Innovative Energy Consultancy Ltd
Innovative Energy Consultancy Ltd

Businesses to seize demand-side flexibility

Businesses are increasingly considering the possibilities of utilising the flexibility in how they use energy to secure financial benefits.

This has been encouraged in recent years by system operator National Grid’s Power Responsive initiative. The campaign seeks to harness the potential of I&C energy users, small-scale generation and electricity storage to ensure the energy market can continue to meet consumer expectations and guarantee energy security.

Released on 8 February, the Power Responsive 2017 Annual Report details the shifting dynamics in this growing part of the energy market.

Different services

Demand side response (DSR) is defined as a change in electricity demand (increased, reduced or shifted) at a particular moment in time in response to an external signal (such as a change in price, or a message). Customers can decide whether to react to these signals or override them. National Grid uses the wider term Demand Side Flexibility (DSF) to include five categories of flexible response:

  • DSR by flexible load shifting (e.g. heating/cooling systems, business operations and appliances)
  • DSR by onsite generation
  • DSR by onsite energy storage
  • Distributed generation – for export, and
  • Distributed energy storage – for export

Flexible response can be utilised by a range of services operated by National Grid to keep the power system stable. These include Short Term Operating Reserve (STOR), Firm Frequency Response (FFR) and Demand Turn Up (DTU).

STOR is the Balancing Service that included the highest volume of participation from DSF between April 2016 and March 2017. The service is open to any technology with the ability to increase generation or reduce demand by at least 3MW.

Current STOR providers are located throughout Britain, although providers closer to high demand areas, including south east England and Wales, are more desirable. STOR involves less technically demanding requirements.

FFR can provide both dynamic and non-dynamic response to changes in frequency:

  • Dynamic frequency response is a continuously provided service used to manage the normal second-by-second changes on the system
  • Non-dynamic frequency response is typically a discrete service triggered at a defined frequency deviation

Between April 2016 and March 2017, 685MW of FFR was accepted from unique units, 40% of which (280MW) were accepted from individual Non-BM (demand side) providers.
The Demand Turn Up service encourages large energy users and generators to either increase demand or reduce generation at times of high renewable output and low national demand. This typically occurs overnight and during weekend afternoons in the summer.

Varied participation

The Power Responsive research also revealed the breakdown of how businesses and industries nationwide are participating in these services through demand response.

On a regional basis there is a predominance of former industrial hubs such as Yorkshire and the Humber, and also the South East and Greater London which are densely populated areas with a concentration of amenities such as supermarkets, hospitals and hotels. The relatively low flexibility provision in other regions, for example the North West, suggests unexplored demand side potential.

Energy intensive manufacturing industries make up the majority of aggregators’ portfolios of DSF (54%), with the remaining volume provided by the Commercial and Retail sector (17%), Other sectors (17%) and the Public Sector (12%).

Currently 97% of the technologies actively participating in flexibility markets are either load response, onsite generation assets or onsite energy storage. This suggests that aggregator flexibility tends to come from I&C customer sites rather than purpose built “farms”.

Need for future reform

The research concluded that during this time of transition, the need to stack revenue streams and innovate with routes to market has become clear. Multiple network organisations are seeking to procure services from DSF, including the System Operator, DNOs or future DSOs, and energy suppliers.

As a result, continued collaboration across transmission and distribution is seen as essential in order to deliver a coherent proposition for flexibility providers. Aggregators and other third parties are also seen as having a key role in supporting I&C customers to navigate complexities in the industry.

Benefits of flexibility

As well as the benefits of electricity flexibility, the extreme weather last week demonstrated the importance of gas flexibility. Larger non-domestic users with commercial agreements with their supplier shifted their gas usage in order to avoid high prices.  This follows a spike in wholesale costs after a series of infrastructure outages and high demand led to National Grid issuing its first ever Gas Deficit Warning.

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