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Flexible energy grids

Transitioning to renewable energy, heat pumps, and electric vehicles requires more than simply connecting them to the grid.

These technologies need a flexible grid that dynamically balances intermittent power generation, meets fluctuating electricity demand, and integrates millions of small-scale solar power generators and batteries.

This article explores flexible electricity grids, highlighting their benefits, the barriers to adoption, and the steps the UK government is taking to advance their implementation.

Contents

What is a flexible energy grid?
Why is a flexible grid essential?
How does a flexible energy grid work?
How does the UK Government support grid flexibility?
The benefits of flexible grids
The barriers slowing down flexible grids
Success stories

What is a flexible energy grid?

A flexible energy grid is a type of electricity grid designed to adapt swiftly to fluctuations in electricity generation and consumption.

It is a high-tech alternative to traditional grids that were built to handle predictable outputs from coal and gas power stations that rely on fossil fuels.

By leveraging advanced technologies like electricity storage and intelligent power distribution based on real-time data and forecasts, flexible grids ensure power supply remains balanced, despite variable availability and demand.

Flexible grids are necessary to integrate:

Intermittent renewable energy sources, such as UK wind farms, which depend on weather conditions.
Small-scale solar power installations, EV batteries, and heat pumps into local grids.
Accurate spot and future electricity markets, facilitating efficient pricing for international and peer-to-peer (P2P) electricity trading.

Why is a flexible grid essential?

The UK is legally bound to achieve net zero emissions by 2050, requiring large-scale adoption of renewable energy, heat pumps, and electric vehicles to replace fossil fuel-based systems like gas power stations, LNG, boilers and petrol vehicles.

However, incorporating these technologies at scale is impossible under the current “rigid” grid. Here is why:

Intermittent renewable energy: Wind and solar power rely on weather conditions, making their electricity generation unpredictable. A flexible grid is essential to balance supply when these sources underproduce or overproduce.
Increased electricity demand: The rise of electric vehicles and heat pumps is shifting electricity consumption, especially towards nighttime charging and winter heating. The current grid, built for steady day-night cycles, struggles to manage these changing loads.
Lack of intelligence: The current grid lacks the sensors, meters, databases, and algorithms to monitor real-time conditions. Without these technologies, the grid cannot automatically and optimally distribute electricity across millions of large and small-scale generators, storage units and consumers, making it difficult to balance supply and demand effectively.
Grid-scale electricity storage: Large-scale storage, such as batteries or pumped hydro is essential for storing excess power from renewables and releasing it when demand is high. The current grid lacks the capacity, infrastructure and technology to incorporate this storage at scale, limiting the ability to balance intermittent supply with demand.

In other words, adopting clean energy depends on crucial grid upgrades, including the rollout of smart meters, dynamic pricing, large-scale storage, and balancing technologies.

How does a flexible energy grid work?

A flexible energy grid requires vast amounts of data and advanced technologies to manage the complexity of integrating renewable energy.

The grid must coordinate large power stations, distributed micro-generators, local demand variations, international electricity trading, storage facilities, and nuclear power stations—all working together like an orchestra to keep the system balanced.

Although we’re not there yet, here’s how the key components of a flexible grid function:

Smart grid management

A flexible grid uses AI and machine learning to dynamically manage energy from large-scale and distributed sources while integrating energy storage at national and local levels.

Advanced forecasting tools predict renewable generation based on weather patterns and anticipate electricity demand using historical data and international trading flows. This helps ensure reserves are available for emergencies.

The grid operates as a network of interconnected, smaller grids, balancing local supply and demand in real-time through smart meters and sensors. AI optimises energy storage, directing when to store and release excess renewable energy, ensuring a stable system across all grid scales.

Demand-Side Response (DSR)

DSR incentivises consumers to shift electricity usage based on dynamic pricing, helping balance supply and demand. Homes and businesses can be incentivised to use energy when renewable generation is high (i.e. low or even negative electricity prices) and reduce consumption during peak times (i.e. expensive kWh).

Although DSR is still developing, smart meters and connected devices will eventually enable automatic adjustments, like charging electric vehicles with abundant renewable power, often sourced from the property’s solar panels.

Widespread adoption is the key challenge, but the potential for cost savings and grid efficiency makes DSR an essential element of a flexible grid.

Energy Storage

Energy storage is crucial for balancing the intermittent nature of renewable energy:

Large-scale storage: Grid-scale batteries store excess energy when renewable generation is high and release it during peak demand or when renewable output is low. These systems stabilise the grid by smoothing out fluctuations.
Small-scale storage: Home and workplace batteries (and potentially EVs while they charge) allow local energy storage where it’s generated, reducing reliance on the regional electricity distribution grids during peak times and enhancing flexibility.

Large and small storage systems work together in a fully flexible grid to maintain a stable and resilient energy supply.

How does the UK Government support grid flexibility?

The UK government is actively exploring and implementing many technologies and mechanisms necessary to support grid flexibility. Here’s a breakdown of some key initiatives:

Future Energy Scenarios (FES)

The Future Energy Scenarios (FES) is a yearly report published by the National Energy System Operator, outlining potential pathways for the UK’s energy transition.

FES often prioritises grid flexibility. The latest 2024 edition highlights actions such as accelerating the roll-out of whole system infrastructure, smart technology, heat pumps for heating, and building low-carbon renewables, all of which are direct contributors to the flexible grid.

If it’s in FES, it will likely happen as it serves as a strategic roadmap for the UK’s energy system, helping guide decisions for policymakers, industry players, and investors.

