DNO flexibility services revenue stacking

Western Power Distribution (WPD) is the electricity distribution network operator (DNO) for the Midlands, South Wales and the South West. Over recent years, both WPD and all other DNOs have begun procuring flexibility from customers connected to the electricity network to avoid the need to undertake physical network upgrades. An emerging issue for both providers and procurers of flexibility is the ability of flexibility providers to provide multiple services (so-called “revenue stacking”) either simultaneously or at different times within a given day.

Cornwall Insight was engaged to undertake an assessment of the regulatory and commercial viability of a flexibility provider using its assets to provide services to both WPD and the national Electricity System Operator (ESO) and to identify unnecessary barriers to revenue stacking which WPD could seek to resolve.

The Cornwall Insight team analysed all flexibility services procured by the ESO and WPD both under current arrangements and expected future developments. We then considered the ability of a single provider to provide any pair of services, both within the same half-hour time period and in other time periods within the same day. Finally, we used a series of case studies to determine likely commercial strategies for revenue stacking to help WPD understand when provision of its services is likely to form an element of a flexibility providers strategy, and in circumstances where this is not the case to understand why other services are more favourable.

It was a successful project for the client, with the report published on its website and used as a resource for further development of DNO flexibility services under the Open Networks project.