Opinion: Sparking a smarter power revolution

Lucy Symons, director of public policy at Open Energi, says there is appetite in most businesses to help manage the grid. A little education could go a long way to delivering it

 

Demand flexibility has come a long way since Open Energi signed its first commercial contract with ­Sainsbury’s five years ago. At the time it was still widely seen as a last-resort measure to alleviate ­pressure on the grid by asking businesses and factories to shut down.
Today, perceptions and understanding of demand flexibility are changing rapidly. This is being helped by massive advances in renewables penetration, plummeting costs of storage and a world increasingly shaped by our ability to connect and control anything from anywhere.
Open Energi believes this connectivity – and the economic benefits it unlocks – is the biggest long-term driver for flexible demand. Even without the climate imperative, the digitalisation of energy means we can finally start to address some of the fundamental inefficiencies created by a system built for peaks. By intelligently shifting demand in real time we can flatten the demand curve and maximise our use of ­existing infrastructure. The resulting efficiency gains can unlock huge savings for consumers.
So what can we do to accelerate uptake of demand flexibility and realise the benefits of a smarter grid?
A vital step is to create a level playing field for demand-side participation. Currently, the market favours existing power generators to a disproportionate extent. As the Association for Decentralised Energy said in its Flexibility on Demand report earlier this year, aggregators should have independent access to the wholesale and balancing markets and fair treatment in the capacity market, which has unequal contract lengths and fails to recognise certain types of flexible demand. If demand flexibility is allowed to compete on equal terms, it will be a move towards the freer energy markets that we all want to see.
Navigating the array of different demand-side schemes and products is also challenging for ­businesses. We have identified more than 20 different ways for a company to monetise its flexible demand, ­including price-based schemes, the capacity market, different types of reserve and frequency response. For businesses, trying to understand demand flexibility and make sense of what assets are suitable for which schemes and when, it can be a major headache. The good news is National Grid has recognised this, and via its Power Responsive campaign, is looking at ways to simplify products and ensure the right signals and incentives are in place.
But the industry is still scratching the surface in terms of participation and perhaps the biggest barrier we need to overcome is to build trust and confidence in the technology.
Businesses are naturally wary of anything that will change the pattern of consumption of an asset for something other than its intended purpose. To get more businesses involved, it is vital we continue to ­educate companies and show them that it is possible to automate this type of technology without ­disrupting processes or behaviours. It’s going to take time because it is a big shift in mindset that’s needed – not just for energy managers, but also for engineering and operational teams, who are being asked to become active participants in a rapidly changing energy system.
But the appetite is there. A recent report by Energyst Media found that almost nine in ten businesses would help National Grid balance the power system if it did not adversely affect their operations, but only 27% of businesses surveyed were actively participating in demand-side response (DSR). Of the 73% who were not, half said they had not been contacted by an aggregator or supplier about DSR.
For businesses to feel confident about DSR, they need to find trusted delivery partners and feel they can access impartial advice. So the work the Association for Decentralised Energy is doing to create a Code of Conduct (due in spring 2017) is another important step forward for the industry.
As the world strives to find ways of delivering energy that is clean, affordable and secure, it feels like demand flexibility is about to be propelled into the mainstream.
With an estimated £8 billion of ­savings from a smarter power system and entrepreneurial British ­companies developing some of the most advanced technology solutions in the world, it’s certainly a prize worth fighting for.

Further reading:

Ofgem ‘future insights’

Fear of disruption limits DSR uptake

National Grid has attracted just a fraction of its target in a new demand response product (members only)

Decc: a flexible energy system could save billions by 2050 (members only)

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