Demand Side Response (DSR)

The UK has implemented several initiatives to enhance grid flexibility, encouraging demand-side response (DSR) to manage energy consumption more effectively.

Demand Flexibility Service (DFS) – Introduced in 2022, this program incentivises businesses and households to reduce consumption during grid stress events, providing payments for reducing demand during peak periods.
Interoperable Demand Side Response Programme (IDSR) – Focuses on developing energy-smart appliances that can communicate with DSR service providers, enabling more flexible energy management for residential and business users.
Capacity Market – Pays businesses to reduce demand during peak times to stabilise the grid and reduce reliance on fossil fuel-based backup generation.
Flexibility Innovation Programme – Provides £65 million to support innovations in smart and flexible energy technologies, increasing DSR participation across sectors.

These efforts help create a more resilient and flexible grid, integrating more renewable energy sources while managing peak demand.

Smart meters

Smart business electricity meters are essential for a flexible grid. They provide real-time data on energy consumption, enable consumers to participate in demand flexibility services, and even facilitate the export of excess energy back to the grid.

Businesses that consume large amounts of electricity are already required to have half-hourly meters that record the maximum demand on individual commercial properties.

The government is pushing the rollout with annual targets for home and business energy suppliers and focusing on ensuring that vulnerable groups are not left behind.

Pilot projects and research

UK government programmes like Innovate UK are funding research into smart grid technologies, energy storage, and related areas to accelerate the development of a more flexible energy system.

These include projects exploring blockchains for peer-to-peer (p2p) electricity trading within local grids, and other like the Cornwall Local Energy Market (LEM) in which distributed grid mechanisms are explored in practice.

Benefits of a flexible energy grid

A flexible energy grid offers numerous advantages by enabling the system to adapt to the increasing use of renewable energy, fluctuating electricity demand, and decentralised power sources.

For businesses, flexible grids bring greater reliability, cost savings, and opportunities to actively engage in energy management. Here are the principal benefits of having a flexible energy grid:

Benefit	Description
Lower domestic and business electricity bills	Consumers save by shifting energy use to cheaper, off-peak times through demand-side response (DSR) schemes like time-of-use tariffs.
Increased grid stability	A flexible grid adapts to real-time fluctuations in supply and demand, enhancing stability.
Easier renewable integration	Flexibility enables higher renewable energy use by accommodating intermittent power with storage and interconnectors.
Improved energy security	Local generation and storage reduce reliance on central power stations, lowering outage risks.
Decentralised power	Consumers can generate and sell excess power, reducing dependence on large energy suppliers and increasing resilience.
Optimised energy storage	Batteries store excess renewable energy for use when supply is low, ensuring consistent energy availability.
Increased consumer participation	Smart meters and apps give users control over their energy, raising awareness and adoption of sustainable practices.
Support for electrification	Flexibility smooths peak demand for EVs and heat pumps by shifting usage to times of excess renewable energy.
Reduced operational costs	Businesses save by automating energy use to align with grid signals and accessing new revenue through DSR programs.
Enhanced market opportunities	Flexibility markets allow trading of energy services (generation, storage), creating new revenue streams for businesses.
Better forecasting	AI improves energy generation and demand predictions, optimising grid management and reducing waste.

Barriers to creating a fully flexible grid

Transitioning to a fully flexible energy grid presents significant technical, economic, and regulatory challenges. While the benefits are clear, implementing the technologies needed to make the grid more adaptable is complex and costly.

Here are the primary barriers hindering the progress:

Barrier	Description
High implementation costs	Energy storage, smart grids, and AI systems require high upfront investments, delaying adoption without substantial funding or incentives.
Slow smart meter rollout	Slow deployment of smart meters and sensors limits real-time energy management and access to demand-side response benefits.
Integration with legacy infrastructure	The old grid was designed for centralised power, making upgrades to accommodate decentralised renewable sources costly and complex.
Regulatory complexity	Slow regulatory changes and conflicting stakeholder priorities hinder the reforms needed to support grid flexibility.
Lack of consumer awareness	Limited consumer understanding of their role in grid flexibility restricts participation in demand-side response and energy generation.
Managing distributed energy resources (DER)	Coordinating small-scale energy sources like solar panels and batteries adds complexity to grid management and requires advanced technology.

Flexible grid success stories

While the ideal electricity grid remains far-flung, several pioneering projects in the UK are already demonstrating how flexible grids can function in practice.

These projects showcase real-world applications of smart technologies, time-based tariffs, and localised energy management, paving the way for a more adaptable grid.

Octopus Energy: Dynamic Tariffs and Smart Meters

Octopus Business Energy is leading the way with its time-of-use tariffs, such as Agile Octopus, which uses smart meter data to allow consumers to adjust their energy consumption based on real-time grid conditions.

Businesses can consume power when business electricity prices are lowest and reduce usage during peak demand periods, saving money while helping to balance the grid. This system leverages flexible pricing to encourage more efficient energy use and greater participation in demand-side response (DSR).

Cornwall Flexible Energy Trials

The Cornwall Local Energy Market (LEM) is a government-backed trial demonstrating how flexible services can help manage local energy demand.

By integrating local energy production, storage, and flexible tariffs, the project allows homes and businesses to trade surplus electricity with the grid.

This reduces strain on the national grid, helps balance energy supply and demand locally, and supports using renewable energy sources. It’s a practical example of how decentralised, flexible systems can operate successfully on a regional scale.