The first live use of the Demand Flexibility Service (DFS) took place on Monday 23 January 2023, with 400,000 customers taking part and receiving £3.37/kWh for the electricity demand they reduced1. The service, run by National Grid Electricity System Operator (ESO), had begun incentivising users to cut consumption at key times from 1 November 2022, following a first test event on 16 November1.
A second live event followed on Tuesday 24 January, when customers were offered £4/kWh as ESO accepted a higher bid1. Across the two live events, ESO paid more than £3m to suppliers, split between around £850,000 for the shorter Monday session and £2.1m for the longer Tuesday session1. During the live events, providers submitted bids in the range of £3,300/MWh to £6,500/MWh, according to data from LCP Delta1. Across the test events, ESO had set a guaranteed acceptance price of £3,000 per megawatt hour for all bids submitted by providers1.
Households with a smart meter, or business sites with half-hourly metering, were eligible to sign up, either through their supplier or a technology provider1. In total, 31 providers registered by the end of the DFS period in March 2023: 14 domestic only, 10 non-domestic only and seven covering both1.
Over the winter of 2022/23 there were 20 test events, used to onboard providers, and two live uses of DFS, with sessions lasting 60, 90 or 120 minutes1. Between November and March, 1.6m households and businesses participated, collectively providing around 350MW of flexibility during events and reducing demand by 2.92GWh from times of grid strain1. ESO reported a total of 3,300MWh of electricity reduction across the 22 events, and 681 tonnes of carbon dioxide emissions avoided1. ESO paid households and businesses nearly £11m over the period, an average cost of around £3,330/MWh across the 22 sessions1.
"during the [first live session] on Monday 23 January, 400,000 customers participated and were given £3.37/kWh of electricity demand they reduced"
| Item | Figure |
|---|---|
| First live event | 23 January 2023 |
| Participants, first live event | 400,000 |
| Rate paid, first live event | £3.37/kWh |
| Rate offered, 24 January | £4/kWh |
| Providers registered by March 2023 | 31 |
| Participants, November to March | 1.6m households and businesses |
| Total paid, 2022/23 | nearly £11m |
Why it matters for households
The DFS is the mechanism by which a household with a smart meter can be paid for cutting or shifting electricity use at times when the grid is tight. The rates paid in the first live event, £3.37/kWh and then £4/kWh, were far above typical unit prices, but they applied only to the demand reduced during a short session, not to all consumption. The Demand Flexibility Service explained sets out how sessions work, and whether the service is worth it covers the practical arithmetic for a home.
Participation depended on metering. Households needed a smart meter, or a business site needed half-hourly metering, to sign up1. For homes without one, joining a demand flexibility service without a smart meter is the relevant question. The payments sit alongside, rather than replace, a household's tariff arrangement.
The scale is also relevant to energy independence. Collectively, participants provided around 350MW of flexibility and cut 2.92GWh of demand at times of strain, with 681 tonnes of CO2 avoided1. That is demand met by not consuming rather than by generating, which is what household demand flexibility does for the grid. The ESO survey found 76% of participants took part for the financial benefits, 41% for the challenge and 37% to help balance the grid1. Underrepresentation was reported among younger age groups, lower income households, renters and city residents1.
What happens next
ESO reintroduced the service for 2023/24, with the first session taking place on 16 November1. For that winter, ESO planned 12 incentivised test events that consumers and businesses could take part in, with a guaranteed acceptance price of £3/kWh on offer to suppliers, aggregators and businesses for at least six of the test events1.