Creating a flexible energy market

By Ken Warner, MD, Energy Renewals

Plans are being put in place to aid the creation of a more flexible energy market where demand side response (DSR) will feature highly.

The Department for Business, Energy and Industrial Strategy (BEIS) and Ofgem are collating views from business on how to best develop technologies and strategies to encourage the take up of DSR (technology which enables a company to reduce its electricity use during peak times to relieve pressure on the National Grid) and other initiatives such as energy storage.

Information will be used in a report which will outline a plan of action and is due in spring 2017.

Implementing a smarter and more flexible response to energy management by utilising new technologies could save consumers £17-40 billion by 2050, according to research by Imperial College and the Carbon Trust.

Businesses can already make use of DSR although it is currently underused mainly because companies perceive it as complex and time-consuming, something which the report will investigate more thoroughly.

Harnessing the expertise of third party intermediaries means businesses can take advantage of initiatives such as DSR without having to undertake the process themselves. Businesses can further benefit by implementing an energy management programme to identify wastage and thereby reduce its carbon footprint which in turn results in lower energy bills. Combined with shopping around for the most competitive tariff and switching energy suppliers, companies can already make significant savings.

The good news is this new report will explore how to encourage wider adoption of new technologies as well as assessing the viability of other innovative energy schemes such as energy storage by using batteries in our homes and businesses. The report will also look at barriers and how to remove them in order to better sell the concept of smart energy to businesses and householders.

“Enabling new and existing forms of flexibility to compete efficiently within the energy market is key to ensuring that we will have a dynamic and responsive energy system which works for consumers and supports low carbon generation,” the BEIS and Ofgem document stated. “We want a policy and regulatory framework that ensures that barriers are not hindering their development.”

In its blog, Ofgem sets out the way in which a smarter and more flexible energy system can be achieved with managing peak demand sitting high on the list.

“Large industrial companies already provide a lot of demand-side response (DSR) where they are paid for helping National Grid to balance the system,” Ofgem writes. “But DSR could grow further if more businesses understood how it works.”

This is where your business and third party intermediaries such as Energy Renewals have a role to play. We understand DSR, how it works and the benefits it can deliver. It’s our job to ensure we explain DSR with clarity and understanding to encourage bosses to take it up. Business owners need to adopt an open mind and implement an energy management programme which incorporates DSR. The more businesses which adopt DSR, the more efficient and sustainable our electricity supply becomes and the lower our national carbon footprint. By default, companies reducing energy consumption pay lower bills.

In its call for evidence in preparation for the report next year, government and Ofgem also urged aggregators to promote the advantages of DSR to business.

The Association for Decentralised Energy, which itself welcomed the forthcoming report , published its own report earlier this year ‘Flexibility of Demand’ showing there was plenty of demand response capacity in the UK. It calculated that hospitals, manufacturing sites and retail stores could free up 10GW, the equivalent electricity supply of six new power stations.

Contact us to find out more information on DSR and how it can benefit all types of businesses.