Two of the UK’s leading energy trade bodies have combined to call on regulators and the system operator to embrace demand response and allow it to further transform the energy sector.
Earlier this week the Association for Decentralised Energy and Renewable UK co-published a report, entitled ‘Industrial flexibility and competitiveness in a low carbon world’, which sought to outline the significant potential for commercial and industrial (C&I) entities to contribute towards the “profound changes” in the energy system.
The two trade bodies have argued that industries, businesses and public sector organisations capable of “flexing” their power demand will help drive that transition, but only if they are allowed to by government, the regulator Ofgem and the system operator.
They cite studies conducted by the likes of the National Infrastructure Commission, which found that increased flexibility in the power market could produce consumer savings of anywhere between £2.9 – £8.1 billion each year by 2030, equivalent to a per-household saving of between £30 and £90.
The report itself narrows in on three particular recommendations for stakeholders to “harness the synergies” offered by demand response and added renewables deployment which, combined, could play a key role in meeting climate targets while managing costs for consumers.
First and foremost the ADE and RUK are seeking a level playing field within balancing services, ancillary service and Capacity Market tenders in order to encourage more competition between supply and demand side response.
“This should be built on the principles of open and competitive access, transparency and non-discrimination between technologies at both transmission and distribution levels,” the report states.
Competition in the Capacity Market in particular has proven a particularly contentious point since the last auctions at the start of the year. Battery storage developers had the goalposts moved between the registration and auction phases with the introduction of de-rating factors, which utility Scottish Power has since also sought applied to DSR applications using energy storage.
Demand response also suffers from similar hurdles to energy storage in the sense that it has no clear definition within the Electricity Act 1989. Battery storage also has no clear legislative definition, leading to uncertainty over whether it should be deemed as generation within energy markets.
The report also recommends that new policy is developed which would enable customers to benefit from the deployment of cost-effective renewable generation technologies such as solar and onshore wind, particularly pertinent considering the small-scale feed-in tariff closes to new applicants from next April.
Lastly, the report calls for the system operator to improve the transparency of its products and services markets, a piece of work which is currently underway as part of National Grid’s System Needs and Product Strategy, launched last year.
In the report’s forewords, ADE chief Tim Rotheray and Renewable UK’s Hugh McNeal said there was a “clear alignment” between decarbonisation and business competitiveness.
“This alignment is nowhere more apparent than in the need to create a more flexible power system; a system that is adaptable to our changing energy mix and one where flexible business energy use is key in managing energy costs and enabling greater renewable uptake.
“The vision we set out is for a new model of industrial energy use in which companies are actively participating in the energy market to improve the competitiveness and productivity of UK industry,” the two said.