From passive consumer to active market participant

Until recently, flexibility (deliberately changing electricity consumption or production) was mainly associated with large generators and industrial consumers. That is no longer the whole picture.

As smart meters and flexible technologies such as home batteries, smart EV chargers and heat pumps become more common, residential consumers can also participate. Aggregators, and in some cases energy suppliers, can combine the flexibility of many individual households into a portfolio that can be offered to the market.

The role of the consumer is therefore changing. Instead of simply consuming electricity, households can increasingly respond to prices or other signals from the energy system. This can reduce costs, create additional revenue opportunities and, when properly coordinated, support the electricity grid.

A simple example is an electric vehicle that charges automatically when electricity is cheaper or more abundant. A home battery can also be controlled to respond to system needs. These actions may benefit the household while contributing to a more balanced and efficient electricity system.

The real breakthrough will come from automation. Consumers should not have to follow market prices all day or make manual decisions about every charging or heating cycle. Energy management systems can increasingly take care of this automatically, within the limits set by the consumer for comfort and availability.

The digital meter as the foundation for flexibility

A digital meter is more than a replacement for an analogue electricity meter. It provides the measurement and data infrastructure needed for a more active electricity system. More detailed information on consumption and injection can support new services and new ways of managing flexible assets.

Flanders has already made substantial progress with the roll out of digital meters by Fluvius. That matters because flexibility becomes difficult to manage at scale without reliable measurement and data. The necessary infrastructure to make electricity use more visible, and in some cases more steerable, is gradually being put in place.

Of course, a digital meter does not create flexibility by itself. Its value depends on what is connected around it: flexible assets, usable data, market signals, automation and market processes that allow those assets to be activated.

Congestion management: flexibility at the local level

Historically, flexibility has mainly been associated with maintaining the overall balance between electricity production and consumption, for example through Elia's balancing mechanisms. Today, however, the need is also becoming more visible on distribution grids. Heat pumps, EV charging and solar panels can create local peaks that put specific parts of the network under pressure.

Reinforcing cables and transformers is often necessary, but it takes time and requires significant investment. This is why distribution system operators are also looking at local flexibility as an additional tool for congestion management. Flexibility is not a substitute for grid reinforcement, but it can help make better use of existing capacity and, in some situations, postpone investments.

Rather than building infrastructure that is mainly needed for a limited number of peak hours, a grid operator may be able to procure flexibility to reduce consumption or limit injection at the right place and time. In those specific situations, flexibility can reduce the need for additional 'copper in the ground'.

Creating value for the entire energy ecosystem

Flexibility creates value for different stakeholders, but the nature of that value differs:

• DSOs (Distribution System Operator) such as Fluvius can use flexibility for local congestion management and more efficient use of network capacity.

• TSOs (Transmission System Operator) such as Elia can use flexibility for system balancing and maintaining system stability.

• Energy suppliers and BRPs can optimize portfolios, manage imbalance exposure and develop new customer services.

• Consumers and prosumers can reduce energy costs and potentially unlock new revenue streams from flexible assets.

The power of value stacking

One of the most important economic questions around flexibility is value stacking: how can the same flexible asset create value in more than one market or application?

A battery, for example, does not necessarily have to serve one purpose all day. Depending on technical constraints and market rules, its capacity may be used differently at different moments:

• In the morning: participating in the balancing market to absorb frequency deviations.

• At noon: offered on the local congestion market to relieve strain on the connecting transformer.

• In the evening: used for portfolio balancing by a Balance Responsible Party (BRP) or optimized for self-consumption.

Combining these opportunities can make the business case for flexible assets considerably stronger. In practice, however, this also raises practical questions: who controls the asset, which signal has priority, what happens when markets overlap, and how is the value divided among the parties involved?

From manual to automated flexibility

The next development is likely to be a move away from flexibility that depends on active choices by consumers towards flexibility that happens largely in the background.

An electric vehicle, for instance, can take into account when the driver needs the car and then determine suitable charging periods based on prices, grid conditions and the user's preferences. Similar principles can be applied to batteries, heat pumps and other flexible devices.

If this is done reliably, large numbers of relatively small devices can together provide a meaningful pool of flexible capacity.

Changing the rules of the game: network code on demand response

At European level, the regulatory framework is also evolving. One important development is the Network Code on Demand Response, which aims to create greater harmonisation across Europe.

Flexibility rules and market arrangements have developed differently across member states. A more harmonised European framework could make participation easier and reduce some of the barriers that currently exist. Key areas include:

• Lowers entry barriers: making it easier for aggregators and smaller assets, such as residential batteries, to gain market access.

• Enforces data standardization: clear rules for data communication between TSOs, DSOs and market parties can help prevent interoperability issues.

• Encourages market-based procurement: supporting transparent mechanisms for grid operators to procure flexibility where appropriate.

For energy companies, this could gradually shift flexibility from highly customised local solutions towards business models that can be replicated more easily across markets, although national implementation will remain important.

What does the future hold for Belgium?

Belgium is reaching a stage where many of the ingredients for a more flexible energy system are available: more renewable generation, digital meters, electric vehicles, heat pumps, batteries and growing interest in dynamic tariffs.

The difficult part is bringing these elements together. That requires workable market processes, reliable data flows, suitable IT architecture and clear operational responsibilities.

The future electricity system will not only need more renewable generation. It will also need to make better decisions about when and where electricity is consumed, produced and stored. Flexibility is one of the mechanisms that can help connect those decisions.

For Belgium, the opportunity lies in combining the physical infrastructure being developed today with digital capabilities and market arrangements that make flexibility practical and valuable. Digital meters provide information, markets and grid operators create signals, and technology can translate those signals into action. The challenge is making all of these elements work together.

Navigating the complexity

The potential is significant, but the practical challenges should not be underestimated. New market mechanisms, value stacking and regulation create questions around IT architecture, real-time control, data exchange, operational processes and governance.

At Trilations, we work with organisations on the practical side of this transition: turning regulatory and market developments into concrete strategies, processes and operational solutions.