Posted on: 01/12/2015
Demand side response (DSR) is expected to play a key role in helping the UK meet its energy goals in the years ahead. Robert Owens explains why it is an attractive option for businesses.
In an era of higher costs and greater awareness around sustainability issues, energy reduction has become an important focus for most businesses. After all, as any good energy manager will tell you, the cheapest kilowatt hour of electricity is the one you don’t use!
But a growing number of businesses are also realising the potential benefits of changing the way they consume electricity.
A sizeable proportion of electricity demand in many companies can be flexible through the powering down of some operations or shifting them to a different time in the day. For example, refrigeration equipment in cold stores can be switched off for several hours without temperature levels rising too high.
In fact, estimates suggest that up to 10% of businesses’ electricity demand could be flexible and in many cases a significantly higher proportion.
That flexibility is very attractive to the National Grid helping to smooth out peaks in demand and making best use of the times when power supply is abundant. It has been estimated that if just 5% of peak demand is met by demand side response solutions, some £200 million a year could be saved.
The Government is also supportive of DSR as it looks for ways to bring down consumer costs while still decarbonising. Amber Rudd's recent "Energy Reset" speech mentioned demand response as a key part of the "radically different model" needed in the market.
How does it work?
Payments available for demand reduction through initiatives such as the Capacity Market enable businesses to turn their energy use into an asset and to make money by agreeing to temporary cuts in consumption when required, whilst also avoiding costly peak charges.
While for many businesses the potential financial gains are the main attraction, there are also reputational benefits from being involved in helping make energy demand more responsive and sustainable, reduce CO2 emissions and help avoid the risk of blackouts.
Although many major energy users are already involved in DSR initiatives and provide services direct to the National Grid, increasingly sophisticated solutions are emerging to help more businesses take part.
For example, aggregation services enable the energy demand of many different smaller businesses to be pooled to take part in DSR. Sophisticated software is also available to help businesses identify how to make the most of DSR across their operations.
In many respects DSR is still in its infancy but it is set to play a much greater role for both businesses and the nation’s energy system in the years ahead.
To find out more about SmartestEnergy’s SmartDSR service, click here
To read more about National Grid’s focus on DSR click here