Duncan Burt, Head of Commercial Operations, explains how a new service from National Grid aims to help encourage more organisations into the demand side response market.
At National Grid we fully support the desire to see demand side response make more of a contribution to the energy system, as long as it makes sense for the consumer.
Duncan Burt, Head of Commercial Operations
One of the fastest growing and innovative areas in the energy sector is demand side response. That means organisations reducing or shifting the demand they place on the power system. Organisations can do this in two main ways – by powering down part of their operations or shifting them to a different time in the day, or by switching to on-site embedded generation.
At National Grid we fully support the desire to see demand side response make more of a contribution to the energy system, as long as it makes sense for the consumer. Although suppliers and distribution networks will be at the forefront of unlocking much of the potential for DSR, we have made a lot of progress in bringing in DSR across the range of balancing services we already procure, and in educating the market about the role DSR can play.
One of the services we use to balance the electricity system is called Short Term Operating Reserve (STOR). For over ten years, demand side responders have been a part of this service. STOR represents a total of about 2GW of reserve (or backup energy) that we can call upon at short notice if there is a sudden loss of power anywhere on the system. This can be called upon at any point in a year, and is not a tool designed specifically to deal with tight electricity margins.
At the moment, we get more tenders to STOR than we need, which is positive as it drives down costs. On the flip side makes it harder for new demand side entrants to get involved, as they have to sign up companies or sites willing to reduce demand with no guarantee they will get paid for it. That’s why we’re aiming for 200MW of our next tender round (for delivery during 2015/16) to come exclusively from demand side response. We’ve called this STOR Runway, as it helps new entrants get off the ground. 200MW is equivalent to the average electricity consumption of boiling 100,000 kettles at the same time.
Demand side has been part of STOR for some time. However, one of the barriers that had held back the growth of new volume is the need to have companies or sites already signed up to reduce demand before bidding in to our STOR tenders. That’s why under STOR Runway we’re removing the requirement to have already secured megawatts before bidding in. Participants will have one year to recruit sites and companies to meet the volume they have committed to providing us. To keep STOR Runway open to as many participants as possible, we’re limiting the amount to no more than 30MW per provider.
Demand Side Response represents an important future element for how we balance the system, and making sure we grow that volume helps us to keep costs down. We expect STOR Runway to grow the pool of demand side STOR providers, and we want to engage businesses of all sizes, whether it’s through an aggregator or directly with us at National Grid.