Power Responsive success stories: Aggregate Industries

National Grid’s Summer Reception 2018 profiled Aggregate Industries’ pioneering partnership with Open Energi as an example of real life achievements to unlock demand side flexibility and the innovation and collaboration within the industry.

Aggregate Industries is the first business to deploy Open Energi’s artificial intelligence-powered flexibility platform, Dynamic Demand 2.0, to deliver electricity cost savings of 10%.

40 bitumen tanks at ten Aggregate Industries’ sites UK-wide have already been connected to the platform, which uses artificial intelligence to automatically optimise their daily electricity use in response to a variety of signals, including wholesale electricity prices, peak price charges, fluctuations in grid frequency, and system imbalance prices.

Aggregate Industries is accessing the imbalance market via Renewable Balancing Reserve (RBR), a product offered by its renewable electricity supplier, Ørsted. RBR enables Aggregate Industries to tap into the financial benefits of participating in the imbalance market, by reducing its demand at certain times.

Over time Aggregate Industries plans to expand its use of Dynamic Demand 2.0 to 48 asphalt plants UK-wide – representing up to 4.5MW of demand flexibility. It is also exploring its wider portfolio of assets and processes to identify where further benefits may lie.

Talking to National Grid, Richard Eaton, Energy Manager at Aggregate Industries explained: “What we’re doing now is rolling out Open Energi’s Dynamic Demand 2.0 platform, where what we do is we flex our assets, not only to calls from National Grid, but also now to calls from Ørsted under their Renewable Balancing Reserve.

“The artificial intelligence within Dynamic Demand 2.0 is helping us to optimise our bitumen tanks leading to a predicted 10-15% reduction in the operating costs of those assets.”

Daring to imagine an energy future that’s unlike our past

Future Energy System

Two years ago, when we walked into a pub in Old Street to chat with Forum for the Future about creating a virtual power station, we had no idea we’d end up convening a project to challenge the fundamentals of how our energy system works – called the Living Grid.

Our early conversations were all about reducing our reliance on fossil fuelled generators, and proving the potential of demand-side management to revolutionise our energy grid.  But it turns out, when you mix inspiring conversations with businesses, universities, government bodies, local authorities, community groups, start-up technology providers, industry associations and everyone in between with a standing-room-only presentation from Michael Pawlyn, you end up with an initiative that questions every aspect of how our energy system is designed.

Why limit the conversation to the role of sophisticated, demand-side technologies. If our goal is an energy system powered by renewable energy rather than fossil fuels, we must look at the capabilities, interactions and design of every aspect of the system and question whether it has to be this way, or whether there is a better, alternative approach – and we must unleash our imaginations to do it.  The Living Grid has become a community of people and organisations who are deliberately challenging the beliefs we hold about our energy future, to open up solutions to us that are simply not possible using the same thinking that created our fossil-fuel powered grid.

“The system of nature, of which man is a part, tends to be self-balancing, self-adjusting, self-cleansing.  Not so with technology.”  E.F. Schumacher

The Living Grid is provoking us to look beyond carbon reductions at the mismatch between our human energy system and the wider, living energy system that’s evolved here over the last 3.8 billion years of life.   Rather than cycle solar energy through a closed-loop, cooperative system – as other life forms do around here – our linear, centralised grid releases energy into the atmosphere by burning fossil fuels, wasting it rather than recapturing it. ‘What it would take to make our alien energy system part and parcel of nature again? 

As founding technology partner, Open Energi is proud to have helped bring the Living Grid into existence with our customers Aggregate Industries, Sainsbury’s, Tarmac and United Utilities.  As the Living Grid grows, we’re pleased that other organisations who share its vision, such as Smartest Energy, are getting involved to usher-in the next stage of development. This next next phase is starting with a global, online conversation to reimagine our legacy grid.  Are you curious about how nature would design our energy system?  Join the debate here.

