Government, Ofgem and industry understand the potential value of large-scale DSR. However, there is no strategy to ensure it happens and, therefore, little confidence that it will emerge in time to offset the costs of decarbonisation. Ofgem is right to recognise that radical thinking is needed to create the shift to an efficient two-sided market.
This response sets out a new approach to drive engagement in energy flexibility through aligning consumer needs with the provision of system services. It is based on a set of beliefs about the nature of innovation and the political context in which the market operates. These beliefs suggest the need for a new licenced function to develop, operate and populate smart local energy markets. First, we outline our overarching policy beliefs in relation to Demand Side Response (DSR) and what will be needed for consumers to be successfully engaged. We then outline more specific proposals in answer to questions 9 and 10.