The current, static nature of DUoS charges fails to address the increasing variability of when periods of peak demand occur e.g. instances of “price herding” around periods of negative wholesale prices that can fall outside of the ‘traditional’ peak demand periods. While explicitly contracted flexibility services can seek to address this through demand turn down/generation turn up services, procuring such services adds cost &complexity to mitigating network constraints. Additionally the totality of the network is not usually considered, with a focus often on either an HV or LV solution. Dynamic network pricing will take the form of a multi-voltage level network price as well as differentiation within the same voltage level, enabling specific assets, such as individual low voltage feeder cables to be priced uniquely based on prevailing conditions. This network level approach will co-ordinate price signals to efficiently mitigate system wide constraints&avoid possible conflicting actions

Benefits

In the recent NESO Clean Power 2030 report, they forecast 11.7GW of demand side flexibility by 2030. With annual despatched volumes of between 10.5 – 31TWh. Based on an assumed average cost of £100/MWh, this could result in annual expenditure of £1 – 3 billion. While the report doesn’t provide a breakdown of this expenditure split between NESO and DSOs, assuming 30% of expenditure is based on DSO expenditure, of which NPg is 15%, this suggests the annual expenditure on flexibility services by NPg in 2030 could be between £47 - £140 million. If dynamic network pricing could be used to totally avoid the requirement for the procurement of explicit flexibility services, this represents the potential annual benefit of this project to NPg. In reality this is unlikely to be achieved but demonstrates the likely ceiling on the monetary value of the benefits. 

While this is a large potential benefit it needs to be appreciated that this assumes full take up of the dynamic pricing methodology 

For the Shine 2.0 project UKPN produced a cost benefit analysis using standard copper reinforcement at low voltage as their baseline method. At project initiation, they estimated the benefit of the application of the Shift methodology to have an NPV of around £17m over the period to the end of ED3 on the UKPN network area alone. 

A second CBA based around the ambition Consumer Transformation scenario from the DFES estimated the UKPN benefit to be £19m.