In the previous section, we found that the electricity system will increasingly be built around renewables and flexibility as the least-cost and cleanest electricity system. Flexibility will become the core grid function, the cornerstone of the grid. This is where technologies and business models such as smart EV charging, battery storage, demand side response (DSR), interconnection, prosumers (those who both produce and consumer energy), and aggregators of distributed energy resources, will come in.
At present, however, the market for flexibility services is limited artificially by a legacy network that has operated in the same way fundamentally for more than a century. In this section, we describe some practical examples of how present regulations perpetuate the electricity systems of the past, for example through connection charges, availability requirements, minimum size thresholds, and capacity and ancillary market rules. Collectively, these legacy regulations discourage investment in flexibility, delaying the shift to majority renewables and increasing system costs overall. Where electricity market reform is taking place, this may be happening in an incremental way that heightens complexity and uncertainty, leaving investors with a limited view as to how they will be compensated and a less convincing business case.
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