The UK is currently not doing enough to properly develop demand side response (DSR) technologies despite lofty targets for its use and obvious benefits to the grid.
Supplier and energy aggregator SmartestEnergy’s Robert Owens made the claim just as the last transitional arrangements (TA) capacity market auction kicked off this morning, the last to be reserved specifically for DSR.
Owens, the firm’s vice president of asset optimisation, warned that future growth of DSR could by stymied by opening future auctions up to fossil fuel power stations, preventing the technology from reaching its potential.
The TA auction, which started its opening round at 9am this morning (Wednesday 22 March) is to procure 300MW of DSR capacity for 2017/18 at an expected clearing price of £25/kW.
Owens said that while this price would give aggregators and customers some confidence in the DSR business case, more is needed if National Grid is to meets its target of using DSR to meet 30 – 50% of balancing reserves by 2020.
“We need a long-term price signal to encourage all types of businesses, from grocers to manufacturers, to change the way they behave to help all of us manage the energy system,” he said.
In comparison, gas generators competing in January’s capacity market auction won 40% of contracts as clearing prices dropped to £6.95/kW, with a considerable amount of DSR bidders exiting prior to that price being reached.
Owens said the likelihood is that DSR will struggle if left to compete against fossil fuel generators again, unless action was taken to “level the playing field”.
SmartestEnergy have specifically called for more certainty around year-ahead T-1 auctions, with capacity set aside for DSR; potential agreements lasting longer than one year; and changes to testing to make it more suitable for demand side technologies.
“DSR needs to get to a point where it is considered equally alongside generation as a viable option to manage the system. This will be achieved through a combination of adapting schemes to meet the specific capabilities of DSR and through overall improvements in DSR performance such that it can demonstrably match the reliability of generation,” Owens added.
Clean Energy News will publish further updates on the TA auction as and when they are available.