Demand-side response (DSR) is a hot topic. Judging by the interest we had in our DSR-themed stand and seminars at the recent Energy Live Expo, it seems businesses can’t get enough information about the range of potential DSR benefits.
The most common question most seem to ask is, how much is DSR really worth?
To answer this, our DSR expert Graeme Dawson shared an overview of the market as it currently stands and outlined some of the changes ahead. He also provided numbers for the likely revenue businesses can expect from participating in the various DSR schemes currently available (as well as those to come).
You can watch his presentation for yourself by clicking here.
The growing need for flexibility
As we move to a more decentralised, decarbonised and digitised energy model, so the need to find news ways to balance supply and demand increases.
On the one hand, we have winter peak breaching 50GW, while on the other, summer peak is declining to lower levels year on year, dropping below 20GW.
This creates opportunities for business, as National Grid – and increasingly, the local Distribution Network Operators (DNOs) – look for new ways to balance demand.
Assess the tools within your estate
To participate in DSR, you need to have – or be willing to invest in – the right tools within your business estate.
These include energy-consuming production and refrigeration plant, plus any generation assets including CHP plant, onsite renewables or standby generation such as diesel plant.
Batteries are also playing an increasing role in DSR and bring more flexibility. (You can find out more in our 101 on Battery Storage blog.)
Revenue stacking is key
There are a variety of DSR schemes you can participate in – the key is to pick several that suit your assets, requirements and risk appetite, so you can count on multiple income streams. These include:
- Short-Term Operating Reserve (STOR) – which can earn you up to £15k per MW a year.
- Frequency Response – if you have fast-responding assets, you can earn between £35k and £90k per MW a year.
- Winter peak avoidance – this includes responding to signals to reduce key non-commodity charges such as Transmission Network Use of System (TNUoS), Distribution Use of System (DUoS) red rates and growing Capacity Market costs. Reducing import demand at peak times could net you between £35k-£85k per MW.
- Market Access – as volatility increases in the wholesale market, you could tap into opportunities to earn between £25k-£50k per MW. (See our recent blog for more on this)
Graeme also explains and sets out typical earnings for participation in the Capacity Market, National Grid’s Demand Turn-Up scheme and the new Demand System Operator (DSO) constraint response trials going on in some key DNO regions.
New developments that need to be on your radar
He also outlined key developments in the pipeline, including:
- Ofgem’s Significant Code Review.
- National Grid’s System Needs and Product Strategy (SNaPs) recommendations for the future of balancing services.
- The likely move from Distribution Network Operator (DNO) to Distribution System Operator (DSO).
- Defra’s Medium Combustion Plant Direction (MCPD) proposal that is likely to impact onsite generation plans.
- Project TERRE, which is a possible pan-European power-reserve sharing scheme.
To get the full picture, watch Graeme’s presentation here.
Finally, Graeme explains how Energy HQ is best placed to support your business’s move to DSR participation. So do get in touch to find out how we can help – you can email the team direct at EnergyHQ@npower.com, or contact your Client Lead (for existing customers).