Post: Tailoring flexibility: strategy across markets

Tailoring flexibility: strategy across markets

The energy transition is not a one-size-fits-all journey. While the imperative to decarbonise is shared, the way energy flexibility is defined, valued, and monetised varies dramatically from one region to another. For businesses with operations in multiple markets understanding these differences is essential to unlocking the full commercial and sustainability potential of flexibility.

In this article, we explore how flexibility opportunities differ across some of the world’s most active markets, including the UK, Ireland, the United States, and Japan, and what that means for energy users looking to participate.

Why regional context matters

In essence energy flexibility is the ability to adjust consumption or generation in response to grid needs, market prices, or renewable generation patterns. However, while the underlying principle is the same worldwide, the way flexibility is valued, rewarded, and deployed depends heavily on local conditions. In other words, the “rules of the game” change from region to region, and sometimes even from state to state or province to province.

Several key factors shape how flexibility markets operate and how businesses can participate:

• Market structures: some regions operate highly liberalised electricity markets, with separate entities for generation, transmission, and retail supply. In these competitive systems (such as the UK or many US ISO/RTO regions) multiple providers compete to deliver balancing services, and prices are set in transparent markets. Vertically integrated markets (still common in parts of Asia, the Middle East, and some US states) have a single utility responsible for generation, distribution, and supply. In these types of market, flexibility may be procured through direct utility programmes rather than open-market bidding participation but terms can be more prescriptive.
• Regulatory frameworks: regulations determine which types of services are rewarded and how. Capacity markets, for example, pay participants simply for being available during system stress events (common in the UK, Ireland, and parts of the US). Ancillary service markets, such as frequency regulation or voltage support, reward precise and rapid responses to maintain grid stability. In some regions, renewable integration policies create unique opportunities: high feed-in tariffs might incentivise self-consumption strategies, while storage subsidies can enhance the business case for pairing batteries with flexibility participation.
• Grid challenges: every grid has its own stress points. In areas with high wind or solar penetration (like Ireland or California) flexibility is often needed to smooth out rapid changes in generation. In regions with limited interconnection to neighbouring systems, such as island grids or parts of Japan, flexibility becomes critical for maintaining reliability during local supply shortages. Seasonal peaks also vary. Cold winters drive peaks in Nordic countries and the UK, while hot summers dominate in places like Texas. These patterns influence when flexibility is most valuable and what assets are best suited to provide it.

These factors collectively determine the revenue streams available, the assets that can participate and the technical requirements for market entry. For businesses, recognising these regional differences is essential. The same on-site assets could earn vastly different returns, and face very different participation rules, depending on the market in which they operate. Understanding the local context is the first step to designing a flexibility strategy that delivers maximum commercial and sustainability value.

UK: multi-layered flexibility

The UK is often considered one of the most advanced flexibility markets in the world, underpinned by a liberalised energy system and ambitious net zero targets.

Key programmes and opportunities:

• Balancing Services (Dynamic Containment, Dynamic Regulation, Dynamic Moderation) from National Grid ESO
• Demand Flexibility Service (DFS) – introduced in 2022 to reduce winter peak demand
• Capacity Market – rewarding availability for peak system support
• Local flexibility (distribution network operator-run programmes)

Unique features:

• High visibility of wholesale prices and intraday opportunities.
• Strong aggregator presence and competitive service provision.
• Increasing value in “stacking” revenues—e.g., combining frequency response with wholesale arbitrage.

What this means for businesses: Flexibility in the UK is no longer niche but an expected part of corporate energy strategy. I&C users can maximise returns by blending automated response services with market-driven price optimisation, often through AI-enabled platforms.

Ireland: rapid growth, renewables integration

Ireland’s grid faces unique challenges: high renewable penetration (particularly wind), limited interconnection, and fast-changing system conditions.

Key programmes and opportunities:

• DS3 System Services: designed to maintain grid stability with up to 70% instantaneous renewable generation
• Capacity Remuneration Mechanism (CRM): rewarding availability during system stress events

Unique features:

• DS3 rewards fast-acting, precise response
• Grid operators are highly engaged with flexibility providers to ensure renewable integration is stable

What this means for businesses: Participation in DS3 often requires advanced control systems capable of sub-second response. Facilities with fast-ramping assets (e.g., batteries) are well positioned to benefit.

USA: decentralised and diverse

The US market is split between regions with organised wholesale markets (RTOs/ISOs) and those without, leading to huge regional variability.

Key examples:

• PJM Interconnection: world’s largest wholesale electricity market; extensive demand response programmes for capacity, energy, and ancillary services
• California ISO (CAISO): strong emphasis on integrating solar and storage; opportunities in real-time energy markets and flexible ramping
• ERCOT (Texas): energy-only market; flexibility highly valuable during scarcity pricing events

Unique features:

• State-by-state regulatory differences
• High value in seasonal and weather-driven events (e.g., Texas cold snaps, California heatwaves)
• Growing role for behind-the-meter storage and EV fleets

What this means for businesses: US operations must take a regional portfolio view. An industrial site in PJM could participate year-round in capacity markets, while a California facility might focus on daily price arbitrage and renewable smoothing.

Japan: opening up to participation

Japan’s electricity market has undergone liberalisation in recent years, opening the door to demand side participation.

Key programmes and opportunities:

• Balancing Market: launched in phases from 2021, enabling demand response and distributed energy resource (DER) participation
• Capacity Market: introduced to ensure supply adequacy
• Growing role for Virtual Power Plants (VPPs) in balancing renewable variability

Unique features:

• Historically centralised and conservative approach to grid operations
• High interest in digital platforms to coordinate smaller loads into aggregated resources
• Strong corporate commitments to sustainability driving participation

What this means for businesses: Early movers can benefit from establishing relationships with aggregators and demonstrating capabilities in emerging VPP schemes.

Building a multi-market flexibility strategy

For businesses active in more than one region, the challenge is not just about knowing the rules but about optimising across them.

Best practices:

• Asset mapping: identify flexible assets in each region, considering technical capabilities and local market eligibility
• Revenue stacking: maximise returns by combining multiple services, where regulations allow
• Data-driven decision-making: use AI and real-time market data to switch between services dynamically
• Aggregator partnerships: work with flexibility providers, such as GridBeyond, who operate across multiple jurisdictions
• Regulatory foresight: monitor market reforms to capture early-mover advantages
• The role of technology: without the right platform, managing flexibility in multiple markets can be complex and resource-intensive. AI-driven energy management systems, like GridBeyond’s, provide: automated dispatch tailored to market rules; portfolio optimisation across sites and regions; compliance management for diverse technical and reporting requirements and scalability as operations expand

By centralising control while respecting local nuances, businesses can turn geographic diversity into a competitive edge.

Think global; act local

The global push for decarbonisation is accelerating, but the path is shaped by local realities. For energy users, the lesson is clear: while the underlying principle of flexibility is universal, the way you unlock its value must be adapted to each market’s specific structure, regulations, and opportunities.

By combining deep local knowledge with global technology platforms, by working with GridBeyond, businesses can transform flexibility from a reactive cost-saving measure into a proactive, revenue-generating, and sustainability-driving strategy, no matter where in the world they operate.

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