The Living Grid is a project convened by Forum for the Future.  To find out more about the Living Grid and how you could get involved please contact: g.adams@forumforthefuture.org or h.hauf@forumforthefuture.org

 

New EEF report: DSR should “be one of the first options” for electricity security

Metal company scores win-win of cash and cost savings

Under Theresa May’s Government BEIS has been tasked with delivering a comprehensive industrial strategy, ensuring that the UK has secure energy supplies that are reliable, affordable and clean, and tackling climate change.

The UK’s manufacturing sector has an important role to play but a report published this week by the manufacturers’ organisation, EEF, found that its members’ confidence in the Government’s handle on security of supply is tepid at best. Only one third of its members agreed with the statement that “the Government has a long-term strategy to ensure security of supply” and just 3.6% felt energy infrastructure had improved in the last two years.

The report “Upgrading Power: Delivering a flexible electricity system” makes a series of recommendations for Government to help manufacturers play a part in boosting UK energy security and improve how our electricity system operates. Demand Side Response (DSR) is identified as one of the first options that should be looked to in achieving electricity security.

As the authors note “Continuing to be over-reliant on supply side options and leaving DSR options untapped is rather like having the heating on at home, deciding it’s too warm and then opening a window rather than turning the heating down. Both actions will achieve the intended outcome but the former wastes energy and money.”

In a recent EEF survey only 9% of respondents took part in some form of DSR activity – compared with 29% in a recent cross-sector survey conducted by Ofgem – citing varied reasons from insufficient financial incentive to those that had utilised all of the available flexibility on their sites. However, by the far the most common reason given was the complexity of the system and resulting lack of understanding within manufacturing companies.

The report found that even manufacturing companies well versed in the DSR markets find the system bewildering and unwelcoming to new entrants. One company commented that “it is genuinely stressful to be in a regulatory environment alongside the big six”, further noting that energy companies have entire departments to deal with these markets, whilst even a large manufacturing company may have only one individual covering energy.

Those manufacturers who are engaged in DSR activities adopt a common approach and hierarchy to maximise potential savings and revenue streams. Where possible, companies will seek out opportunities to reduce exposure to higher power (wholesale) prices first, followed by minimising their network costs (Triads and Distribution red band charges) and finally participate in specific DSR products.

To help unlock the estimated 9.8GW of DSR flexibility available in the UK EEF recommends first increasing the number of businesses acting on straightforward price signals through time-of-use tariffs. Beyond this it calls on the Government, National Grid and Ofgem to look at what can be done to reduce the complexity of specific DSR services and regulatory barriers to entry.

Finally, it highlights the forthcoming ADE code of conduct for aggregators as an important step which will improve manufacturers confidence in these companies. Open Energi strongly supports this move. Aggregators occupy a position of trust and have a responsibility to educate businesses and be open and transparent about the benefits that exist.

Donna Hunt, Head of Sustainability at Aggregate Industries summed this up in a recent interview with edie, saying “businesses want to see what the value-case is. They need the confidence and trust in it. It’s not new technology but it’s perhaps not at scale yet. That’s a big reason why Aggregate Industries is proud to be out there talking about how it works. We should be doing more of it because we need a more responsive energy system that works for everyone.

“We need to prove that value-case, share knowledge and open doors. We just need there to be a level playing field between the aggregators to remove the confusion so people are clear about how they can engage.”

Unlocking the full potential of DSR is going to take time but National Grid is looking to source 30-50% of balancing services from DSR by 2020, creating a potential revenue stream for businesses of around £1 billion. As the world strives to find ways of delivering energy which is clean, affordable, and secure, the more that can be done to facilitate DSR participation – from business of all sectors – the better.

