A leading analyst has questioned the effectiveness of National Grid’s hopes of extending pre-announced load-shedding into domestic power supply.
The backbone operator was yesterday reported to be at an advanced stage of planning for home owners to be rewarded with up to £6 per kWh to switch off heavy-consuming appliances such as storage heaters during the coming winter’s peak hours.
Phil Hewitt, a director of EnAppSys, the respected provider of analysis and forecasting in power markets, today cast doubt on the plan.
Hewitt argues that a “turn-down-to-cash-in” approach is likely to fail in its goal of safeguarding poor households from bills set to rocket beyond £3,000 a year, under the latest revision in October of Ofgem’s cap on retail prices.
“We have been involved in trials of load shifting out of high-priced periods, “ Hewett recounted “This does work if you have a big load like a domestic battery, electric vehicle (EV) or hot water tank.
“However, the majority of households do not have these at the moment, as they cannot afford the capital cost of a battery or EV”.
In addition most households use gas, not electricity, to heat their homes, the consultancy boss observed.
The ESO predicates success for its home load-shifting plan on the 20 million dwellings now equipped with time-sensitive smart meters.
But targeting homes’ metering capabilities, rather than the heavy-charging or heavy-consuming appliances drawing big loads, risks over-estimating the experiment’s impact, Hewett argues.
Tariffing by day part
A second drawback was that too few suppliers are equipped with half hour settlement protocols addressing dwellings, in the analyst’s opinion.
Creating tariffs offering prices which vary by day part might be a solution. But too many retailers lacked software for the former, or creativity for the latter, Hewett implied.
“In the long run (these measures) will become more common. But right now the industry is not ready to deliver the changes to systems that this would require. Maybe it will be a different story in two years’ time”, said Hewett.
“EnAppSys believes domestic DSR demand side response will be a big enabler of the energy transition in the future.
Hewett anticipates “some very high system stress periods this winter when prices in the wholesale market will peak at high levels.
“But at the moment domestic consumers are not exposed to those high prices. So there is little incentive to load-shift, as most consumers are on single price tariffs up at the price cap”.
Overall, Hewett’s prognosis is gloomy. He added: “The current proposals by National Grid will not solve the big capacity crunch we are looking at this winter, with its reduction in coal-fired power station capacity and the severe problems that France is having with its nuclear fleet.
Domestic DSR at present is “really a market for those early adopters of new technology who can experiment by moving consumption to different times of the day”, Hewett concluded.
