Experts offer insights into challenges and opportunities of demand-side response

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Energyst Media’s DSR event, The Banking Hall, London

Leading experts in demand-side response (DSR) and end users gathered at the Cornhill Banking Hall, London, to share their insights on the challenges and the opportunities. Organised by Energyst Media, the DSR event was packed with delegates from a diverse range of industry sectors – from government, NHS Trusts and water authorities, to utilities, local councils and universities. Headline speakers included Asheya Patten, flexibility workstream lead, National Grid; Ed Nelson, senior policy advisor, smart energy, BEIS; and Louise van Rensburg, senior economist, Ofgem.

Delegates heard how the energy system is changing dramatically. In the coming years, those who can respond to sharpening price signals at any given time of day will cut costs and generate revenue – those that do not will pay more.

While there are significant revenue opportunities, participation in DSR is not without its challenges, and Kate Dapre, head of engineering, energy & sustainability at NHS National Services Scotland, gave a candid account of the hurdles experienced by healthcare providers, in attempting to take projects forward.

The NHS should in theory be a major player in DSR as many sites have generation assets and it is under financial pressure. She commented that while there are significant potential revenue opportunities, funding has presented a major hurdle. “The main barrier is cost. You are often told there is no cost of entry, but there is a cost associated with updating equipment, particularly switchgear, and significant costs associated with G59 grid connections,” she commented.

NHS assets, in many cases, are ageing and the health boards’ gen sets were not installed with DSR in mind. Furthermore, as DSR does not ‘tick the right box’ for carbon savings, it has been hard work to build a case for investment. In addition, conflicting legislation has made participation difficult to navigate. Other hurdles have included concerns over the noise of diesel generators and potential impact on patients.

Dapre commented that public sector inertia and bureaucracy makes it extremely difficult to push projects forward and it can take years to make any progress. While the savings are good, the process can be ‘exasperating’.

Andrew Heygate-Brown, senior energy innovation analyst at Dwr Cymru Welsh Water, also outlined the firm’s DSR strategy, its outcomes and Welsh Water’s plans for a significant push into frequency response.

After labour, energy is Welsh Water’s highest cost, which provides a strong incentive to maximise the value of flexibility. The firm’s primary DSR activity is Triad and peak tariff avoidance. His presentation highlighted what is possible with some perseverance.

“For Triad avoidance we reduce our demand by about 50% without the use of any diesel generators in parallel with the grid,” said Heygate-Brown. In fact, the company has managed to reduce peak demand from 40MW to about 17-18MW net after export benefit – a significant saving. Welsh Water is now planning a major firm frequency response (FFR) rollout and is looking beyond frequency to broader markets. He commented that dynamic FFR was more attractive to Welsh Water as it meant that they did not have to commit upfront. This is an important consideration – Welsh Water only participates when it the conditions are right and it is safe to do so, thereby safeguarding their environmental responsibilities.

Kam Singh, director of energy, global workplace solutions, CBRE, tackled the question of whether high value services equate to ‘higher hassle’. Risk aversion in the finance sector is the main challenge when seeking to introduce frequency schemes, according to Singh.

However, this can be overcome. “We completed the first frequency control demand management scheme in the banking sector around three-and-a-half years ago. If you have a diesel rotary UPS that has a frequency switch on it, it is ‘money for old rope’,” says Singh .

“You are doing it already. When the mains frequency drops to a certain set point, your diesel rotaries kick-in anyway. Purely demonstrating that availability, should be able to earn you a decent £30K-£40K per MW.

“In this case, it was a 3MW installation. Despite the numbers stacking up and it seeming exceptionally straight-forward, it took around 15 months to get the project over the line,” Singh explains.

“The first challenge we encountered was going through four different aggregators. It was the fourth aggregator that stood up and said: ‘We can do this project.’ As operators of the site, we knew it made perfect sense.”

The site in question has a £5m per year energy bill and is a major broking house, typically trading trillions pounds worth through its buildings.

While the principle had been ‘sold’ to client, the aggregators did not necessarily understand the criticality of the asset, proposing to add a relay on the ‘other side of the bank’s infrastructure’, which of course was unacceptable to the bank. The fourth aggregator found a solution to overcome this issue.

“It now works like a dream,” says Singh, adding that the bank has seen significant rewards in terms of revenue.

“If we can do it with a client that is so risk adverse, in such a mission critical environment, it can be done in 90% of other locations,” comments Singh.

Panellists advised delegates that involving an expert is crucial, as DSR can be complicated. It is also important to limit Capex exposure as the market is fluid, while persistence is needed when starting out and embarking on DSR for the first time. Ultimately, the most value can be obtained by ‘stacking’ different revenues, across different assets.

Energyst Media’s latest DSR Report was also launched at the event. This major survey provided an insight into organisations’ views on DSR, their current and planned participation, as well as sharing experiences from end users. The Demand-side response: Shifting the balance of power report is available as a free download here.

Event partners included: National Grid, British Independent Utilities (BIU), E.ON, EnerNOC, ENGIE, G59 Professional Services, REstore, Total Gas & Power, UK Power Reserve, The Energyst and Mission Critical Power Magazine.

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