Demand Flexibility Explained | Pete Last | Axle Energy

Demand Flexibility Explained | Pete Last | Axle Energy

In this episode of Energy Unwrapped, I’m joined by Pete Last from Axle Energy to explore demand flexibility, virtual power plants (VPPs) and how ordinary households can help balance the electricity grid while earning money from their home energy devices.

As Britain generates more electricity from wind and solar, we need smarter ways to manage when electricity is used. Sometimes there’s an abundance of renewable energy, while at other times we still rely on expensive gas-fired power stations to meet demand. This is where demand flexibility comes in.

We discuss how home batteries, electric vehicles, heat pumps and hot water cylinders can all play a part, and how companies like Axle Energy bring thousands of individual devices together to create a virtual power plant.

We also explore the financial rewards available to homeowners, how Axle works independently of your electricity supplier, the difference between national and local grid flexibility, smart charging, Mixergy Flex and the future of whole-home energy management.

Having spent years optimising my own solar, battery, heat pump and EV setup around smart tariffs, I’m particularly interested in how this technology can help ordinary households make better use of the equipment they’ve already invested in.

Interested in joining Axle Energy? Take a look at my Axle Energy Referral page to learn more about the service and how you can earn rewards from flexibility events. We also discuss my referral offer in the episode, including a £25 joining bonus for eligible new customers.

What we cover in this episode

• Pete Last’s background and his role at Axle Energy
• What demand flexibility actually means
• Why wind and solar make flexibility increasingly important
• Renewable energy curtailment and reducing gas generation
• How virtual power plants (VPPs) work
• Why Axle Energy isn’t an electricity supplier
• National versus local grid flexibility
• How NESO and distribution networks use flexibility
• Home batteries and grid export events
• Earning rewards from demand flexibility
• Axle Energy’s £1/kWh battery export events
• EV smart charging and flexibility rewards
• Intelligent Octopus Go and competing smart charging services
• How Mixergy Flex uses hot water as energy storage
• Heat pumps and the importance of homeowner comfort
• Smart tariffs, battery arbitrage and optimisation
• Why devices need reliable software integrations
• The future of whole-home energy management
• Axle’s battery optimiser, customer insights and app
• Where virtual power plants go next

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Full Transcript

Below is the full transcript for this episode, lightly edited for readability.

Meet Pete Last from Axle Energy

Pete Last leads Axle Energy’s consumer virtual power plant business, which focuses on connecting and controlling home batteries to support the electricity grid.

Interestingly, Pete’s background isn’t in energy. He previously worked in financial technology, helping banks develop new products and services.

He sees similarities between the changes that transformed banking and the changes now taking place in energy, particularly as software, connected devices and new markets create opportunities to reduce household electricity costs.

What Is Demand Flexibility?

Demand flexibility is about changing when we use electricity to better match the amount available on the grid.

Historically, electricity generation could be increased or reduced by adjusting the output of coal and gas power stations. But as more of our electricity comes from wind and solar, generation becomes increasingly dependent on the weather.

Rather than always changing generation to match demand, we can also change demand to match generation.

That might mean charging an electric car when there’s plenty of wind, storing surplus solar electricity in a battery or temporarily reducing consumption when the grid is under pressure.

Why Renewable Energy Needs Flexibility

Wind and solar are now providing an increasingly large proportion of Britain’s electricity, but they don’t always generate power when we need it.

On particularly windy or sunny days, electricity generation can exceed demand or the capacity of the network to transport it.

At other times, particularly when demand is high and renewable generation is low, gas-fired power stations may still be needed.

Demand flexibility can help with both situations, making better use of renewable generation and reducing the need for expensive fossil-fuel generation.

Why Wind and Solar Farms Get Curtailed

We discuss the growing issue of renewable energy curtailment.

This is when wind or solar farms are instructed to reduce their output, often because the electricity network cannot accommodate all the energy being generated.

Although curtailment can be necessary for operating the grid safely, it also means some potentially useful renewable electricity isn’t being used.

Pete explains how storage, stronger electricity networks and flexible demand can all help make better use of this generation.

What Is a Virtual Power Plant?

A virtual power plant, or VPP, brings together large numbers of smaller energy devices and coordinates them as though they were one larger power station.

A single household battery might only store 5, 10 or 16 kWh of electricity.

But connect thousands of batteries together and they become a substantial energy resource capable of responding to requests from electricity network operators.

Axle Energy acts as an aggregator, combining the flexibility available from individual homes and offering it into electricity markets.

How Axle Energy Works With Your Electricity Supplier

One of the important distinctions is that Axle Energy isn’t a traditional electricity supplier.

You can continue buying electricity from your existing supplier and receiving export payments through your normal export tariff.

Axle provides an additional flexibility service, connecting compatible devices and rewarding customers for supporting the grid.

This separation also means homeowners aren’t necessarily tied to a particular electricity supplier simply because they’ve joined Axle’s virtual power plant.

National Grid Flexibility Versus Local Flexibility

Not all electricity network problems are the same.

National flexibility is concerned with balancing electricity supply and demand across the wider grid.

Local flexibility deals with constraints in particular areas, such as a substation or cable that might otherwise become overloaded.

Pete explains how the same home battery could potentially help with both types of problem.

We also discuss the roles of NESO, the National Energy System Operator, and local distribution network operators in requesting flexibility services.

How Does Axle Know When to Use Your Battery?

Some flexibility events are planned well in advance using forecasts of electricity demand, renewable generation and network conditions.

Axle can often give customers notice the day before an event takes place.

Other electricity markets require a much faster response, particularly when helping to maintain grid frequency.

We explore how these different markets work and why improved automation could allow home energy devices to participate in more of them.

