Mythbusting demand side response

Published by Alastair Martin 10 / 08 / 16

Dr Alastair Martin, CSO, Flexitricity takes a look at some common myths relating to demand side response and gives his view on the opportunities that are available.

This June, I joined National Grid in London for its second Power Responsive conference to discuss next steps for the demand side response (DSR) industry. Together with industrial and commercial energy users, CHP operators and public sector organisations, we discussed working with aggregators to develop DSR opportunities.

Awareness of DSR is growing, but, there is still a great deal of misunderstanding around participation and practice. When first engaging in DSR, customers need both realism and persistence. To find the right aggregation partner, they should be ready to ask difficult questions, covering track record, experience of working with similar customers, and how the aggregator will protect the core business operations of participating sites.

After 12 years in the business, we’ve grown used to answering these questions. When Flexitricity started out, DSR was unknown. Now, with the birth of the Capacity Market, and with the Power Responsive target of 30-50% of National Grid’s balancing needs coming from the demand side, DSR has quickly become the hot topic in energy.

But we can’t hit those targets unless everyone has a clear idea of what we’re talking about. So here are five common myths surrounding DSR, and our view of the right way to view demand-side opportunities.

Myth one: DSR is easy

This one comes in several guises, such as “it’s free money” and “you don’t have to do anything”. It is true that some DSR can be commercialised with minimal expenditure; it’s also perfectly feasible for DSR companies to pay for controls upgrades. But most site managers aren’t interested in external funding, so capex is not the point.

The key is management time and the resulting opportunity cost. While the energy manager is busy appraising a DSR proposal, discussing flexibility with Operations, or considering payback with Finance, some other energy project isn’t getting done.

With experience, genuinely viable DSR opportunities begin to stand out. But the experience must come from both sides: DSR aggregator and energy user. There is no DSR without collaboration.

Myth two: It’s all about demand peaks

Since Flexitricity was born, there has never been an energy shortfall at peak. Crises have happened, however. Tilbury power station caught fire during a morning pick-up in February 2012. A couple of weeks later came the “duvet day”, a cold Saturday morning when seven gas power stations failed to get out of bed. The infamous Longannet/Sizewell B crash in 2008 happened just as biscuits were being dunked in mid-morning tea.

That’s not to say that DSR doesn’t get activated at peaks. Triad management – the classic peak reduction opportunity – is now so lucrative that other DSR activities like short-term operating reserve (STOR) become secondary during winter weekday evenings.

Awareness of DSR is growing, but, there is still a great deal of misunderstanding around participation and practice.

Myth three: DSR is all diesel

In fact, flexible load and CHP are making far better returns from DSR than diesel. That’s because market conditions are rewarding low delivery cost more than consistent availability.

Cold stores, for example, modulate their electricity consumption to take advantage of prices. During the most expensive periods of the day, flexible plant is already off – leaving nothing more for National Grid. But at other times, a cold store can shut down very cheaply if requested. CHP follows a similar pattern – the day job must be done, but during idle periods, CHP can deliver reserve energy cheaply and often. And that’s where the economic sweet spot is found.

However, standby generators have two particular virtues which other resources sometimes lack. First, they need occasional on-load running in order to provide reliable emergency power. That works well with DSR – the trick is to ensure that testing is done when the electricity is most needed. Second, as a standby generator’s day-job is to sit and wait, it can be regularly available for Grid duties.

CHP and flexible load are likely to retain the top spot in terms of economic returns from DSR. However, National Grid has recently signalled willingness to pay more for resources which can be consistently available, even if they will be used very rarely. If a large power station trips, standby generators can fill the brief gap quickly and reliably while cheaper resources are ramped up.

Myth four: You can only do one thing at a time

This one is partly true. No resource can provide frequency response and STOR at the same time. Different resources on the same site could do that, but each resource needs to commit to what it’s providing at any time. Sometimes the commitment is made months ahead; in other cases, an hour will do. But overlapping is usually prohibited.

There are two exceptions. The first is that sites consume electricity for a purpose, and they will keep doing that whatever they are doing in DSR. Core business must be protected, and it’s for the aggregator to resolve any conflicts. The way to do that is through a large, diverse portfolio, continuous monitoring and active management.

The second is the government’s Capacity Market, which was explicitly designed to overlap with everything else a resource might want to do. This makes economic sense – if one resource can do two things, then the consumer doesn’t have to pay for two resources.

Myth five: It’s about technology

Automation, security and speed are very important, as are aggregation methods, flexibility in communications, and defensive engineering. However, none of those will help if the site itself simply isn’t right for DSR. Thorough appraisal and careful implementation are vital – DSR without engineering is like a car without steering. And if there’s a problem, a site operator wants to be able to pick up the phone – at any time of the day or night – and speak to a person. Flexitricity knows that technology alone isn’t enough. Expertise makes the difference.

