If energy is history, it is also the future - our keynote speakers at Flexible Futures this year cover from 1880 to 2060, and discuss how history has shaped the energy system we have today, and how technology and economics will shape the Futures.

• Arthur Downing, Strategy Director at Octopus Energy covers 300 years of history in 15 minutes, from what shapes the frequency that electricity systems run at, to where and why generation is built, to what lessons history has for the energy transition. 

• We then move on to Australia, and discuss how solar PV is shaping and impacting networks, and the tools and approaches distribution network companies have to manage these impacts. Tim Jarratt, from Ausgrid, Australia summarises this as “as a DNSP (distribution network service provider), we used to transport electricity over distance, we must now transport electricity both over distance and over time”. Tim discusses a range of tools, from Dynamic Operating Envelopes and dynamic grid pricing, to community batteries and optimising from the grid-edge in.

• James Johnson, the CEO of Piclo, the market platform provides a provoking view of the future, and asks “in a world where solar power creates abundant energy and storage is almost free, how should we organise electricity systems”. In answering this question, James paints a view of an aggressively decentralised electricity system, where storage at nodes buffers production, and outlines the ENERNET

• The Italian electricity system is undergoing extreme transformation. In Sunshine in the South, Luca Marchisio from the Transmission System Operator Terna, describes the approach they are taking to integrate solar power into the electricity system and how they will support batteries through their MACSE programme. He finishes with the challenging observation that for time shifting in energy markets, there are NO BARRIERS OF ANY KIND in Italy, but nothing happens…

• Alex Schoch, Global Head of Electrification and Flexibility at Octopus Energy wraps up the keynotes by comparing demand flexibility to a Christmas Tree Ornament. We talk about flexibility from demand as a nice to have. In reality, we urgently need to embed demand flexibility into the very heart of the way the electricity system operates if we are to avoid over-building grids and creating  high cost electricity systems.

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Welcome:

Looking Backward to the Future:

Networks Down-Under:

Solar Abundance:

Sunshine in the South:

The Road to Flex:

Consumer flexibility needs to be embedded into the electricity system and the markets that enable the second by second balancing and the long term matching of demand and supply. How these markets work together, both existing markets using consumer flexibility in a new way, and new markets for flexibility, and how dynamic grid tariffs interact with it all is covered in the flexibility framework. The framework, which acts as a roadmap for  the remaining two days, is described by Marcia Poletti, Head of European System Change for Octopus Energy.

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What if? The Future We Don't Expect:

So, How Is This Going To Work Then?:

Serge Subiron, CEO Jedlix, a Kraken Company introduced the audience to Project Mercury. Mercury is a collaborative, non-profit initiative and brings together manufacturers, utilities, regulators, and tech providers. Its mission is to develop guidelines for consumer devices to integrate into the energy system and participate in demand-response programs.

Ensuring that new smart devices can participate effectively will create huge value for the electricity sector, and drive cost savings, and grid resilience.

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Project Mercury

Insights from the panel

• There’s increasing evidence that dynamic network pricing is an effective first line of defence for DNOs to prevent herding behaviour.

  • Research from FTI Consulting, “A roadmap for cost-reflective electricity distribution network tariffs in the EU”, assessed various tariff structures based on cost-reflectivity, electrification efficacy, and distributional impact. The research concluded that dynamic network pricing produces the best results overall, with as low as 15% EV penetration.

  • By the time EV penetration hits 60%, dynamic grid tariffs see 24% lower network peaks, and 18% lower network costs

• We urgently need to start to be thinking of dynamic network pricing as BAU

  • UKPN, who ran “Project Shift 2.0”, an EV dynamic network, recognises that while current EV penetration levels are not yet causing grid constraints, it’s critical for DSOs to develop the capability of using dynamic network pricing now, given the exponential growth of EVs.

• In order to ensure lower costs for consumers, we need 

  • DSOs to be evaluated on total expenditure (TOTEX) rather than capital expenditure, as this will incentivise DSOs to make use of a range of alternatives to network upgrades. Even without a TOTEX regulatory framework, dynamic network pricing can be used to keep costs low and nudge smart devices

  • Volue, who have partnered with Norgesnett in a trial where EVs were offered a discounted network price at certain times, raised the issue that regulation in many countries incentivise DSOs to build grids rather than implement cheaper solutions.

Findings from the workshops

• Begin with a simple, minimum viable product (MVP) and gradually increase complexity as required. This MVP would be:

  • An overlay signal, to be implemented by DSOs alongside other flexibility products (i.e. flexibility market).  (An overlay acts as both an incentive or a distinctive to charge, depending on the network  loading. Consumers, or anyone steering the consumers’ smart device receive a benefit, in cents/kWh available to consume or charge when networks are very uncongested, or conversely, must pay to charge when the network is at peak congestion.)