EEF Report: Demand Side Response Recommendations

  • The Government should investigate how to maximise the DSR benefits for manufacturers of smart meters, half-hourly settlement and time-of use tariffs.
  • National Grid, as part of its charging review and in consultation with industrial energy consumers, should seek to reform the Triad charging system to deliver greater predictability for industrial energy consumers.
  • The Government should explore the incorporation of DSR aims and related electricity cost reduction strategies into energy efficiency schemes such as ESOS.
  • National Grid, in collaboration with energy consumers and the Government, should seek to reform the ancillary market to reduce complexity and create greater transparency.
  • Ofgem should amend the Balancing Settlement Code rules to allow participation of DSR in the balancing market.
  • The Government should reform the Capacity Market to allow easier access for DSR assets in future auctions.

Download the full EEF report “Upgrading Power: Delivering a flexible electricity system”

 

 

The 4th industrial revolution: a smart power revolution?

Sainsbury's deliver demand side response from its stores UK wide

On the 8th September, James Heappey, Conservative MP for Wells took part in a House of Commons debate on the 4th Industrial Revolution.

In his speech he talked about the “smart energy revolution” that is underway in the UK today, and highlighted the pioneering work of two of Open Energi’s customers, Sainsbury’s and Aggregate Industries. Here’s what he had to say:

Speaking twice in 25 hours is a record for me, and I am grateful for the opportunity. I congratulate my hon. Friend Mr Mak, who has secured a worthwhile debate and opened it brilliantly. I apologise for being late, but I was working on the Energy and Climate Change Committee’s paper on renewable heat and transport targets, which will be released this evening. I commend it to the House: it is probably one of the most insightful Select Committee reports that Members will read all year. Indeed, all of our Committee’s reports are insightful.

In summing up yesterday’s debate, the Minister used some fantastic theatrical references, which I hope will become a tradition of his summing-up speeches. He has an encyclopaedic knowledge of the theatre, so we look forward to that. Today, I present, to use my own theatrical reference, the second part of my play in two parts, in which I will talk about the energy opportunities provided by the collision of emerging technologies and our existing energy infrastructure.

There is some dispute over whether this is the third or fourth industrial revolution. A book by Professor Jeremy Rifkin has become a bit of a bible for me, as I have sought to develop my thinking on how energy policy might evolve. He thinks that this is the third industrial revolution, but none the less it is an excellent read that very much pulls in the same direction as those who are advocating the fourth industrial revolution.

Ministers will already have looked in great detail at the National Infrastructure Commission’s “Smart Power” report, which is a fantastic publication setting out how we can harness all these wonderful technologies as we digitise the energy system. The reality, as the report observes, is that we could save £8 billion a year for the UK economy if we digitise our energy system and harness those technologies. That figure represents not just immediate savings on our energy bills, but gains in productivity.

Nicola Shaw, the head of National Grid, told the BBC “Today” programme last week that we are seeing

“a smart energy revolution across the country with consumption adjustments reflecting when energy is cheapest”.

The idea that we have to change our consumption habits to meet a changing energy market sounds like a nightmare to most people, but the reality is that we already have many of the technologies in our homes. Most major white goods manufacturers are producing smart appliances already: they are in our shops and, probably unknowingly, we already have them in our homes. Through the internet of things, they will all start to speak to one another to make sure that they operate at the most efficient and cost-effective time. They also report faults, so people will not have to carry on for years with a fridge that uses more power than it should, because it will already have flagged up its fault to whoever manufactured it. These are exciting times and the technologies already exist. It is not, in my view, going to be a case of opting into them, because manufacturers are building them as standard and they will increasingly do so.

The Government face a challenge in preparing our homes, businesses and society for the internet of things from an energy perspective, so I will give my thoughts on our system preparedness before moving on to examples of where we are already seeing the huge economic advantages.

As Ministers know only too well, the smart meter programme is the keystone in achieving the digitisation of our energy system, and I know that they will be keen to push on with that roll-out at best speed. Everything that we seek to do in bringing technological innovation into the energy space depends on those smart meters being in place to digitise the system. Similarly, on the way in which our grid is put together, we want all our generational capacity—from the smallest to the largest—to be able to speak in real time about what it is producing, so that we can have a more dynamic generation system. We also need to sort out the regulatory framework for storage, because at the moment people have, in effect, to pay for their energy twice: first when it is generated, and secondly when it is released from storage. Surely, that cannot continue for much longer.

