When flexibility signals interact: Quantifying the interplay of mechanisms for acquiring DSO services

Abstract

The growing incorporation of distributed energy resources (DERs), together with the electrification of transport, heating and cooling, is making distribution networks more dynamic and more exposed to local congestion and voltage problems. In this context, system operators are considering a range of flexibility acquisition mechanisms, including network tariffs, local flexibility markets (LFMs), and flexible connection agreements (FCAs), to address these network challenges. However, these mechanisms are often designed independently, even though they can coexist and act on the same customers. Depending on their design and how their signals interact, these acquisition mechanisms may reinforce each other, enabling more effective customer responses to meet network requirements, or, conversely, lead to redundant or conflicting signals that undermine their joint efficiency.Thus, this work presents a based-model assessment, developed within the BeFlexible project, to analyse how multiple mechanisms for acquiring flexibility interact when implemented jointly in distribution networks with high shares of DERs and flexible demand. The study examines how price signals from network tariffs, local flexibility markets, and flexible connection agreements jointly influence the behaviour of flexible loads, such as electric vehicles (EVs), heat pumps (HPs), and water heaters (WHs), and how these responses translate into network impacts. Four case studies are considered to assess: (i) the interaction between network tariff designs (national and local) and LFMs; (ii) the role of temperature-driven demand variation under these acquisition mechanisms and network impacts; (iii) the effect of changes in regulated tariff components; and (iv) the interplay between FCAs, network tariffs, and LFMs.The results show that predictable system-wide tariff signals may synchronise flexible demand and unintentionally create local congestion, particularly for highly price-responsive resources. LFMs improve congestion management by introducing locational corrective signals, while ex-post local tariffs help reduce excessive predictability, gaming opportunities, and local market power concentration. Flexible connection agreements further complement tariff- and market-based mechanisms by limiting coincident demand during constrained hours. Overall, the findings highlight that a coordinated acquisition mechanism design is essential to align incentives with local grid constraints, reduce inefficient or conflicting signals, and support the secure and cost-effective operation of active distribution networks.