  • The overlay signal would be voluntary: customers would decide to opt-in either directly (for instance where they have a HEMs control box in their home) or via a market participants (suppliers and aggregators) who would provide the optimisation for the customer.

  • The overlay signal would be a day-ahead price. It should be in sync with other markets for an effective optimisation. 

  • Start with lowest granularity and add granularity along the way.

• In parallel, start network tariff reform because this takes years and it’s most effective when this is mandatory.

Unanswered questions

• Will dynamic network pricing erode value in other markets?

• How should the dynamic grid tariff/overlay evolve over time, for instance, as post-DA markets become more dominant in asset optimisation?

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Getting Dynamic Grid Pricing Done: Lessons From trials and Research

Summary (including summary of survey with results)

Insights from the panel:

Can it be done?

• Standardisation is happening in a number of GB/European countries. 

• GB DSOs have developed set of standard products

• Nodes already has set of standard products on its platform that multiple DSOs use (in same market place)

  • These are an activation product (short flex), and two reservation products (long flex and max usage, which limits connection capacity)

  • Nodes is also doing bid forwarding

• European balancing products (e.g. aFRR, mFRR, RR) show it’s possible

• But one major question is whether low voltage/high voltage standardisation should happen separately to keep things simple at the start, or whether we account for future complexities across those networks now and create products that work across both levels

• Standardisation across both DSO-TSO happening in Finland

How?

• We can do a lot with a small set of products, but may need to allow for bespoke products too

• Simple products/messaging important for service providers and their customers – the presentation of these products and simple access to markets just as important

• To achieve standardisation we need to acknowledge we start from different positions and consider IT/tech infrastructure, building from these

• Nodes already supporting bid forwarding between low and high voltage flex markets

• One success of balancing standardisation (aFRR, mFRR) that could be replicated is to start small, show it works and get more and more onboard. Build, measure, learn is a good approach.

• To get more on board we need to be clear on welfare gain of standardisation

Is it worth it?

• Nodes has FSPs that are using the platform in more than one country and that will follow it to new countries (a benefit of standardisation)

• Lots of DSOs and these markets just emerging. Important to think about coordination now (potentially with TSOs too)

Findings from the workshops

• Agree that we can do almost everything with a small set of products - likely to be mix of availability and activation

• Now time together to as industry to firm this up and make it happen

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Standardising Flex Products Across Europe

Summary

• Today with just 4% EV penetration, we are moving 500MW+ of demand at the settlement boundary, but TSOs can’t see most of this as it sits outside of balancing markets. At the same time, balancing and redispatch costs are on the rise. We know that visibility is ultra important for system operators, but there’s a trade-off. Challenges include:

  • High costs associated switch sophisticated metering with varying standards across Europe

  • Locking in positions too early and eroding value

  • Sharing granular data post-event

• How can we improve system visibility of consumer flex whilst also keeping costs down?

• Yingi Wang (NESO) opened with a clear message: DSF has the potential to grow from 2.5 GW to 12 GW by 2030, helping to reduce the need for network upgrades and saving billions each year. However, key barriers remain - especially around operational visibility. NESO is addressing this through a trial with relaxed metering requirements, which has allowed small, aggregated assets like Octopus EVs to participate in the Balancing Mechanism (BM). Early results showed promising improvements in forecast accuracy, response time, and metering rate, setting the stage for a longer-term rollout in 2024. NESO is also working on tools like Reveal and the TIDE cross-industry programme to improve DSF accessibility.

• Jean Hamman (NESO) highlighted the real-time system challenges TSOs are facing as we move toward net zero - from managing frequency to avoiding network overload. He noted that the volume of real-time energy balancing is rising significantly, yet wholesale markets alone don’t provide the tools system operators need. Unexpected demand swings and forecast errors are becoming more common, but half of the UK’s demand-side flexibility is currently excluded from operational use, often due to outdated metering requirements. Jean stressed that while traditional generation is controllable and embedded generation is well-metered, neither offers the real-time visibility and flexibility that DSF potentially can. He questioned why DSF is not being fully used for system security, simply because of metering constraints, and argued for a shift in mindset: system operators need all types of flexibility - firm or non-firm, manual or automated. He used the Demand Flexibility Service (DFS), developed during Russia’s invasion of Ukraine, as an example of what’s possible - a service that delivered real value but was ultimately dropped because it wasn’t included in the grid code. Jean’s message was clear: the system shouldn’t be held back by rules that no longer reflect today’s needs. Instead, DSF should be packaged like a battery - it’s cheaper, greener, and location-flexible - and core DSF products should be built based on system needs, with TSOs challenged to explain why they can’t use them.