Originally published on powerresponsive.com

Alastair Martin

Alastair Martin Founder and Chief Strategy Officer

Dr Alastair Martin founded the first demand side response business in Great Britain in 2004. Alongside heading up Flexitricity, Alastair has worked on a range of energy policy developments and participates in several key regulatory working groups and committees with the Association for Decentralised Energy, National Grid ESO and others.

Leading flexible energy specialist Flexitricity has appointed a new CEO to spearhead growth plans that will help drive the UK Government’s 2050 net zero ambitions.

Simon Heyes joins Flexitricity at an exciting juncture for the business as the UK forges ahead with its transition to a low carbon economy.

The pioneering Edinburgh-based firm is leading the charge by providing businesses and organisations with a host of ground-breaking opportunities to drive revenue and lower their carbon footprint.

Simon will guide Flexitricity as the company trailblazes a new age where a growing range of energy users and those with generation assets can help National Grid balance the energy system and earn revenue from doing so – from large scale energy storage projects and I&C businesses to SMEs, households and electric vehicle owners.

Flexitricity has already generated over £20million for its energy partners since starting live operations in 2008 and currently has close to 500MW under management. Most recently, Flexitricity has partnered with Asda to aggregate the flexibility in their fridges across 300 stores and 18 depots into a 13-megawatt virtual battery that will be helping to balance the power grid.

Simon will be tasked with exploring further ambitious growth opportunities and partnerships driven by the renewable energy revolution and electrification of heat and transport.

Flexitricity founder and CSO, Dr Alastair Martin believes Simon Heyes’s extensive experience in the renewable energy sector will prove invaluable as the UK’s energy market faces a new frontier.

He said: “We’ve come a long way as an industry. When Flexitricity first started back in 2004, demand side response did not exist in the UK and the whole energy landscape looked very different. Now the concept is becoming mainstream which highlights the impact and importance placed upon finding carbon-friendly solutions.

 “The appointment of Simon Heyes as Flexitricity’s new CEO underpins everything we strive to achieve ahead of what is set to be an exciting and pivotal few years for the energy sector.

“Simon’s background in the renewable energy field will be an invaluable resource as Flexitricity bids to break new boundaries in the market. I am delighted that we can welcome him to a team already burgeoning with talent and expertise.”

Simon brings over 20 years’ experience in the renewable energy field, having previously held the position of Wind Energy Development and Construction Director at Infinis.

Prior to Infinis, Simon led the development and construction of new renewable projects in Great Britain, at Scottish and Southern Energy. His tenure included the consent and commencement of construction of the 350MW Clyde Wind Farm, which was at the time the largest onshore wind farm in Europe.

A chartered mechanical engineer and Fellow of the Institution of Mechanical Engineers, with a degree in Aeronautical Engineering, Simon was most recently CEO at KPS.

Simon said: “I am delighted to be appointed as the new Chief Executive Officer at Flexitricity.

“Flexitricity is not just the leading demand response energy company in the country but one of the most innovative and pioneering firms deploying the new energy strategies of the future.

“The Government’s target of being carbon neutral by 2050 can only be achieved by ensuring there is sufficient flexibility in the system to balance varying renewable generation. Flexitricity pioneered this industry over 15 years ago and is now entering a growth phase as more and more firms realise the significant financial and environmental benefits which flexibility in their generation and consumption profiles can unlock.

“Their impressive client base and ambition to grow, as well the opportunity to work with some of the leading energy experts in the country are all reasons why I am delighted to be a part of this exciting venture.

Simon will take up his new post at the end of November.

ENDS

Issued by Media Zoo on behalf of Flexitricity.

For more information please contact:

Ross Henderson ross@mediazoo.tv 0141 471 8399 / 07954 995 104

Craig Ritchie craig@mediazoo.tv 0141 471 8399 / 07919 815 926

Notes to Editors:

About Flexitricity

Flexitricity created and now operates the first, largest and most advanced demand-response portfolio in GB and has unsurpassed knowledge of the market and its requirements.

Headquartered in Edinburgh, Flexitricity partners with businesses throughout Great Britain to provide reserve electricity to National Grid.  The word “Flexitricity” means “Flexible Electricity”. The company looks for flexibility in electricity consumption and generation, creating revenue for energy users and generators as well as reducing national CO2 emissions and helping to secure energy supplies.

Their team is fully engaged at industry and regulatory level and has a track record that demonstrates innovation and delivery success.

Flexitricity is part of the Alpiq Group, a leading Swiss electricity and energy service provider with a strong presence across Europe.

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