Major power users Anglian Water and Inovyn have urged policymakers, regulators and the system operator to simplify demand-side response (DSR) markets to enable greater uptake.
Inovyn’s head of energy procurement Mark Fitchett said the company had participated in demand-side mechanisms such as Triad since the late nineties and engages in DSR in six of the eight European countries in which it operates. However, DSR “is still a hard sell,” said Fitchett, “and we are a big company.”
While broadly in favour of DSR, Fitchett is “slightly skeptical as to where it will end up” and warned of “unintended consequences” potentially being triggered by ill-conceived interventions. By way of example, he pointed to the way the capacity market was originally structured. “If you get [the market wrong], you end up with shedloads of diesel farms,” said Fitchett.
Speaking at National Grid’s Power Responsive conference, Fitchett said companies needed clear price signals ahead of time in order to make informed decisions and warned of overcomplicating market mechanisms.
“You have to keep [DSR] simple, because even the most sophisticated users aren’t,” he said.
Anglian Water’s energy contract and information manager Tom Lee agreed.
“If we had flexibility and a price signal, then we could follow the price. Nice, easy market signals mean you can follow the price around – which makes it easy to participate [in flexibility markets],” he said.
Lee also suggested there was room for simplification of markets on a technical level. The company had invested in meters for use in the short term operating reserve (STOR) mechanism, he said, but would need to invest in new, more accurate meters to take part in the capacity market.
Mark Fitchett is one of the speakers at The Energyst’s demand-side response conference, held in London on 8 September. The conference is free for end-users. Reserve your seat here.