Designing Alternative Energy Market Options through Novel Simulations

Energy Systems Catapult is working with OVO Energy and CEPA to design, develop, and simulate flexibility propositions targeted at domestic customers under a number of hypothetical 2030 alternative energy market scenarios.

This project has received funding through Phase 1 of the Alternative Energy Markets Innovation Programme – funded through the Net Zero Innovation Portfolio (NZIP) from the Department for Energy Security and Net Zero This up to £18 million funding programme aims to support the development and demonstration of innovative domestic demand side flexibility propositions in a future energy system where electricity market arrangements may look different from today.

The programme consists of two Phases with Phase 1 supporting the design of innovative tariffs, products, and services under AEM scenarios of a future energy system.

Phase 2 aims to deliver real-world demonstrators, testing the demand side flexibility propositions conceived of in Phase 1.

The Challenge

In any future energy system, electricity market arrangements are likely to look very different to how they look today. To decarbonise the energy system by 2035, maintain the UK’s security of supply, and support energy independence, the UK needs to transition to a smarter, more flexible electricity system. This need for greater flexibility is not without its challenges.

Innovative domestic demand side response propositions may bring added benefits to both the consumer and the energy system. More work is needed to better understand how the regulatory environment can support the design and demonstration of domestic demand side flexibility propositions such as tariffs, products, and services.

The Solution

Energy Systems Catapult, OVO Energy, and CEPA are working collaboratively to address this challenge, bringing together a team of experts across policy, consumer research and energy modelling to design innovative domestic flexibility propositions for the future energy market.

The project will demonstrate the impact that domestic demand side response solutions can have on consumers and proposition providers, in enabling a smart and flexible future energy system. The project partners will design potential domestic demand side flexibility propositions under various alternative energy market scenarios and propose changes to facilitate maximum energy system flexibility and value to consumers.

The team will assess these propositions against consumer needs and determine the commercial and technical feasibility of each one. They will carry out electricity market simulations to understand the contribution each proposition could make to a more flexible energy system, as well as identifying barriers and/or enablers that would help or hinder each proposition in the context of various market reforms.

This project will inform future policy and regulatory decisions by contributing to the evidence base for how the domestic flexibility market can be grown and encouraged under a future energy system.

Next Steps

Phase 2 of the AEM project will see organisations testing and trialling the demand side flexibility propositions developed as part of Phase 1 in real-world environments. This will ultimately demonstrate the impact of propositions and the potential benefit to consumers and the electricity grid, under various scenarios.

Markets, Policy & Regulation

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