Ten thousand businesses ‘missing out on energy flexibility ‘cashback’ opportunity’

More businesses can save money by avoiding power ‘congestion charging’ and shifting their use, say companies who help them deliver the service.

One such, SmartestEnergy, said it had estimated that nearly 10,000 UK businesses could each potentially save £20,000 or more each year by helping the National Grid balance supply and demand. It is preparing to bid to provide 100MW of “demand side response” (DSR) capacity next winter.

The company explained that businesses can make money from the Grid by providing DSR, turning down or turning off non-essential energy use at times of high demand. But Smartest Energy said that for every £1,000 businesses earn in these capacity market payments they can save a further £5,000 by avoiding peak energy charges.

A business which has a 250kW DSR contract with SmartestEnergy would make £2,812 from Capacity Market payments but would save an additional £15,000 by shifting consumption off peak and £17,150 by stopping consumption altogether.

Robert Groves, chief executive of SmartestEnergy, said: “Electricity isn’t just a utility you take for granted but a valuable commodity. Matching demand to supply is key to a cost-effective and reliable energy system, and businesses which can help do this stand to gain by tens of thousands of pounds a year. The average business can shift 10% of its energy usage with little impact on operations.”

SmartestEnergy said DSR makes good sense for businesses that are spending at least £1 million on electricity and consuming 10GWh a year.

Mr Groves said: “We understand our customers’ electricity consumption so we are best placed to understand how to maximise income from their flexible capacity without affecting their core business. We can navigate the complexities of DSR contracts, spot opportunities to sell the electricity they have bought at a good profit, and ensure that savings on non-commodity charges are passed on.”

The DSR market is growing rapidly. Smartest Energy said that Great Britain spends £1 billion a year on balancing services, to ensure power supply and demand are matched, that the grid is not overloaded, and that the right voltage and frequency is maintained across the network. That payment could be fed back to flexible customers. National Grid has set a target of meeting 30% to 50% of balancing services from DSR by 2020.

CHP working with Flexitricity
Similarly, District heat and power supplier Gateshead Energy Company, which is now being commissioned, has announced a contract to receive payments from Flexitricity in excess of £60,000 per year over the next 15 years, for using to its flexibility to smooth out peaks and troughs in national electricity demand.
Gateshead Council owns both the District Energy Scheme and Gateshead Energy Company. Leader Martin Gannon said: “Once we realised that we could bring more revenue into the project by providing capacity to the National Grid – without changing our day-to-day operations – the decision was made for us. It’s win-win for ourselves and our customers.”
Gateshead Energy Company’s combined heat and power (CHP) system will add 4MW of electricity generating capacity to National Grid. Within Flexitricity’s portfolio, the Gateshead CHP will form part of a virtual power station. Dr Alastair Martin, Chief Strategy Officer at Flexitricity, said: “District heating projects like this are an exciting low-carbon way of keeping everyone’s lights on without impacting on service provision.”
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