UK firms could deliver almost 10GW of demand-side response within the next four years if policymakers level the playing field for providers, according to the Association for Decentralised Energy.
Its latest report suggests unlocking industrial, commercial and public sector demand-reduction as well as back-up generation and combined heat and power (CHP) could save UK bill payers around £10bn by 2035.
Of that figure, around £2bn is from avoiding the need to build new power stations, with £8bn in savings from avoided network infrastructure.
The ADE suggests some 2.8GW could be delivered by industrial companies, 1.7GW from the public and commercial sector and around 2.3GW from CHP.
The association also believes around 3GW of demand-response could come from existing back-up generation. That figure could potentially be much higher. No accurate tally of the UK’s back-up generators exists. Experts told the Lords Science & Technology Committee in 2014 that it could be as high as 20GW, although that estimate was then based on a 2010 ‘guesstimate’ by EA Technology, which likely lifted that figure from a 2001 report for the DTI.
Meanwhile, Frontier Economics, commissioned by Decc last year to look into the potential for DSR in the UK, could not find accurate data on which to base assumptions. It modelled scenarios with between 5GW and 20GW of back-up generation.
Either way, ADE director Tim Rotheray said there were “swathes” of generators that could be used to provide balancing services with the right framework in place.
He called for policy and market makers to implement three changes to unlock demand-side response: fair treatment in the capacity market; independent access to the wholesale market and balancing mechanism; and simplification of the balancing services market.
The capacity market currently awards generators contracts of up to 15 years but DSR providers are only given one-year contracts. Some have questioned the legality of that arrangement. Rotheray said the issue was that policymakers recognised the low cost of equipment – but not cost of the time and resource to develop DSR business cases.
Rotheray said DSR providers would probably be satisfied with “contract lengths between three and five years”. However, he questioned “whether it is right to give one actor a three year contract and another a 15 year contract … the time and effort [of implementing DSR within a business] needs to be reflected in the capacity market [contract structure].”
Paul Lowbridge, who manages National Grid’s Power Responsive campaign, which aims to procure up to 50% of balancing services from DSR by 2020, acknowledged the issue of complexity.
He said the system operator had made headway in terms of market education in the first year of the campaign, but would focus on making balancing markets more accessible for demand-side providers and “levelling the playing field” over the next 12 months.
Download the report here.
The Energyst, in partnership with National Grid, aggregators and energy suppliers is hosting a conference on demand-side response in London on 8 September. It is free to qualifying end-user businesses. To request your ticket, click here.
Ahead of the DSR Event, we are surveying firms for their views on demand-side response. Please take this short survey, which will form part of a new report, to be published at the conference.
Related stories:
Free demand-side response conference
Demand-side response: Give us your views
Decc, Ofgem and National Grid must make battery storage stack-up
Ofgem: Energy flexibility will become more valuable than energy efficiency
National Grid boss: future of energy is demand not supply
Government backs Adonis’ smartgrid plan, pledges £50m+ for storage and demand response
National Grid says impact of solar requires greater system flexibility
National Grid signs 20MW demand-side response contract with battery storage operator
Eon opens 2MW battery storage facility
Decc says energy storage ‘a top priority’
National Grid says UK will miss 2020 targets, predicts big battery future
Major changes to capacity market proposed
Hot technology: energy storage via heat battery
Western Power Distribution ramps up demand-response trials, calls for participants
Smart grids ‘require local control and businesses must play or pay’
National Grid must simplify demand response to scale UK market
40% of firms say they could shift energy use as National Grid asks them to turn up
Government to consult on demand response in spring
Energy Technologies Institute: Let private firms run smartgrid trials
MPs told UK needs energy system architect and must commercialise smartgrid
Flexitricity blasts transitional capacity market as Npower plots supermarket sweep
National Infrastructure Commission to focus on energy storage and demand response
Tempus: A five year old can see capacity market is anticompetitive
National Grid plots superfast grid balancing service
Keep calm and scale demand response, says Scots energy inquiry
National Grid flags demand response changes, urges suppliers and TPIs to deliver
Follow us at @EnergystMedia. For regular bulletins, sign up for the free newsletter.
