The value of flexibility is set to rise from 2018 as power markets become more volatile and imbalance charges double, according to Ørsted’s UK sales boss Jeff Whittingham.
Speaking at the Emex exhibition and conference in London, Whittingham suggested that the revenues industrial and commercial firms can earn by helping energy companies balance their trading positions could potentially treble in the coming years.
Ørsted, formerly Dong Energy, launched an imbalance product last year. It pays companies to adjust consumption or onsite generation so that Ørsted can better balance its market position and avoid paying high penalties.
Whittingham said the company remained “unchallenged” by other energy suppliers in providing that kind of balancing product, which it calls Renewable Balancing Reserve.
However, facing incoming volatility due to increases in renewable generation and declining thermal plant, it is likely that other suppliers will launch similar products next year, when imbalance charges double to £6,000 per megawatt hour and are set by the last megawatt hour rather than the current 50 megawatt hours.
Asked by The Energyst to quantify the value that development could present to I&C firms able to help energy companies by harnessing flexibility, Whittingham said it was difficult to predict.
However, citing an I&C customer for whom flexibility currently represents “about 3 per cent of total energy spend”, Whittingham said, “in the new world, I would put that in the five to ten per cent range. It will be a significant revenue stream”.
Whittingham suggested the convergence of energy procurement, management and flexibility means that flexibility risk management is “something businesses now have to consider as part of a holistic energy management strategy.”
Whittingham also touted the firm’s new ‘energy as a service’ proposition, where it hopes to fund and build assets on customer sites and then optimise them in response to market signals.
Ørsted will be present at The Energyst Event, The Energyst’s conference and exhibition focused on the convergence of energy management, procurement and flexibility, held at the National Motorcycle Museum in Birmingham, April 17-18 2018. Register here.
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