ESO sets out initial design for future of Demand Flexibility Service

• ESO to build on the success of Demand Flexibility Service (DFS) and expand its capability ensuring Great Britain remains a world leader in placing consumers at the forefront of flexibility in the energy transition.  
• Following the publication of the ESO’s early view of winter last week, the ESO can now confirm its intention not to use the Demand Flexibility Service as a winter contingency service for winter 2024/25.
• DFS will continue to exist however and the ESO has today proposed enhancements to the service, so that it can be used across the year as a normal commercial service.
• The product will continue to support the ESO’s control room when demand is at its highest, providing participating households and businesses the opportunity to see continued value from using their electricity flexibly.
• To facilitate the continued use of DFS, the ESO will now consult with industry on its proposed design, before seeking regulatory approval from Ofgem ahead of winter.
• Last year DFS delivered over 3.7GWh of electricity with over 2.6 million households and businesses participating to reduce or shift their electricity consumption at key times.

The Electricity System Operator (ESO) has confirmed its initial design proposal for the future use of the Demand Flexibility Service. 

Following confirmation in the ESO’s early view of winter that the de-rated margin – (the excess generation the ESO expects to be able to call on at peak demand in a cold spell) - is expected to be higher than last year (5.6 GW / 9.4% for winter 2024/25 compared to 4.4 GW / 7.4% last winter), the requirement for DFS to be used as a winter contingency service to support the electricity network at peak times has been reduced. 

The ESO has therefore opted to evolve the service and expand its capability to further support high demand periods on the system all year round. 

Changes to the DFS will allow it to compete against the other commercial tools available to the ESO control room and DFS providers and their customers would for the first time also be able to stack the service with other revenue streams, ensuring greater opportunities for consumers to realise value from using their electricity flexibly.

The evolved design for DFS will be consulted with industry over the summer, before a final design is submitted to Ofgem for approval ahead of a planned winter go live.  

The ESO looks forward to working closely with industry to agree a final design, that will ensure that the future use of DFS continues to deliver value and continues to be a world leading service in the space of consumer flexibility. 

Kayte O’Neill, Chief Operating Officer at the ESO

“The Demand Flexibility Service has been a national first in empowering households and businesses to embrace energy flexibility and to be rewarded in the process. As we transition away from requiring DFS as a winter contingency service it is only right that we look to the future of what this service can deliver. 

We look forward to working closely with industry over the coming months to deliver a service that makes flexibility part of everyday life and that can unlock the benefits for participating consumers and society at large.”

Learn more about the ESO's Demand Flexibility Service