We also have to make sure that our distribution networks—the substations in our communities—are capable of dealing with more dynamic demand and clustered demand, particularly overnight, when people might be taking advantage of cheap energy to charge cars, run the washing machine and tumble dryer, and heat immersion tanks. None of that will happen automatically without the Government paving the way. Thereafter, however, I am sure that these technologies will find their place in the market by themselves. They will make life better, and people will buy them as a result. The Government do not need to encourage people every year or so to change their mobile phone, because people just want to have the latest technology at their disposal. I am sure that that will be the case in this area if the Government create the right regulatory framework with energy policy.

I turn to storage. The price of storage has already come down from $3,000 per kWh to about $200 today, and it will come down even more quickly still. We saw over the summer reports about the Tesla Panasonic factory in Colorado, the construction of which is being accelerated quite rapidly given the increase in demand. These are exciting times, because storage is the key to flattening the energy supply curve and unlocking the real potential of renewables.

The real technological wizardry, however, is demand-side response. That may be a combination of words that many in the Chamber have not heard before, but it needs to be at the forefront of the way in which we discuss energy. Flattening the supply curve through the availability of storage deals with only half the problem; flattening the demand curve through demand-side management is equally important.

I have been hugely impressed as I have become enthused about DSR, and as I have gone around various companies that are delivering it, by the scale of the savings that it is bringing to businesses. Marriott hotels have signed up to a DSR contract that saves them hundreds of thousands of dollars a year. Workers at Aggregate Industries’ bitumen plants used to just turn up in the morning and fire up the boilers to get the bitumen tanks up to heat. They would operate over the course of the day, and then they would be switched off. Aggregate Industries now employs technologies that allow it to say, “Our tolerance is that we need to keep these tanks at a certain temperature, and provided that they are at that temperature, we can release energy back to the grid.” It does so, and it gets money for nothing as a result. By employing those technologies, it can sell back energy that it does not need, which it would otherwise just have paid for and wasted. That creates a huge saving.

Similarly, refrigeration is a massive cost for supermarkets and the food industry in general. Sainsbury’s has employed demand-side response, and the store in my constituency in Street, Somerset has released 20 kW of capacity back to the grid simply from DSR. That is extraordinary.

The other area that I want to touch on was the electrification of the transport system. I had to check very carefully with the Clerk of the Energy and Climate Change Committee about when I would find myself in contempt of Parliament, but I understand that if I draw on the evidence rather than on the report itself, it is fine. This is a hugely exciting opportunity for us to employ electric cars and electric haulage systems in the UK. The problem is that I am not sure that we yet have the infrastructure in place to support them, and I am not sure that we have the right fiscal structure to support them either.

I tried to buy an electric car over the summer, and sadly I found that their range was probably not quite enough to allow me to do my duties around my rural Somerset constituency. They are getting there, however, and we just need to incentivise the acceleration of the technology, so that we get beyond the 100-mile range to a range of 200 or 300 miles. If that happens, I think that people will, all of a sudden, go for electric cars quite quickly. All the incentives that the Government have in place—the £4,500 that they contribute towards the car and the contribution they make towards a charging point at the buyer’s home—are fantastic. The Government’s emphasis on establishing a charging infrastructure at motorway service stations and on main roads is also fantastic, but we really need to grow the infrastructure much more if people are to buy the cars and make the saving that we hope they will. The argument is that electric cars will make us more productive as well, particularly when we go beyond merely electric cars to electric autonomous cars, and we find that we can move around our towns and cities much more freely.

