As we go into Christmas after one of the hottest Novembers on record, all eyes are on Climate Change and the correlation between global warming and levels of CO2 reaching record highs. It’s here that Demand Side Response (DSR) is carving out attention as a tool to help solve the problem by letting businesses who use it contribute to cutting emissions.
As more businesses start to participate in Demand Side Response, National Grid will have more flexibility to balance periods of stress on the electricity system – and therefore needs to rely less on standby generation from fossil fuels.
Offsetting three nuclear power stations
According to the Association for Decentralised Energy, around 9.8GW of potential DSR capacity could be delivered by the industrial and commercial sector by 2020. That’s the equivalent of having three new Hinkley Point nuclear power stations (and a lot cheaper than the £19.6bn and rising cost of building just one).
Certainly in other countries, DSR plays a key role in reducing peak demand. In the US and Australia, for example, 15% of peak demand can currently be met by DSR, according to the Energy and Climate Intelligence Unit.
And it’s a key growth market in the UK. But while the environmental benefits are of course a draw, the main driver for most businesses is the revenue DSR can generate – and the value this delivers to offset the impact of rising energy costs.
DSR value up to £180k per megawatt
Our Energy HQ team at npower Business Solutions (nBS) are finding customers can generate up to £180k per megawatt a year from our range of DSR services. These services include automated Triad avoidance and access to National Grid balancing services such as Static and Dynamic FFR. Through our aggregation platform, nBS can use your on-site generation assets to help National Grid balance the national demand – and receive availability and utilisation payments for doing so. The latest DSR opportunity for businesses is what we call Market Access. Market Access enables your business to earn revenue at times of peak demand and high market prices, either by increasing generation or by reducing consumption for specified periods. This product accesses both day-ahead N2EX market and within-day APX market, providing a much greater opportunity than simpler Balancing Mechanism products.
Using DSR to benefit from market price spikes
Market Access, overseen by our award-winning Optimisation Desk, provides a managed route to the Day Ahead and Within Day wholesale market for both generators (or businesses with on-site generation) and consumers.
You tell us your ‘Strike Price’ and availability and we’ll do the rest. We can even automate turning your asset on/off for the specified period. So we do the hard work and manage all the complexities on your behalf.
And unlike other DSR schemes, Market Access carries no obligation, so there’s no penalty if you decide not to participate or fail to meet your load management commitment.
Generate up to £60k per megawatt
Market Access has the potential to generate between £30-60k per megawatt of capacity per annum (with the majority of income generated during winter peaks), so it can be a valuable source of revenue.
It can be used as a stand-alone DSR activity, which is a popular no-commitment way with customers looking to start DSR participation. Or Market Access Service can form part of a wider DSR strategy, alongside participation in our Access STOR and Access Static FFR services, or our Automated Triad Service.
Check out the DSR Clinic from Energy HQ here.
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