The HOMEflex project developed the HOMEflex Code of Conduct promoting an inclusive, fair, and transparent domestic flexibility marketplace.
This phase will deliver HOMEflex Compliance, a Scheme to establish standards, help new entrants meet the service levels consumers expect, and deserve, and enable electricity networks to confidently procure flexibility ethically, encouraging the domestic flexibility market to grow in a fairer, more sustainable manner..
The Code of Conduct has been well received by Government, stakeholders, and market participants. National Grid Electricity System Operator (ESO) will include representation of the HOMEflex Code in the procurement of their 2023/24 Demand Flexibility Service (DFS). Phase 2 assists the ‘trial’ use of the Code, proposing to engage with DFS participants, gaining feedback for the development of a HOMEflex Compliance Scheme.
Benefits
The ultimate benefit of this project will be the development of an inclusive, healthy, publicly trusted and liquid domestic Flexibility Services marketplace. The project is not dedicated to a specific, single financial benefit to the customer, but rather a better customer experience throughout the whole cycle of a customer’s engagement with a Flexibility Services Provider, the avoidance of customer detriment and unrealised income, and facilitation of better understanding of offers and a clear thread of accountability across a potential stack of service delivery partners.
The benefits hereof must be seen in the context of the potential for the provision of domestic flexibility to contribute to the efficient and reliable operation of the electricity system along with significant reductions in carbon emissions. Findings from the first phase of the CrowdFlex1 project indicate a significant potential for domestic flexibility to help balance the Great Britain (GB) electricity system, including the potential to reduce the GB system peak demand by up to 10% (6.8GW), and to provide up to 37GW of demand turn up flexibility, equating to 53% of the magnitude GB system peak.
Learnings
Outcomes
As detailed fully in Section 5.5 of the HOMEflex Final Report, the HOMEflex Compliance project started by engaging with participants of the National Grid’s Demand Flexibility Service during winter of 2023-24.
Data collection used a mixed method approach to maximise engagement with the stakeholders in the domestic flexibility sector. First a survey was issued to Flexibility Service Providers (FSPs) who had taken part in National Grid’s Demand Flexibility Service in the winter of 2023-24, which was followed by a workshop with key energy stakeholders to discuss points around the characteristics of a potential compliance scheme. Findings revealed strong support among participants for its creation, citing its potential to address regulatory gaps, enhance consumer protection and uphold industry integrity.
While the majority of survey respondents backed the Code and the potential for a scheme, a minority, mainly from currently unregulated apps/technology companies and aggregators, expressed scepticism about the need for additional standards. In contrast, energy suppliers were in favour, advocating for uniform regulatory scrutiny across all FSPs. The second round of data collection, an online co-design stakeholder workshop, was designed to encourage relevant stakeholders to provide qualitative data on a series of discussion points built around characteristics such as: the need for a scheme, design, structure, guiding principles, governance, monitoring and auditing, funding and public awareness. Participants identified crucial roles for the compliance scheme, emphasising the need to set quality standards to ensure customer protection, build trust, and safeguard reputable practitioners from unfair competition. They also highlighted the scheme’s importance in preparing the industry for formal regulation by providing a common set of standards, as well as protecting customers by informing them of their rights, auditing providers and supporting mediation between company and customer. It was also felt that the compliance scheme should incentivise high quality service through the recognition of trusted companies, granting market access to HOMEflex-certified providers or even reduced fees for positive reviews.
The research emphasised that the proposed scheme should avoid regulatory overlap while ensuring adaptability to technological and market changes. Independent oversight, effective auditing mechanisms, and fair dispute resolution were deemed essential, alongside clear metrics like customer satisfaction scores and lightweight cybersecurity audits. A tiered funding model was suggested, with initial costs borne by major procurers of flexibility (e.g., NESO and DNOs), gradually shifting to service providers as the market matures. Public and industry awareness campaigns, collaborations with trusted consumer organizations, and clear communication channels were highlighted as critical for fostering trust and participation.
Both reports can be read in full at: https://www.flexassure.org/homeflex. The HOMEflex team have successfully developed a governance structure and developed four possible scheme structures. Four options are considered for the organisational structure of the compliance scheme’s operational activity.
All four options comprise:
- A corporate component, including the company board, the scheme committee, administration, HR and payroll
- A scheme operation component, including membership, engagement, auditing, and dispute management.
Full details of these options are in Section 7 of the Final Report.
Lessons Learnt
As highlighted in the Section 3.3 of the HOMEflex Compliance Final Report there are upcoming regulations which a compliance scheme may need to adapt to. Section 3.3 states:
Through discussions with the Smart Secure Electricity Systems (SSES) team at the Department for Energy Security and Net Zero (DESNZ) on the plans for future FSP licensing, it is clear that there is an intention for a licensing regime to cover areas of customer protections that are addressed in the HOMEflex Code. Though the initial indications from Government were to primarily ensure licensing of “Load Controllers” (BEIS and DESNZ, 2023), recent Government consultations have not ruled out licensing of all providers “Contracting with domestic or small non-domestic consumers for services including load control of certain energy smart appliances (ESAs) for the purposes of demand side reduction” (Department for Energy Security and Net Zero, 2024). The current Forward Plan of the SSES team is to open the license window in 2026, with licenses being granted and in effect from 2027. This is an evolving regulatory landscape, and it is likely that any initial approach for the design and operation of a compliance scheme will be affected by those changes. However, even with the government ambition of delivering regulations in the near future, it is not possible to predict with sufficient certainty what those regulations will entail in their ultimate design, or when they will fully come into force. Therefore, there is little value in delaying implementation of the compliance scheme in the interim. Furthermore, any compliance scheme operating across any industry must by design be capable of change. Aside from regulations, the framework in which an industry operates may change due to market forces, energy prices, consumer interests, and other less predictable volatilities.
