Sky’s the limit for DSR revenues?

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Is demand-side response an attractive proposition and are mission critical sites now coming on board?

Demand-side response is becoming more critical as a method to balance the grid with increasing amounts of intermittent generation and a reluctance to have fossil fuel spinning reserve in place. Sites with back-up generation are ideally suited to this and therefore critical facilities, such as hospitals, data centres, utilities. airports and the like, have the opportunity to make money and help to balance the electricity system. 

While mission critical sites are increasingly coming on board, there is huge untapped potential across a variety of sectors. It is clear some are more open to adopting DSR than others. Data centres, in particular, have required some convincing. Equinix, a colocation data centre provider believes that DSR is an exciting area but the conditions will need to be right for the company to consider making the next step. 

Michael Winterson, managing director of Equinix Services, comments: “Governments want digitisation as it is the only way to sustain a growing and more urban population. If we can digitise what were once physical services, the planet will benefit but we need governments to help us. One of the most interesting concepts we have been discussing is: ‘What if the data centre augmented its battery facilities, so that it could enter into contracts with the government and allow the government’s grid to start micromanaging us?’ We could come off grid or extract extra energy but this requires joined up thinking. It requires long-term planning and we need to engage national government departments. 

“Firstly, participation has to make sense for national shareholders, so there must be an economic benefit for investing in the technology; secondly, participation will make sense if customers demand it; and thirdly, it will make sense if the government wants to make it happen and treats it as being for the national good, forcing the economy to deal with it. 

“At the moment, it doesn’t make economic sense for us to do this. The offer on the table compared to the capital that we would have to spend, means that it wouldn’t pay back in any decent response time.”

So could government regulation be the answer to increasing uptake? Winterson believes this isn’t the answer. 

 “If government regulated what we did it, they would impose a burden and a cost on our business that would mean a worse return for shareholders, so our stock price would go down and we would deliver less of a service to the economy, or we would have to pass on the cost to our clients. 

“This would mean that businesses would keep their ‘dirty’ servers in their own ‘dirty data centres’ in the basement, as they couldn’t afford to migrate to a large, green data centre, like Equinix. People have to understand the negativity of regulation. We need to think big about this; about the future of a digital economy,” Winterson argues. 

Other data centres are already pushing forward into grid balancing schemes and report that it makes sense for their individual business model. Some data centre operators go as far as saying that the resilience of their data centre is improved by taking part in DSR schemes. 

Ari Kurvi, data centre manager for Yandex Oy’s facility, based in Mäntsälä, Finland, comments: “The only way you can ensure your system works is to test it end-to-end. We have seen no increase in risk by participating in DSR – instead, we have reduced our risk by testing our systems more frequently and more thoroughly. We are ahead of any disaster that may happen on the grid and can react much quicker to any frequency drop compared to other data centres that are not participating in DSR schemes.”

Dublin Airport Authority (DAA) is also among the increasing number of critical sites starting to come on board with grid balancing schemes. DAA is partnering with EnerNOC to help deliver more than 11MW of flexible capacity to both EirGrid’s recently launched ancillary services programme and the future capacity market due to launch later this year. DAA is already providing more than 3MW of very fast responding flexible capacity within the DS3 (Tertiary Operating Reserve 1, or TOR1) scheme, and will also enrol more than 8MW of flexible capacity into the new Integrated Single Electricity Market (I-SEM) for Ireland and Northern Ireland, due to launch 1 October.

DAA will earn streams of revenue and build operational resilience from its participation in both schemes, while actively contributing to EirGrid’s system stability as they integrate more renewables on the grid.

EirGrid’s DS3 scheme is a new ancillary services programme that will provide incentive payments to large energy users that can enact fast-acting distributed energy assets when system frequency drops to a certain rate. Prior to the May 2018 launch of the DS3 programme, EnerNOC was already a provider of fast responding aggregated grid services in Ireland as part of an EirGrid pilot project.

Ian Clarke, energy manager, Dublin Airport, comments: “Participating in EirGrid’s latest grid balancing schemes aligns perfectly with our asset management and energy objectives. We are delighted to become part of the EnerNOC network of businesses that are enabling Ireland’s grid resilience while furthering our own operational resilience. Our enrolment, testing, and early participation has been simple and seamless.” 

EnerNOC’s Sam Scuilli, will be joining the panel discussion on ‘Capacity Market Changes and Opportunities for Businesses’ at the DSR Event. The event will provide valuable insights from experts, aggregators and energy users. National Grid needs more businesses to reduce power use, or switch to on-site generation instead of asking power stations to ramp up at times of system stress. Ultimately, there are significant opportunities for businesses to avoid costs and generate revenue. 

The Demand-Side Response Event, hosted by Mission Critical Power’s sister title, The Energyst, will outline these opportunities and how to take part.

DSR Event: panel experts to discuss opportunities

Visitors to The Energyst’s DSR Event can gain key insights into the challenges, solutions and requirements for particiption in grid balancing schemes. Discussion topics at the DSR Event will include:

DSR market overview: What’s changed and where next? National Grid details changes to its balancing services and what that means for DSR providers 

Generation versus load: Impact of recent policy and regulatory changes. What does the future hold for generation forms of DSR in light of incoming rule changes, and what opportunities does this open up for ‘load’ providers?

Balancing risk and reward: Are businesses comfortable sharing more risk to unlock higher revenue? What challenges do end user organisations face in unlocking flexibility, and is there appetite for increased risk to make business case stack-up?

Follow the money: Where’s it going, how can you access best value? How businesses are mitigating revenue cannibalisation in contracted markets with more agile strategies

Hybrid DSR and storage: Less risk, more reward? How businesses can reduce risk and maximise benefits by pairing batteries with DSR assets 

Last year’s event was oversubscribed. Register in advance for the 2018 DSR Event to avoid disappointment. The DSR Event 2018 will take place on Thursday 13 September at the prestigious Banking Hall, central London. For further details and to register, visit: https://dsrevent.uk

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