UK demand side response aggregator Flexitricity is launching a “transformational” new energy trading service.
Called Flexitricity+, it is intended to bring industrial and commercial energy users closer to the market by opening the door to energy trading via the National Grid’s Balancing Mechanism for the first time.
The Balancing Mechanism is the real-time flexible electricity market the UK’s National Grid uses to balance supply and demand. BM prices can reach £2,500/MWh, compared to around £50/MW in wholesale markets. The market is used around 3000 times per day at a cost of £350m per year – a cost which is passed on to the bill payers.
By taking the flexibility of industrial, commercial and public-sector energy users right into the BM, Flexitricity says it can give its customers a slice of this premium market, while cutting the cost for National Grid and all energy users.
Dr Alastair Martin, chief strategy officer of the Edinburgh-based firm, said: “There’s a customer base out there who could do more if they had the opportunity. That’s what this is about. We’re cracking open the most important market in flexible energy for those who can both earn from it and contribute to it.
“This is about being customer-centric and creating value that has been hidden behind a locked door until now. At Flexitricity, we do not have our own big energy assets to trade like the Big Six, therefore, we have no conflict. This means we can truly focus on generating revenue for customers as they work with us to keep the grid balanced.”
He added: “We already know from the rise of smaller, more disruptive firms that, big isn’t always beautiful in the eyes of customers – whether they are powering their home or their business. They want value, integrity and attention to detail. They are more engaged in the market place than they have ever been before, and this isn’t likely to change.
“As the first mover in this space, we know that we are more able and agile and better equipped than the bigger players to cope with the detail and complexity of this operation.”
Flexitricity currently works with a range of industrial and commercial customers, operating electricity balancing services from its 24-hour control room. Industry rules mean these are currently separate from the BM. By becoming an energy supplier, Flexitricity plans to join these activities together.
Initially the new Flexitricity+ service will be targeted at businesses and public sector organisations. The company says it will be particularly suited towards those that operate community energy schemes, combined heat and power generators and cold stores, as well as developers of gas peaking and battery storage sites.
Martin added that he believes that a “seismic shift” is taking place across the energy industry thanks to consumer engagement with electric vehicles and demand side response.
He said that the mounting popularity of electric vehicles, a growing interest in the potential of domestic DSR and the now mainstream participation of UK businesses in the British Capacity Market are symptomatic of a trend that is blurring the lines between the consumer and industry.
Flexitricity chief executive Ron Ramage said: “The new energy trading proposition is a natural evolution of Flexitricity’s business model, taking advantage of our technical capability to exploit a gap in the market we believe represents real value for our customers. We will be working with three expert organisations to help create and deliver our energy supply offering: ENSEK, Quorum Development and Jules Energy. All three are widely-respected names in the industry with unbeatable track records.
“This is the first time anything like this has been done in the Balancing Mechanism and we think it will be transformational – we are unlocking value for our customers as well as for bill-payers across the country by making our electricity system more efficient.”
Flexitricity – which is part of the Alpiq Group, a leading Swiss electricity and energy service provider – has been aggregating electricity production and consumption of energy-intensive industrial, commercial, and public sector companies since 2004. It offers these electricity volumes to the transmission and distribution system operators as positive or negative reserves for ancillary services.
In Europe, Britain is the most developed market for demand response services.