Interestingly, in the United States, Coca-Cola has employed hydrogen-electric hybrid vehicles for its entire fleet, and it has made a 20% reduction on its fuel costs. It made that huge saving by employing those technologies and electrifying its transport fleet, which is very exciting. We should look across at that and realise that this is not just something that people do if they are green and they want to be environmentally sensitive. It is something that an individual or a business can do if they want to reduce their operating costs—technology colliding with energy generation and energy consumption to make us more efficient and more cost-effective, and to make all our operating costs that bit cheaper.

Mr Deputy Speaker, you encouraged us to keep within 10 minutes, so I will summarise, rather than go into the many more examples that I am itching to provide. The bottom line is that, while we will focus very much on our digital infrastructure with broadband and 5G mobile phones and we will worry very much about the preparedness of our airports and air routes, as well as of our roads and rail, the energy infrastructure is just as important. In my view, alongside the broadband and mobile phone networks, the three sets of infrastructure of telecoms, broadband and energy will drive the fourth—or third—industrial revolution and allow us to harness all these fantastic technologies. We should seek to do so not just because we are seeking to arrest climate change, but because it is cost-effective, makes business sense, will increase productivity and, ultimately, will be great for our economy.

Access the full debate here.

10 myths about Demand Side Response

Sainsbury's deliver demand side response from its stores UK wide

Demand Side Response  is a vital part of our transition to a zero carbon economy and has the potential to transform how we use and deliver energy. But there are some common misconceptions about how businesses can get involved and what it means for them. To help cut through these, Chris Kimmett, Commercial Director at Open Energi, tackles some of the most common myths about Demand Side Response (DSR).

Myth 1: It’s too disruptive

This myth is especially prevalent in the press where headlines such as “UK factories shut down to prevent winter blackouts” are not uncommon. But this is a very outdated perception and technology advances have changed the game completely. There are lots of processes that have a degree of flexibility, where technology can be used to temporarily increase or decrease consumption without impacting performance, for example heating, cooling and pumping.

Take the air conditioning in a typical office building. It will be designed to maintain the temperature between certain bands, for example 18-22 degrees centigrade. Turning the unit on or off for a short period won’t have any discernible impact on the temperature and technology can automate its response so as soon as it approaches its upper or lower limit it stops responding.

Some demand is genuinely inflexible, such as lighting. The good news is that as battery costs come down, businesses can use these to participate in different Demand Side Response schemes and switch to battery power during peak periods.

Myth 2: It’s all back-up diesel generators

It’s true that there is a lot of back up generation participating in certain DSR schemes. Short Term Operating Reserve (STOR) is a good example; 93% of the response comes from generation and 22% (743MW) of this is from diesel. That’s because there are a lot of organisations with back up diesel generators which for much of the time are under-used, so it makes sense to earn revenue from these where possible. However, there is also a significant and growing portion of real demand participating across a range of markets, coming from all kinds of different equipment, including fridges, pumps, chillers, motors, and fans. To date, we have connected over 60MW of demand flexibility from these types of assets across the UK, of which around a third is usually available at any one time.

Myth 3: There isn’t enough value to make it worthwhile

There are lots of businesses out there participating in DSR who would disagree with this statement. In a recent Energyst Media survey, 81% of businesses said they participated in DSR to generate revenue and National Grid’s PowerResponsive website features a range of case studies. These businesses are seeing significant value from participating in DSR, not just in terms of revenue, but also because it is the right thing to do and it is supporting their organisation’s sustainability credentials. Accessing all a business’ flexibility means it should be possible to return around 5-10% of its energy bill in DSR revenue. National Grid has clearly stated its desire and need to grow demand side participation significantly, and its value is expected to increase over time.

Myth 4: It’s a winter peak problem

There is a winter peak problem and margins remain slim at around 6.6%, but National Grid increasingly faces challenges in the summer and with the year round second-by-second balancing of supply and demand. As more of our power comes from wind, solar and other sources of distributed generation over which National Grid has no control, it is having to cope with periods in the summer months where supply exceeds demand, often overnight or in the middle of a sunny day. Rather than pay wind farms to turn off, it has been using a new service called Demand Turn-up to encourage businesses to shift their demand to these periods to help absorb the excess energy.

