Posted on: 25/09/2017
It is clear there is a huge interest in the uptake of Demand Side Response (DSR) from businesses. Head of Commercial for Industrial & Commercial Supply, Nicolas Begu, examines the practicalities of expanding DSR to its full potential.
While DSR is widely discussed as the next major step-change in the UK energy sector, currently only large companies are getting involved by making an agreed amount of their usage available to be turned up or down if required by the National Grid.
These businesses are increasingly recognising that the huge benefits of DSR outweigh perceived risks and have decided to be first-movers in the space.
As is common with emerging technologies like these, larger early adopters can help drive overall uptake and will smooth the path for smaller companies by overcoming the initial barriers.
We are now seeing that more businesses want to try DSR and use their flexible consumption as an asset but are not yet able to convince their boards.
The learnings from those already doing DSR can be very useful for those trying to start on their journey, so knowledge-sharing is really crucial to ensure more businesses can participate in DSR.
Below are three common, but resolvable, challenges that companies may be coming up against when considering DSR:
- Setup costs - technology such as smart meters or building management systems are required to allow energy consumption to be controlled in real-time. Another major cost is enabling back up generation for turning up power. This needs to be in place before any revenue can be generated from DSR and this initial outlay is why a lot of businesses are hesitant to start. However, the revenue and cost-savings are attractive and technology costs will decrease as popularity and competition increases.
- Lack of profit certainty – schemes for DSR, such as the Firm Frequency Response (FFR), don’t typically provide a set revenue over multiple years so it can be difficult to clearly identify the return on investment. However as more renewable generation comes on stream and flexibility becomes even more valuable for balancing the grid, revenue opportunities and cost savings will only grow.
- Cyber security issues - DSR activities require a large amount of information to be shared with the supplier/aggregator and potentially allowing important systems to be turned down or switched off. Although systems access and data security are serious concerns, it can be resolved by ensuring providers have strong cyber security credentials.
Overall these challenges can be overcome by addressing them in the early stages of the business case.
This is something that your aggregator should support you with once they’ve helped identify your flexibility and if they are also a supplier, these benefits can be enhanced by viewing supply and DSR holistically.