A study on service providers’ financial and technical potential to participate in local and national flexibility markets

The integration of flexible resources into the energy system is essential for both Distribution System Operators (DSO) and Transmission System Operators (TSO). This paper investigates the drivers, barriers, opportunities, and potential for Service Providers (SPs) to value-stack across different local and national flexibility markets. The findings are derived from the Uppflex project, which involved interviews, workshops, and technical and financial assessments. The results show that there are barriers to participate in multiple markets, especially local flexibility markets. The assessment indicates that if SPs would look at the price offered by different markets each hour, the local flexibility market would be most profitable the majority of hours when the DSO requires flexibility. An energy product and a capacity product that is coordinated with all markets could benefit both System Operators (SO) and system users. To conclude, allowing SPs to participate across multiple system levels can reduce overall system costs. However, standardization, increased knowledge, higher economic predictability, and new regulation is needed to make local flexibility markets more attractive.