• Nikolai Klempp (TransnetBW) presented the OctoFlex project in Germany, which is working to bring EV flexibility into the control room. The project is trialling a 15-minute “dumb energy” product and a 12-hour rolling schedule, aligning redispatch processes with user behaviour while ensuring system controllability and safety. He pointed to the need for better regional visibility of DSF to support congestion management and highlighted the role of pilots in shaping standardised products.

• Tommaso de Marco (Terna) offered the Italian view, outlining two key DSF roles: load shifting as a low-cost alternative to batteries, and balancing-like services for near real-time response. But integration challenges remain - including visibility, pricing, and performance. Terna’s ESI pilot is testing behind-the-meter aggregation across hundreds of resources (e.g. EVs, heat pumps) to help shape Italy’s grid code update by 2026. With battery deployment accelerating, Tommaso warned this may be “the last train” for demand-side flexibility in Italy.

• For TSOs, the priority is clear - build the confidence to use flexible demand just like any other grid asset. That means creating product definitions that work for operators and providers alike, updating outdated frameworks, and ensuring DSF isn’t sidelined due to legacy constraints.

System Visibility Of Consumer Flex

This session was structured in four presentations centering around the discussion about the challenges of the current Independent Aggregators (IA) models and possible solutions. 

• Hans de Heer, a Principal Consultant at DNV, highlighted that the largest potential for demand-side flexibility (DSF) lies in the wholesale market, yet in most countries, independent aggregators (IA) do not have access to these markets. He also emphasized the importance of controlling the rebound effect, as it is a real phenomenon that impacts the system and market participants in a similar way to a flexibility activation.

• Paul Troughton, Senior Director of Regulatory Affairs at Enel X, shared best practices for IA based on his own experience and supported them with a set of comparative tables. The main takeaways from his presentation were: 1) socialising compensation creates market inefficiencies, as the IA responds to distorted incentives rather than actual market needs; and 2) compensation should reflect 100% of the retail price.

• John Lucas, Head of Market Design at Elexon, presented the GB case study on integrating independent aggregators (IA) into electricity markets. He explained how regulatory reforms (P344, P375, P376, and P415) enabled IAs to participate in both balancing and wholesale markets. The latest reform, P415, allows for "virtual trading" with socialised compensation. John noted that future revisions of P415 may need to reconsider this socialisation, as it can distort market signals. Key challenges remain around baseline validation, compensation design, and managing rebound effects. 

• Stefan Doerig, Head of Regulatory and Public Affairs at tiko, presented the Reference Profile Method as a way to govern the relationship between suppliers and IA, allowing IA to access wholesale markets. This method transfers consumption responsibility to the IA based on a day-ahead nominated profile. It avoids baseline gaming and allows IA to trade flexibility in various markets including wholesale. Open questions include setting a fair transfer price and comparing this method to other aggregation models. 

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Integrating Aggregators into the Electricity System

We set this panel up as we are worried that dynamic retail tariffs, i.e. tracker tariffs that follow the wholesale price, might do more harm than good for networks in the future. Why? Because consumers or assets (that automatically follow the tariff) react all to the same day ahead spot price signal. This could lead to herding and new peaks during hours that were forecast to have a low price. 

In the session, we wanted to get views on what dynamic retail tariffs mean for the consumer and networks. We started with some questions for the audience. We clearly hosted a flex-loving crowd, Over half of respondents expected >15% of consumers to be on dynamic retail tariffs by 2030. A large majority (80%) stated that these tariffs are good for the network and the consumer. 

On the panel, Louise Sutherland (RAP) gave an overview of where dynamic tariffs are springing up and pointed out that dynamic retail tariffs are principally a good thing for consumers as they allow them to participate in the energy market. She also pointed out that the focus should be on assets to protect non-flexible household consumption. Laurens Rutten (BEUC) agreed and pointed out that tariffs need to be easy to understand and follow fair commercial practices.

Representing the network side, Lion van de Heijden (Stedin) said they welcome more flexible customers, especially in winter and in domestic regions where little other flex potential is available. She predicts they will need localised dynamic network tariffs to counteract the central market price signals in the future. 

Speakers remarked that smart tariffs are evolving, where consumers are protected from market risks but still remunerated for offering flexibility. This can be a fixed rate tariff with optimisation of flex assets by the supplier. In contrast to dynamic retail tariffs, tariffs with optimisation also carry less risks for networks, as the number of assets continues to grow. The supplier can optimise the flexible assets beyond the initial day ahead price signal and adjust to signals in the intraday market to avoid herding. 

Dynamic Retail Tariffs: Good or Bad