Thoughts on conceiving a “fair” value for flexibility

Abstract

Modern distribution networks are rich in distributed energy resources (DERs) but old in terms of infrastructure and management mentality. This has led to their experiencing more frequent operational issues, leading to distribution system operators (DSOs) facing a key question: should they reinforce or resort to local flexibility markets to solve their issues? The decision ultimately boils down to what the cost of flexibility and value of the deferred grid reinforcement are. While most works opt for determining these through real-time markets, we instead argue that flexibility, like any other product, has intrinsic value, which is directly tied to the reinforcement it replaces. This work presents some thoughts on how to define network-specific, fixed flexibility price catalogues for different DERs, in order to protect the financial interests of both DSOs and end-users. Said thoughts comprise a 3-step methodology that could underpin further research on defining a truly “fair” value for flexibility.