Demand Side Response Services
ESE welcomes the opportunity to provide details of the financial benefits for participating in Demand Response. Demand Response is a source of reserve energy generation and balancing services for National Grid and is utilised to address a range of problems that affect the UK electricity distribution network.
Demand response provides an opportunity for Industrial and Commercial consumers to play a significant role in the security of the UK energy supply by harnessing their ability to generate, reduce or shift their electricity usage during peak periods and receive financial incentives.
What is Demand Response?
Demand Response is a collective term for a range of services that National Grid calls upon to deal with challenges on the UK electricity transmission system. The services are asset dependent however it essentially focuses on load curtailment or an increase in generation for short periods.
Demand side response is intelligent energy usage. By knowing when to increase, decrease or shift electricity consumption, businesses and consumers will save on total energy costs and can reduce their carbon footprints. It is the smart way to create new and efficient patterns of demand.
Why should I get involved?
The main reasons why industrial and commercial energy users participate in demand response are cost avoidance, accessing new revenue and ensuring energy security.
There are a few compelling reasons why this makes sense and these are outlined as follows:-
- Triad costs rising 30-70% over next few years depending on geographical area.
- Further peak charging from 2018 with the introduction of the capacity market charge.
- The UK system margin (the margin between peak consumption and generation capacity) is at an historical low with the closures of more power stations, participating in demand response will improve your energy security.
- Increasing reliance on renewable generation means more balancing is required to facilitate a low carbon future
Will it disrupt my core business?
No. We understand that your equipment is there for your core business and this takes priority in all situations. There will be an “inhibit” switch, allowing your site operators to opt out should the need arise. Our equipment will also automatically opt out if any process parameters stray beyond agreed limits.
The revenue from demand response can be significant and it is dependent on asset type, connection status and site energy load. It comes from the following sources;
- Availability payments – this is a rent for the capacity which you make available. This income is not dependent on the amount of running (or “utilisation”) you experience, and should be as reliable as your generator (or your electricity consuming equipment).
- Utilisation payments – payments are made whenever you generate electricity or reduce your consumption in response to a call. The more you are used, the more you will earn.
- Triad management – by ensuring that load is avoided during a Triad period cost is avoided. If the site is exporting energy during this period they can also earn Triad benefit.
Please check out our case study.