National Grid moots demand side response rule changes as winter power margins tighten

Winter (after next) is coming...
Winter (after next) is coming…

National Grid is consulting on whether to change the rules around demand side response participation as the UK faces several winters of tight power supply margins.

Stating today that the capacity margin for winter 2016/17 could fall to zero, the system operator has issued a consultation which tables wide ranging changes to balancing services. These include increasing the cap on the amount of strategic and demand side balancing reserve (DSBR) it is allowed to procure, potentially incentivising demand side response, creating a broader range of prices for demand response balancing services, and creating an entirely new demand side response product.

National Grid has also moved to clarify the rules around how various demand response mechanisms, such as the capacity market and demand side balancing reserve, interact with each other.

While “not minded” to introduce incentives for DSBR, National Grid indicated it could be persuaded to develop them if enough people asked. It has also proposed a new fee structure in a bid to encourage DSBR provision from 5-6pm, or throughout the entire evening peak period. So far, said Grid, it’s mainly encouraged service provision after 6pm.

To avoid confusion and cannibalisation of balancing services, National Grid also proposed that tenders for future demand side balancing reserve should only take place once results of the capacity market transitional arrangement (TA) auctions elements are known. Companies providing demand response in the TAs could still bid for DSBR contracts, said Grid, but only if what they were offering was above and beyond that committed in the capacity market.

The consultation comes as National Grid has committed to help drive massive growth in demand response services. Last month the company said it aimed to derive between 30% and 50% of balancing services from demand side measures by 2020.

A survey by Energyst Media suggests a high level of interest in providing demand side response services from both small and large companies. Around 80% of readers polled suggested that up to 10% of their load could be shifted, while around a third suggested between 10 and 25% was flexible.

The survey is open for a few more days. All those that complete it will receive a copy of the Understanding Demand Response report, supported by Open Energi and National Grid.

Take the survey here.

See National Grid’s consultation here.

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