How Much Can You Earn From Axle Energy?

For many homeowners, the most important question is what they can earn.

At the time of recording, Axle’s home battery virtual power plant was offering £1 per kWh exported during qualifying grid events.

That’s considerably more than a typical fixed export tariff, although these payments only apply to particular events rather than every unit exported throughout the year.

Pete explains why these events can command a higher value and how Axle expects its reward structures to develop as the flexibility market grows.

Why £1 per kWh Isn’t the Same as an Export Tariff

A normal export tariff pays for electricity exported throughout the year, regardless of whether the grid particularly needs that energy at the time.

Axle’s flexibility payments work differently.

Events are targeted at periods when reducing demand or exporting stored electricity provides additional value to the electricity system.

We discuss why the higher payment can make commercial sense for these limited periods and whether this type of reward is sustainable over the longer term.

Smart EV Charging and Flexibility Rewards

Electric vehicles are another major opportunity for demand flexibility.

Most EVs spend far more time parked than they need for charging. If a car is plugged in during the evening but doesn’t need to be ready until the following morning, there may be several hours in which charging can be moved around.

Pete explains how Axle works with EV charging partners to optimise charging schedules and reward customers for participating.

We also discuss why charging in the middle of a sunny afternoon could sometimes be more useful to the electricity grid than charging overnight.

Can You Use Axle With Intelligent Octopus Go?

An important question is whether multiple companies can control the same device.

For example, Intelligent Octopus Go already manages EV charging to provide cheap electricity during smart charging sessions.

Pete explains why customers generally cannot use Intelligent Octopus Go smart charging alongside another smart charging service controlling the same EV or charger.

However, using Axle for a separate compatible home battery may still be possible.

Understanding which company controls which device is becoming increasingly important as intelligent tariffs and flexibility services develop.

Hot Water Cylinders and Mixergy Flex

Hot water cylinders are another form of energy storage.

Rather than storing electricity in a battery, they store thermal energy that can be used later.

Having owned a Mixergy cylinder since 2022, I’m particularly interested in this opportunity.

We discuss Mixergy Flex and how hot water heating can be shifted to periods when electricity is abundant or cheaper, without necessarily affecting the homeowner’s supply of hot water.

With millions of hot water cylinders already installed across Britain, the potential combined storage capacity is significant.

Should Heat Pumps Participate in Demand Flexibility?

This is one area where I have some reservations.

After several years of heat pump ownership, I particularly value the consistent comfort provided by weather compensation and low-temperature heating.

I’m less enthusiastic about switching space heating off or deliberately changing room temperatures simply to respond to electricity prices.

Pete explains how heat pump flexibility doesn’t necessarily require switching the system off completely. Small changes to consumption or heating schedules may still provide useful flexibility.

We agree that homeowner comfort and individual requirements must come first.

Home Batteries, Smart Tariffs and Energy Arbitrage

A home battery can do considerably more than store surplus solar generation.

It can also charge from the grid when electricity is cheap, supply the home when prices are higher and potentially export electricity when the grid places a greater value on it.

We discuss how combining smart tariffs, solar forecasts, household consumption and flexibility rewards can help homeowners get a better return on their battery investment.

Rather than leaving the battery to operate on a simple fixed schedule, increasingly sophisticated software can make these decisions automatically.

The Future of Whole-Home Energy Management

Most households with renewable technology already have several different apps.

There might be one for the solar inverter, another for the battery, one for the EV charger and another for the heat pump.

We discuss whether the future could involve a single home energy management system capable of coordinating all these devices.

Pete explains why this is technically challenging, particularly when different manufacturers use different software and communication methods.

However, bringing everything together could unlock considerably more flexibility while making the experience simpler for homeowners.

Axle Energy’s Battery Optimiser

Axle is developing its home battery offering beyond individual flexibility events.

Pete describes the company’s optimiser, which aims to manage compatible batteries around household consumption, solar generation, electricity tariffs and grid events.

The idea is to help homeowners save money automatically, rather than having to work out the best charging and discharging strategy themselves.

We also discuss why reliability is essential, including restoring batteries to their normal operating settings after flexibility events.

Understanding Your Battery Savings

One challenge with home batteries is knowing how much money they’re actually saving.

It’s relatively easy to see how much electricity a battery has charged or discharged, but understanding the financial benefit can be more complicated.

Axle is developing customer insights to help explain the value of solar generation, battery storage, tariff optimisation and flexibility participation.

We discuss why showing these savings clearly could help homeowners make better decisions about their energy systems.

Axle Energy’s App and Future Plans

Towards the end of the episode, Pete outlines what Axle is working on next.

This includes expanding its battery optimisation service, improving customer insights and developing a mobile app with notifications for flexibility events and earnings.

We also discuss how customers can opt out of individual events if they want to preserve their battery charge.

Looking further ahead, Axle wants to connect more types of home energy devices and make flexibility increasingly automatic.

Will Virtual Power Plants Become Part of Everyday Life?

The episode finishes by considering how household energy management might change over the coming years.

As more homes adopt EVs, batteries, heat pumps and smart hot water systems, the combined flexibility available to the electricity grid will grow.

The opportunity is to make all these devices work together, reducing electricity system costs while helping homeowners make better use of the equipment they’ve already purchased.

Ultimately, the ambition is that households won’t need to spend their evenings studying electricity prices or deciding when to charge and discharge their batteries.

The software should increasingly be able to do that for them.

About the Energy Unwrapped Podcast

Energy Unwrapped is my podcast about renewables, home electrification and how energy technology works in the real world. You can browse all episodes, platform links and future updates on the main Energy Unwrapped Podcast page.

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