conservative value lower than Cost Of New Entrant),
• Operating Reserve - £1.4/kW/yr (Element Energy analysis). 

Before Discovery, CrowdFlex:NIA outlined the technical potential of domestic flexibility. The outputs from NIA were applied to the updated revenue streams from Alpha and extrapolated to model the uptake of domestic flexibility following the trial. With 60% of GB EV-owning households participating in domestic flexibility, as CrowdFlex becomes BAU, the value of flexibility could be worth £1.25Bn/yr to the end consumer across GB when the cost of providing flexibility services is accounted for. This includes £3.8Bn of avoided DN reinforcement and £2.2Bn of avoided transmission network reinforcement investments between 2024-2050. Such value far outweighs the estimated £10-15M trial cost to establish a domestic flexibility resource. If initially 100,000 customers begin participating in domestic flexibility in 2024, growing out to 2050, The potential IRR of CrowdFlex is 324%. 
 
CrowdFlex will help accelerate decarbonization, reducing the need for VRE dispatch to be compensated with thermal generation on the other side of constraints and will reduce peak demand met with thermal generation. This equates to 4.6MtCO2eq/year of avoided CO2 emissions, assuming peak demand is met with additional OCGTs. In addition, CrowdFlex will relieve load from the DN encouraging the uptake of LCTs. These factors will play a crucial role in shifting the grid to a decentralized smart energy system, vital if National Grid ESO are to achieve zero carbon operation by 2025 and a decarbonized grid by 2035 as well as the Government’s ambition for Net Zero by 2050.  
 
Passing all these system savings onto customers has the potential to reduce consumer electricity bills by up to 11% and reduce CO2 emissions related to their electricity use by 17%. This equates to approximately £137 in bill savings and 0.25tCO2eq of avoided emissions per consumer per year. Over a 20-year lifetime of a household, this could lead to bill savings of £2,750 and an emission avoidance of 5.3tCO2eq. 
 
To track the benefits of CrowdFlex throughout CrowdFlex:Alpha, Trial and beyond, several metrics will be monitored.  

• Per household metrics: Revenue £/year per asset type. Volume activated kWh/year. Diversified peak reduction kW/house (avg).
• Specific metrics: £/kW/year and £/kWh/year to compare to BAU technologies and GB potential.
• Asset declaration metrics: Derating value; statistical metrics for PDF declaration.