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End users win £90 million Capacity Market benefits as DSR contracts treble

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Image: Getty.

The role end users play in the security of the UK’s energy supply is to grow significantly after demand side response gained three times the number of agreements it did in this year’s Capacity Market auction compared to last year.

The Capacity Market auction for the winter 2020/21 period took place throughout this week and saw more than 52GW of contracts awarded. The mechanism is designed to source energy supply should the grid need it during winter peaks.

Having secured 476MW of agreements in last year’s auction, DSR as a technology secured more than 1.4GW in this year’s with notable providers including Kiwi Power, Flexitricity, SmartestEnergy and EnerNOC all recording significant wins.

Big Six utilities E.ON and Scottish Power were also successful in landing DSR-related contracts.

Of the 4.4GW of combined heat and power (CHP) plants to win contracts, the Association for Decentralised Energy has said that 2GW of this is ‘user-led’, contributing towards approximately 2.29GW of energy derived from end-users that has cleared the auction.

This, the ADE has said, will deliver benefits totalling £90 million for energy end users in the 2020/21 period.

Tim Rotheray, director at the ADE, said that while the tripling of DSR capacity showed its “growing importance”, the opportunity for the technology and CHP was much larger.

“As coal continues to come under pressure to close in response to our climate change ambitions, it will be more important than ever that it is replaced by lower-carbon, user-led solutions like combined heat and power and demand side response.

“By increasing their participation, we can secure lower costs for consumers and ensuring it is businesses and local energy users that benefit from Capacity Market funding, contributing to industry and wider businesses competitiveness. Government should allow all participants to access the same lengths of contract and should simplify the rules to better allow industrial manufacturers and other business to more easily participate,” he added.


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