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 But this is a very outdated perception and technology advances have changed the game completely.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.



The IOT technology meeting the UK’s grid balancing needs faster than a power station

Tech image

Chris Kimmett, Commercial Manager, Open Energi

It’s a well reported fact that electricity margins are tighter than they have been for a number of years and, as we move towards winter, talk will increasingly turn to the need to balance energy supply and demand in order to mitigate the risk of power black outs in the UK.

Almost all of the UK’s grid balancing has traditionally been done by coal and gas. But the EU’s Large Combustion Plant Directive has limited running hours at a number of plants and in the past twelve months both Longannet and Eggborough power stations, which currently provide around 5% of the UK’s capacity, have announced they will be closing their doors in 2016.

Add to this the solar and wind explosion – by the end of 2015 experts predict the UK will have 10GW of solar power, a benchmark most thought wouldn’t be reached until 2020, and by 2020 National Grid’s Future Energy Scenarios indicate that small-scale, distributed generation will represent a third of total capacity in the UK. This considered, we see that tomorrow’s electricity landscape will look very different to that of today.

The transformation of the energy system away from centralised generation to small-scale, distributed power means that speed of response to changes in energy supply and demand will be more important than ever.

Indeed, while most people are focusing on the tight capacity margin between supply and demand, the real blackout threat could come from generators being unable to respond within the required window to balance instantaneous shifts on the grid.

For more than 12 months, energy data analysts at EnAppSys have been monitoring grid frequency and analysing large deviations which, if not managed, can lead to instability. EnAppSys’ director Paul Verrill says that while we need to ensure the system has sufficient supply to meet demand, the real risk of blackouts could come from this second issue that often falls under the radar: a lack of capacity able to deliver additional power within the required timeframe.

Grid agility and flexibility will be essential as we move away from models of centrally dispatched generation, and National Grid, via its Power Responsive campaign, has already asserted that demand side response (DSR) will play an increasingly vital role in building a resilient, sustainable and affordable electricity system for the future.

This is especially pertinent given the results of new research by Open Energi, National Grid and Cardiff University, which suggests that smart demand side response (DSR) technology can meet the UK’s crucial grid balancing requirements faster than a conventional power station.

The latest research paper, which forms part of the ongoing collaborative research programme between Open Energi, National Grid and Cardiff University, titled Power System Frequency Response from the Control of Bitumen Tanks, looks at the feasibility of DSR to provide a significant share of frequency balancing services.

To test the scale of the opportunity for industrial heating loads to provide frequency response to the power system, bitumen tanks (which contain the glue that binds our roads together) equipped with Dynamic Demand technology were tested in combination with National Grid’s model of the GB transmission system.

Dynamic Demand deployed at scale is able to contribute to the grid frequency control in a manner similar to, and, crucially, faster than that provided by traditional peaking power generation – not to mention more cleanly and cheaply.

Field tests showed that full response could be provided in less than two seconds, as compared to 5 – 10 seconds for a thermal generator. Large scale deployment of Dynamic Demand will reduce the reliance on frequency-sensitive generators and ensure that the grid stays balanced in a cost-effective, sustainable and secure manner.

The research simulations help to shape National Grid’s understanding of DSR as a replacement for frequency-sensitive generation and will be used when they are planning their requirements for grid network operation in the future – with huge impacts on the future of our energy mix.

When launching Power Responsive, National Grid CEO Steve Holliday said: “The move to a low carbon economy coupled with rapid advances in technology and innovation are transforming our electricity supply. But supply is only half the story. The challenge now is to exploit new opportunities to radically evolve our energy system by changing the way we use electricity.”

And this is why the research findings are so significant.

With more renewables and decreased thermal generation, ‘inertia’ on the Grid will decrease, making frequency more unstable. To counteract this effect we need faster response, so by rolling out Dynamic Demand today we are future proofing the Grid.

With their new Power Responsive campaign, National Grid has recognised the need for a new source of flexibility and have stated they are committed to scaling the smart DSR industry.

Demand side response is intelligent energy usage. By knowing when to increase, decrease or shift their 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.