The energy and climate change committee has urged the government to create policy that favours turn-down demand side response over decentralised diesel generation.
The committee, which has been axed by the new administration, also used its final report to reiterate calls to lift energy storage market barriers – and set a 2020 procurement target.
The vast majority of demand side response (DSR) is currently provided by firms that switch to on-site generation at times of system stress. While such generation includes combined heat and power, as well as on-site solar and wind, much of it is from diesel generators.
Although government is aiming to cut diesel farms out of the capacity market through emissions regulation and more broadly, as part of a review of embedded benefits, the committee urged BEIS to consider a merit order when capacity is tight, so that diesel is used as a last resort, and ‘genuine’ DSR via load reduction is favoured.
The committee also called on government to rethink capacity market policy around disproportionately high bid bonds – the surety DSR providers have to pay to play in the market – as well as contract lengths. Currently DSR providers can only bid for one year contracts whereas new build power stations can bid for 15-year contracts.
In terms of energy storage, the committee reiterated calls to remove double charging and create a separate asset class for storage. It also called for longer contract lengths for storage in the capacity market.
Finally, it advised the government to set a 2020 procurement target for storage and also consider a subsidy framework.
Read detailed views of aggregators, independent energy suppliers and public and private sector end users on DSR and battery storage in The Energyst’s new, free 2016 demand-side response report. The report also contains a survey of more than 200 end-users on their views on DSR. Download it here.