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DSR wins 209MW in latest capacity market auction as role of business energy continues to grow

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Provisional contracts worth a combined capacity of over 209MW have been awarded to demand side response (DSR) technologies in the latest capacity market auction.

Agreements won in the Early Auction (EA) run from the start of winter 2017 to the beginning of winter 2018, when previously secured contracts will begin to provide capacity. Due to the short term nature of the EA, the auction closed on 3 February at the lowest clearing price of £6.95/kW, with 54.4GW of capacity agreements reached.

DSR providers proved to be successful across a range of applications, with 30 contracts awarded to varying capacities.

Around half (100MW) of DSR capacity to win agreements in the EA were awarded to Flexitricity, which will provide services from a number of standby diesel generators around the UK. The aggregator will also manage load reduction from flexible electricity consuming processes such as air-conditioning, lighting and other energy demands.

Similarly, the likes of British Gas, E.ON UK and EDF also won contracts to offset site loads and manage onsite generation assets at a number of industrial facilities. Both Limejump and Energy Pool UK will also provide circa 12MW and 25MW of DSR capacity respectively by aggregating on site generation and load reduction from a number of sites.

National Grid is repeatedly turning to DSR to provide grid services, allowing businesses to offer up their capacity in exchange for a share of market payments.

SmartestEnergy recently claimed that businesses which are able to deliver at least 250kW of capacity could save nearly £20,000 a year from capacity market payments, avoiding peak energy charges and selling to the grid and times of high demand.

National Grid has set a target of meeting 30% to 50% of balancing services from DSR by 2020, and spending could double to £2 billion a year within five years as renewables replace fossil fuel generation.

This is intended to ensure that the UK remains protected from potential shortages in capacity by reducing the need for new generation assets. DSR is particularly well suited to this goal and is now readily receiving support from both National Grid in the form of capacity market payments and government.

Significant levels of funding were recently announced by the Department for Business, Energy & Industrial Strategy, including up to £7.6 million will be available for advancing energy DSR technologies that can help both private and public sector organisations reduce energy use in peak times.

However Chris Kimmett, commercial director at demand-side aggregator Open Energi, claims the current shift towards smarter technologies needs to advance further in order for the grid to remain fit for purpose.

“Our grid urgently needs to become more agile and the cleanest, cheapest, most efficient way of doing this is to make use of demand-side flexibility,” he said.

“The Government’s recently announced funding for energy innovation projects is an encouraging step, but the priority should be market reform to ensure equal market access for demand-side providers and power generation.”


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