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DEMAND-SIDE RESPONSE Dispelling the myths

Twelve years ago, when Flexitricitywas in gestation, demand-side response (DSR) was unknown. With National Grid’s recent pronouncement that DSR could provide 30-50% of its balancing needs, DSR is the hot topic. But attention brings confusion. It’s time the myth busting got started. Here are Flexitricity’s top five


yth one - DSR is easy: This one comes in several guises, such as “it’s free money”

and “you don’t have to do anything”. It’s true that some DSR can be commercialised with minimal expenditure. It’s also perfectly feasible for DSR companies to pay for controls upgrades. But most site managers aren’t interested in external funding. So capex is not the point. The key is management time, and the

resulting opportunity cost. While the energy manager is busy appraising a DSR proposal, discussing flexibility with Operations, or considering payback with Finance, some other energy project isn’t getting done. With experience, genuinely viable DSR opportunities begin to stand out. But the experience must come from both sides: DSR provider and energy user. There is no DSR without collaboration. Myth two -It’s all about demand peaks: Since Flexitricity was inaugurated, there has never been an energy shortfall at peak. Crises have happened, however. Tilbury power station caught fire during a morning pick-up in February 2012. A couple of weeks later came the “duvet day”, a cold Saturday morning when


Figure 1: DSR dispelling the myths

seven gas power stations failed to start. The infamous Longannet/Sizewell B crash in 2008 happened just as biscuits were being dunked in mid-morning tea.

That’s not to say that DSR doesn’t get

activated at peaks. Triad management – the classic peak reduction opportunity – is now so lucrative that other DSR activities like short- term operating reserve (STOR) become secondary during winter weekday evenings. Myth three - DSR is all diesel: In fact, flexible load and CHP are making better returns from DSR than diesel. That’s because market conditions are rewarding low delivery cost more than consistent availability. Cold stores, for example, modulate their electricity consumption to take advantage of prices. During the most expensive periods of the day, flexible plant is already off – leaving nothing more for National Grid. But at other times, a cold store can shut down very cheaply if requested. CHP follows a similar pattern – the day job must be done, but during idle periods, CHP can deliver reserve energy cheaply and often; and that’s where the economic sweet spot is found.

However, standby generators have two particular virtues which other resources sometimes lack. First, they need occasional on- load running in order to provide reliable emergency power. That works well with DSR – the trick is to ensure that testing is done when the electricity is most needed. Second, as a standby generator’s day-job is to sit and wait, it can be regularly available for Grid duties. CHP and flexible load are likely to retain the top spot in terms of economic returns from DSR. However, National Grid has recently signalled willingness to pay more for resources which can be consistently available, even if they will be used very rarely. If a large power station trips, standby generators can fill the brief gap quickly and reliably while cheaper resources are ramped up. Myth four - You can only do one thing at a time: This one is partly true. No resource can provide frequency response and STOR at the same time. Different resources on the same site could do that, but each resource needs to commit to what it’s providing at any time. Sometimes the commitment is made months ahead; in other cases, an hour will do. But overlapping is usually a prohibited thing. There are two exceptions. The first is that sites consume electricity for a purpose, and they will keep doing that whatever they are doing in DSR. Core business must be protected, and it’s for the DSR provider to resolve any conflicts. The way to do that is through a large, diverse portfolio, continuous monitoring and active management. The second is the government’s Capacity

Market (CM), which was explicitly designed to overlap with everything else a resource might want to do. This makes economic sense – if one resource can do two things, then the consumer doesn’t have to pay for two resources. Myth five - It’s about technology: Automation, security and speed are very important, as are aggregation methods, flexibility in communications, and defensive engineering. However, none of those will help if the site itself simply isn’t right for DSR. Thorough appraisal and careful

implementation are vital – DSR without engineering is like a car without steering. And if there’s a problem, a site operator wants to be able to pick up the phone – at any time of the day or night – and speak to a person. As the DSR technology leader, Flexitricity knows that technology alone isn’t enough. Expertise makes the difference.

Flexitricity 0131 221 8100


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