A very different challenge is that of managing the real-time balancing of electricity supply and demand, which National Grid must do 24/7, 365 days a year. Whether a gust of wind means a surge in power or a gas plant tripping means a shortage, demand flexibility is cleaner, cheaper and faster than ramping power stations up and down in response. Fast acting real time flexibility is essential to keeping the lights on in the future.

Myth 5: Participating in Demand Side Response means handing over control of my processes

Absolutely not! It is not the place of DSR providers to tell you how to run your business and you should always retain ultimate control. This should be a fundamental part of how you approach DSR. We spend a lot of time working with our customers to understand their assets and processes and agree the parameters within which they want their assets to participate. Once a control strategy is in place, each individual asset is then able to decide if it can respond, and the technology will enable it to kick us out automatically if it reaches a point where it can’t.

The beauty of DSR is that because the response is aggregated from many thousands of assets, where one fridge can’t respond we know that a pump or a bitumen tank will. Added to this there is always an override switch which means the system can be disabled on site at any time.

Myth 6:  Demand Side Response is easy

It is getting easier, but it is certainly not easy just yet. As described above, much of the effort and resource is required pre-implementation, in understanding the assets and processes and developing a strategy to ensure there is no impact on operational performance. There is a lot of great learning happening in the UK and globally, connectivity is increasing, technology is improving, and we are starting to see equipment being manufactured “DSR” ready. These changes are making it easier for businesses to participate by the day.

Myth 7:  Energy storage = batteries

Batteries are very interesting and the cost curve has been plummeting – especially for Lithium-ion batteries. But energy storage comes in many forms; there is thermal storage in a fridge, in a building’s air conditioning or in a bitumen tank for example.

Working with Aggregate Industries, we have found that a modern, well-maintained and insulated bitumen tank – which stores the liquid bitumen used to make asphalt for roads at between 150-180 degrees centigrade – can be switched off for over an hour with only a one-degree change in temperature.

Similarly, the water pumped to a reservoir represents a form stored energy. If we can find these small amounts of stored energy in everyday processes and unlock this flexibility for National Grid, then we can start to deliver a transformation in how our energy system operates without the need to build new batteries.

Myth 8: There isn’t enough demand flexibility to make a difference

A number of recent studies have looked at this, including the Association of Decentralised Energy and the National Infrastructure Commission. Our analysis suggests there is around 6GW of demand that can be shifted during peak periods, and that’s real demand only, not including back-up generators. 6GW is more than the UK’s two biggest coal fired power stations combined, and almost double the proposed Hinkley Point C nuclear plant. Unlocking this flexibility means we can build fewer peaking plants, integrate more renewable generation and mitigate the effects of intermittency. It offers major advantages in terms of cost, network reliability and sustainability which is good news for the environment and bill payers!

Myth 9: It’s unreliable

In setting the Capacity Market Auction Guidelines, National Grid prescribed the reliability for each balancing technology class available. Demand Side Response was ranked as more reliable than Combined Cycle Gas Turbines (CCGT), coal, hydro, oil or nuclear power. For example, for a 100MW nuclear generator, National Grid estimate it can rely on 81.4MW being available, while for DSR they would expect 89.7MW to be available. Large centralised power stations do not necessarily confer reliability. By their very nature they represent large single points of failure with the potential to cause massive disruption should a problem arise. The aggregated nature of DSR which relies on many thousands of smaller assets working together has proved its reliability over many years.

Myth 10: I have no flexibility!

You probably have more than you realise. If you’re thinking about demand flexibility but not sure how or if it could work for your business, we recommend you:
1) engage the right people internally who know what equipment you have and understand how it is managed
2) find someone who understands the market
3) find someone who understands your industry and what you do

By overlaying the above in a meaningful you can identify how much flexibility you have and where you can use it in a way that doesn’t disrupt your business and delivers the value you need.