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Wayne Mitchell is Director of Energy HQ at npower Business Solutions and has more than a decade’s experience of working with businesses to maximise energy management opportunities. Here he answers the most commonly-asked questions about Demand Side Response to aid understanding of how it works and the benefits it can bring to businesses.
Demand Side Response (DSR) is an intervention by consumers to flexibly alter consumption patterns in real-time at times of stress on the main electricity system, or in response to network operator price signals.
DSR enables businesses to save on import costs as well as generate income by reducing or shifting consumption – or switching to on-site generation – at opportune times. It can also involve increasing consumption at times when the system has too much capacity.
National Grid uses DSR as a tool to help balance national energy requirements. Through various balancing schemes, consumers are incentivised to ‘flex’ their electricity use at required times to resolve issues on the grid.
This helps to ensure a secure, sustainable and affordable electricity system. It can help soften peaks in demand and fill in the troughs, especially at times when power is more abundant, affordable and clean.
Historically only available to the largest energy players, DSR is now opening up to business consumers and small generators.
There are various ways to participate, from flexing operational processes to utilising on-site generation or battery storage. This can deliver savings on non-commodity costs, generate wholesale market value, or provide income as part of a commercial arrangement with National Grid.
The best way to find out what would work best for your business would be to ask an experienced DSR provider to assess your individual circumstances and the opportunities that would best fit your requirements. For example, contact the DSR experts at Energy HQ, npower Business Solutions.
DSR can help you access a range of benefits – from significantly reducing peak non-commodity charges to earning revenue by participating in National Grid balancing services.
With Energy HQ, you can also generate additional value for these operations by selling back unused volume at peak market prices through the day ahead (N2EX) and within day (APX) markets.
What’s more, if you’re utilising your on-site generation/storage assets more regularly, you’ll increase resilience and be better able to respond when you need them most (for example, in a power cut).
This will depend on the sorts of benefits you’ve decided to focus on. But typically, at times of system stress or when asked to do so by your DSR partner and/or National Grid, you would:
1) Flex (i.e. increase or decrease) your energy intensive processes for short periods, like cold storage or certain production or processing activities.
2) Switch your power source to existing generation assets and/or start exporting from that asset to the grid.
3) Utilise energy storage to dynamically flex your power requirements.
An intervention could last for anything between a few seconds to a few hours, depending on the services/benefits you’ve agreed to.
The good news is that once you agree when and how your business can respond, the whole process can be fully automated and implemented by experienced DSR professionals on your behalf, without requiring any action from you.
You will then save on peak import charges – e.g. Distribution Use of System (DUoS) and Transmission Network Use of System (TNUoS) charges.
If you’re participating in National Grid schemes, you can also earn revenue both for being available – even if you’re not called upon – and for any volume you flex (i.e. turn down or up) when asked to do so for short periods ranging between one second and four hours.
If you have any spare capacity from onsite generation or battery storage, you could even export some of that power – providing your business with yet another potential income stream.
And with Energy HQ, you can earn additional revenue by selling back the volume you don’t use – but have already purchased – often at peak market prices via Wholesale Market Access.
Leveraging this wide range of benefits can be the difference between a good business case and a great one – and provides a low-risk revenue stream to build a proposal on.
The best place to start is by talking to an experienced DSR partner. For example, the experts at Energy HQ will help you to decide what’s feasible and what would suit your individual business circumstances and requirements. Then once you’re clear, a contract can be agreed to specify exactly what your business can offer.
To automate DSR, at Energy HQ we generally install a Smart Controller together with a high-sample rate meter to collect the necessary usage detail and provide the control method. However, we understand that some businesses may wish to retain control of some critical processes, so for certain services we offer a solution without the requirement for a controller.
Once set up, you are then ready to make savings on energy costs and earn revenue when you participate.
With Energy HQ, the process for DSR participation usually includes the following steps:
There are a number of different ways to save or generate revenue. For starters, DSR helps to reduce your import supply costs. For example, typical savings on DUoS and TNUoS charges are in the region of £45-70k* per megawatt per year.
By participating in National Grid balancing services, you could also potentially generate an additional £8-100k per megawatt year. And trading any unused procured energy back to the wholesale energy market through Energy HQ’s unique Wholesale Market Access product can net additional five digit revenues, depending on the market.
* Savings can vary depending on area
You don’t need to have generation assets or battery storage on site to participate in DSR. You can load manage to reduce consumption away from peak charging times – typically between 4pm and 6pm Monday to Friday over the winter season (November to the end of February). But many businesses do utilise some form of energy generation or storage assets to support their DSR strategy and increase the savings and/or revenue they are able to make.
It’s possible to hire diesel generators for the winter period and make a healthy profit after covering costs. Installing on-site generation or battery storage assets require a longer return on investment, but the numbers often stack up – so it’s worth investigating.
The DSR experts at Energy HQ can help you assess your options, working with our solutions partners to develop compelling business cases. Often the optimal solution varies site by site and can include a combination of options.