Post: Considering Demand Side Response? Here are your need-to-knows

Considering Demand Side Response? Here are your need-to-knows

Depending on who you speak to, Demand Side Response (DSR) is somewhere between the innovation phase and the early-adoption phase. One thing is clear, however: in relative terms, hardly anybody is doing it yet. ‘Yet’ being the operative word there.

If you are currently in the process of finding out more about DSR and why your business might want to get involved, you probably have the basic gist already:

DSR is a type of energy service that enables your business to be flexible with its electricity consumption – adjusting your assets’ consumption whenever required by the National Grid – and in exchange for doing so, you receive regular payments that generate additional revenue for your business. In simple terms, DSR allows you to start profiting from assets that you have to use anyway, simply by using them a little more flexibly.

So, leading on from that, here is some key information that you should know if you are interested in pursuing DSR further.

Only certain businesses are eligible (right now)
To participate in DSR, your organisation needs to be a large-scale industrial or commercial consumer of electricity – an organisation that uses megawatts. For example, a manufacturer or another type of business whose operations are equally power-intensive.

In years to come, this is likely to change: smaller businesses and domestic properties might be able to eventually participate, but the technology and installation process are not yet mainstream enough in the I&C market to advance towards making it cost-effective on smaller scales.

There is a financial incentive for participating
The main incentive of Demand Side Response is, of course, monetary: by participating, you will earn steady additional revenue – and without any effort being required on your part. In effect, you will be getting paid by the grid simply for being on standby to supply spare capacity when it is needed. For example, when you participate in the capacity market as part of your DSR, you will be required to switch off three times each year; in return, you will be paid a set amount for each megawatt (MW) provided by those three turn-downs. All you are doing in these scenarios is proving that you can contribute the spare capacity.

The secondary incentive is that you will be doing your part to keep the UK’s energy market balanced and operational, protecting it against the unpredictability of renewable-energy generation. In doing so, your organisation will be seen to provide a wider societal benefit, which will reflect well on your values and your operations. Ultimately, by participating in DSR, you are helping to ensure that businesses and homes across the country are never without power, while helping the grid to integrate more clean energy sources – who wouldn’t want to be recognised for that?

Your ROI potential will depend on numerous factors
The amount of revenue that you earn from your DSR participation will depend on which energy markets (i.e. DSR services) you participate in and how quickly your assets can be turned up or down. The whole idea of DSR is that it provides the grid with the fast, reliable support necessary to keep the grid’s frequency balanced or to rebalance it after an ‘event’ – so, the quicker you are able to assist, the better you will be paid.

Your DSR aggregator should be proactively moving you between the different energy markets in order to maximise your revenue and your cost-savings.

During the setup process, your aggregator should be able to provide you with a detailed forecast that outlines how much you can expect to earn each month from your participation. This, however, is always subject to the market pricing fluctuations, which are controlled by National Grid.

Operational disruption is extremely rare
It would be inaccurate to claim that DSR participation will ‘never’ interrupt your operations whatsoever, because there is a minute possibility that it will. In times of genuine emergency – when demand far outweighs supply and capacity, and there are blackouts occurring as a result – the grid may require you to switch your assets off for longer than the usual 30 minutes, in order to ease demand while supply catches up.

As a large-scale consumer of electricity, shutting down during these ‘demand control events’ or ‘system stress events’ means that you are supplying the capacity that the grid needs at that time.

In the very worst-case scenario, you may be required to switch off for up to four hours. Depending on the nature of your business and your assets, such a shutdown may in fact be a significant hindrance to your operational efficiency, but these are extremely rare: the last event of this magnitude occurred back in May 2008. There are many initiatives in place, and there are numerous lines of defence before getting to this point. The grid refers to these events as “once every 10 years” to cover themselves – and it’s now been 11 years since the last one.

Day-to-day, however, you should find that your DSR works behind the scenes, barely noticeably. In the initial setup phase, your provider is supposed to identify your DSR-suitable assets and then specify the parameters of your responses. The result of this should be that your assets participate in DSR services at convenient times (apart from the aforementioned emergency events), maintaining your operational efficiency and minimising the possibility of interruption.

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Book a 20 minute meeting/ demo to determine whether your company is eligible. During the chat, our energy experts will be able to explain the process and answer any questions.