United Utilities: Stronger incentives required to scale demand side response

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Thirlmere_credit_Steve_BarberUnited Utilities is building towards an aspirational target of 20MW of Frequency Response via Open Energi. The water company could conceivably deliver more demand side response (DSR), says energy manager Andy Pennick, but that would require stronger incentives to make smaller loads commercially viable.

United Utilities aims to create around 50MW of demand response capacity over the next five years, of which 30MW will be diesel generators providing Short Term Operating Reserve (STOR) services.

Flexibility

For the Frequency Response component, Pennick says flexibility was key to rolling out the technology, which works by controlling pumps and motors used in the water and wastewater process. By utilising asset flexibility, United Utilities now earns revenue by helping National Grid maintain frequency at the optimum 50 Hertz. That revenue will be reinvested into reducing its energy bill, one of United Utilities largest operating costs.

“Our operational requirement is to meet compliance standards, so we have to be very careful when we introduce new pieces of equipment that we don’t put any of that at risk,” says Pennick. “But we can still comply with environmental constraints and be flexible provided we meet quality requirements.”

Operating within set points and controlled parameters “works with us, because our availability changes due to lots of variables, such as the weather,” he says. “We can’t say ‘we will be available next Tuesday’ because we don’t know for sure what will be happening at that time. So that is why the Dynamic Demand system works really well with our business.

Cutting energy costs

“We are primarily looking to mitigate against our own rising energy costs and demand-side response provides a good income stream to do that,” says Pennick. “The income can then be reinvested against our existing asset base.”

Pennick says it is too soon to quantify precisely how far DSR measures reduce the bill. But given energy is one of the company’s highest operating costs, it is likely to be substantial.

“It’s hard to say because we are still at the early learning stage of rolling out at scale. We have had some success, but it is early days in our understanding of the market and of our own assets’ flexibility.”

A double digit percentage?

“I don’t think we will be taking tens of millions of pounds off of our energy bill with demand side response,” he says. “But we are looking at high single figures.”

As well as the STOR programme, United Utilities also Triad manages and undertakes red zone tariff avoidance. “Pumping water into reservoirs, for example, we will preferentially do overnight if operationally possible,” says Pennick. The firm is also “keeping a watching brief” on the capacity market.

Money

Asked what might help scale the broader demand response market, Pennick said it boiled down to money.

“Ultimately for us is it is a commercial decision to become involved in DSR,” says Pennick. “We have lots of smaller assets which could be flexible, but the cost benefit to put them into the market doesn’t necessarily stack up.

“Whoever is buying the service needs to be aware that 100kW might cost us the same to put into Frequency Response as a megawatt,” he continues.

“To scale the market, I think you need to look at how you make it cost beneficial to bring in those smaller motors, pumps and drives. We would like to put them in and we could put them in. But currently, it is just not worth it.”

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