As one of our earlier pieces examined, discussions around flexibility dominated this year’s Future of Utilities Summit. My interview series at the event echoed that theme; there was a general view that flexibility’s barrier is no longer technical, but no real consensus on how the economic case stacks up or where the value lies.
There was widespread agreement among participants that the technology behind flexibility has stabilised. Kate Mulvaney described flexibility as having graduated from the IoT hype cycle into real delivery, and Sean Layerle reinforced the point, arguing that the sector’s technology base has settled. That moves the industry forward significantly; three or four years ago we were still arguing about whether the kit worked.
So if the technology is settled, what exactly is holding it back? Across my interviews I got three distinct answers, and together they say something useful about where flexibility currently sits.
Sean focused on the need for action, highlighting that the gap is hindsight, not capability. Too many businesses, legacy and startup alike, are waiting for data points that simply don’t exist yet. His view is that the companies seeing success right now are those moving, failing and learning quickly, and comfortable carrying the risk that involves.
David Watson of BFY Group focused on a different part of the flexibility package, the importance of building trust with consumers. Decades of inaccurate billing, unreliable smart meter reads and negative media attention have created a trust deficit the industry has struggled to resolve. Getting the fundamentals right is essential before we ask people to hand over control of their homes and their assets.
Kate takes a different stance, though; in her view consumer engagement is not built on trust so much as on automation that makes customers’ lives easier.
All three agree that the technology we need to make flexibility work exists today; we are not waiting for a silver bullet. But David made a further point that sits slightly apart from the others. The technology may exist, but do we have the volume? His view is that there simply are not enough EVs, solar panels, batteries and heat pumps in homes for a market to function. So we have the automation, the aggregation and the assets that talk to each other; what we are still waiting for is scale.
So what does this mean for the wider industry?
Kate predicted that consolidation among flexibility providers will arrive via market price movements rather than gradual attrition, with geopolitical and electoral volatility as the trigger.
David estimated that a typical household might earn a couple of hundred pounds a year from optimising flexible assets, enough for the engaged, nowhere near enough for the mainstream, and he described current flexibility participants as operating on a “jam tomorrow strategy”.
From flexibility to solar and storage
Lennart Van Walsum of the Global Solar Council came at the argument from a different perspective, but his assertion that storage is an essential addition to any solar installation only strengthened the flexibility case. Unlocking solar and batteries together adds more assets to the flexibility pot and riding the “solar coaster” over the past few years, we can see solar becoming a genuinely useful asset for flexibility service providers. Watch this space for a wider discussion on that.
Technology, trust and value
If there is one thing to take from this year’s Summit, it is that the sector has stopped arguing about the technology needed to deliver flexibility as a grid service and moved on to what comes next.
What these conversations left me with is three positions on what has to happen, each pointing to a different challenge standing between flexibility and the mainstream.
Sean’s position is that what is missing is action; his point about hindsight rather than capability is really a point about risk appetite, and on his reading the winners are already moving, already failing at small scale, and already learning faster than their competitors.
David comes at it from the opposite direction. Moving fast into a population that does not trust you turns opportunity into opposition, and asking someone to hand over control of their heating when you cannot reliably tell them what they owe is a hard sell.
Kate’s view rests on automation; if flexibility works properly the customer never has to think about it, and engagement stops being a question at all.
None of these is wrong, but together they show the scale of the mountain we need to climb. They cannot all be the priority, and that is a something the wider industry has to grapple with.
The question I keep coming back to sits underneath Kate’s position. If David is right that trust is the binding constraint, can trust be built through systems people never consciously see or agree to? Automation may well solve engagement, but engagement and trust are not the same thing, and the first time something goes wrong inside a system people do not understand, flexibility becomes the victim.
Which leaves value, and this is where flexibility might fall down. David’s estimate that a well-optimised household might see a couple of hundred pounds a year is enough for the genuinely interested and nowhere near enough for everyone else. Whichever path the industry takes, technology, trust or automation, it arrives at a consumer proposition that has to be worth someone’s while, and right now, for most households, it is not.
So: the technology argument is settled, the trust argument is unresolved, and the value argument has barely started. I will be unpicking these issues over the coming weeks. I would love to hear what you think.