Response to the CRU National Energy Demand Strategy Consultation

Therefore, the approach of seeking to identify a single definition for many heterogeneous services is particularly difficult (Nolan and O’Malley, 2015) and could be simplified by separating the various types of flexibility according to the service provided to the system. [...] If the focus of policy is to encourage specific types of flexibility, then it may need to be excluded, while noting that the exclusion of interconnectors from the provision of flexibility within their capabilities will lead to over-procurement and higher costs (Newbery and Grubb, 2014). [...] Whether this should be included as part of a definition is determined by the purpose of the policy and the type of flexibility that the policy wishes to incentivise. [...] the cost of transmitting the last kWh of electricity through the system); the standing charge should be proportional to the burden that consumer places on fixed costs while a capacity charge should be proportional to each consumer’s contribution towards the transmission capacity requirement. [...] This is because the relationship between the demand for flexibility and the demand for energy is unknown, but is at the very least non-linear and is also heavily dependant on the supply side, over which the consumer has no control.