Risk Vs Revenue: the commercial case for DSR

Our Demand Side Response (DSR) webinar last week revealed how businesses can turn their flexible energy demand into a revenue creating asset with the capacity market. Robert Owens, VP Demand Side Management, talks us through how DSR can provide significant returns with minimal impact on business operations.

For many businesses that are building the commercial case for DSR, the challenge is ‘risk versus revenue’. Energy managers need to convince the board how DSR can provide an additional revenue stream and reduce nervousness around the impact on operations and productivity.

Identifying your flexibility

A recent report published by The Energyst states that a growing number of businesses are concerned about the disruption DSR could have on their business performance. However, many businesses delivering DSR have found flexibility in the region of 10% of their site consumption.

Our suggestion is to start small to prove the concept with your smaller, low-risk assets and gradually develop your DSR programme until you reach your full capability.

Being creative with your assets by using them as ‘energy stores’ to package up flexibility could also provide you with additional capacity you could be earning revenue from. For example, businesses with a thermal load have the potential to manage their settings and sustain temperature parameters throughout peak times.

Triad avoidance is a first step for demand response and businesses that are load shifting out of peak to avoid Triad periods are in a good place to build on this capability and further monetise their flexibility with DSR.

Returns of up to £80/kW

The Capacity Market is a live scheme rewarding customers able to offer up commercial-size flexibility with regular fixed payments for being available at times of system stress.

This payment forms part of the revenues available from DSR as there are also significant cost savings to be made that build up a revenue stack of £70-£80 per kW.

The Capacity Market payment can multiply with huge savings made from avoiding peak-charges, such as Triad and Red-band DUoS, together with your energy saving as a result of reducing usage in peak times. 

'Risk Vs Revenue'

A lot of the perceived risk around DSR comes from a lack of clarity from the industry – DSR can be complex and it’s the role of National Grid, suppliers and aggregators to simplify it for consumers.

> Watch the webinar in full to learn more about DSR and the Capacity Market scheme

Once your business understands its consumption patterns to find pockets of flexibility that can be monetised, you can start to prove the concept with very little risk to business operations.

The value of flexibility is only set to grow and with the TA auctions for winter 2017/18 this March, there’s no better time for businesses to start thinking about DSR and get prepared to take advantage of the future opportunities for demand flexibility.