Demand side response could be worth £8bn to UK economy – report

Electricity costs could be slashed by £8.1 billion a year if more businesses used demand-side response (DSR) to reduce pressure on the network, according to a new report.

The Association for Decentralised Energy (ADE) calculated that 16% of the UK’s peak electricity requirement – or 9.8GW – could be provided by businesses shifting demand away from busy periods and by making better use of on-site generation.

Taking such measures would match the output from six power stations and help sooth capacity concerns.

The report suggested that UK energy consumers would save £600 million by 2020 and £2.3bn by 2035 through unlocking the potential of demand-side response by preventing the “wasteful construction of more than 1,300 diesel engines, which may only run a few hours a year”.

Three recommendations

The ADE published its report ahead of December’s Capacity Market auction, during which the UK Government will procure energy supplies for 2020.

Businesses have already gained £100m from participating in the Capacity Market, the report said.

The trade body recommended three changes to help more businesses play a role in balancing the UK’s energy requirements:

● independent access to the wholesale market and balancing mechanism;
● equal contract lengths with power stations in the Capacity Market;
● and simplified balancing services.

‘Enormous resource’

Tim Rotherary, Director of the ADE, said: “We need to access the enormous resource that energy users can provide, whether they are NHS hospitals, pharmaceutical manufacturers or your local retail store.

“This report shows that by putting these users at the heart of the energy system, we will make it more cost-effective, reduce carbon emissions, and give customers a chance to participate in the system and take control of their energy use.”

Cathy McClay, Head of Commercial, Electricity, at National Grid, added: “National Grid is actively working on how we as an electricity industry can enable increased participation of a range of flexibility sources in our markets. We believe that there are great opportunities for consumers of energy to play an active role in flexibility and realise benefits of doing so.

“National Grid welcomes the report and is committed through Power Responsive to continue to focus on actions to help unlock the potential volumes of demand side response.”

> Download the report