Combined Heat & Power, District Heating & Cooling, Demand Side Services

Decarbonisation and industrial competitiveness go hand-in-hand

6 June 2018

The Association for Decentralised Energy (ADE) and RenewableUK have come together to demonstrate the exciting opportunities that the UK’s transition to low carbon power offers to British industry, by helping companies to reduce their energy costs.

Decarbonisation and industrial competitiveness go hand-in-hand | ADE press-releases

In a joint report, 'Industrial competitiveness in a low carbon world', the trade associations explore how some companies are already varying the amount of electricity they use at certain times of day to match renewable power generation. By being adaptable and flexible in their demand, energy-intensive users can help balance the system in a cost-effective way, get paid for it and increase their competitive edge when operating in a decarbonising global economy.

The report also examines the potential for more companies to participate in flexible arrangements which will drive down network costs and allow them to take advantage of the rise in cheap clean power. This will lead in turn to reductions in household energy bills.

In practice, this means increasing energy consumption in periods of ample generation, and reducing consumption at times of peak demand, or when the capacity of the grid is constrained for technical reasons. 

This flexibility is key to making British industry more competitive, as well as ensuring that cost-effective decarbonisation from renewable power generation can grow.

Consumers benefit too; the National Infrastructure Commission has suggested that flexibility could lead to reductions in the average household energy bill of £30 to £90 a year by 2030. This can be achieved by reducing the need for network upgrades, putting fewer power stations on standby, and using more of our renewable generation output[1].

Speaking at the report launch, the ADE’s Director  Dr Tim Rotheray explained how, despite often being presented as being mutually exclusive, there is clear alignment between decarbonisation and industrial competitiveness:

The industrial, commercial and public sector energy sectors account for over half the UK power demand[2] and it is their participation in the flexibility market which will be key in growing the market.

New business models reveal the sleeping potential for flexibility embedded in industrial processes which can be harnessed without disruption to core activities. By tapping into this potential and creating a more flexible power system, we can create a win-win situation for industry and deliver cost effective decarbonisation.

A more flexible power system creates a stable power grid, which can then accommodate more renewable energy to meet our decarbonisation targets at least cost. The industrial energy users providing flexibility also benefit with lower energy bills and increased competitiveness when operating in a decarbonising global economy.

RenewableUK’s Chief Executive Hugh McNeal added that more renewable energy on a flexible, smart energy system would ultimately benefit all energy users:

This report highlights the exciting new opportunities on offer to British businesses, and especially British industry, to get paid for being adaptable and flexible in how much electricity they use and when they consume it. As a result, they can reduce their energy bills, and they can support the deployment of cheaper low carbon electricity generation, creating jobs, attracting investment and helping us to fulfil our climate goals.

Our members’ interests stretch across all of the electricity system. We want to see the growth of more open, competitive and transparent markets, in power generation and in  electricity demand.     

 James Heappey MP welcomed the report saying:

Industry and government are united in our ambition to maximise the advantages for UK industry from the global shift to clean growth.

While progress has been made in untapping the potential of demand response flexibility we know more can be done and I count on industry, which is best placed to provide the level of flexibility needed, to continue to provide guidance to government as we move forward.

[1] An analysis of electricity system flexibility for Great Britain, Imperial College London and Carbon Trust, November 2016

[2] Digest of United Kingdom Energy Statistics, BEIS, 2017

Notes

The ADE and RUK represent more than 450 organisations from across industry, decentralised and renewable energy. The full report is available for download at www.theade.co.uk and www.renewableuk.com

Demand-side response is where energy users change their electricity consumption patterns in response to a signal or incentive. Businesses able to be flexible in their energy use can take advantage of price fluctuations in the energy market and receive payments for their dynamic interactions with the grid. On the continent, where demand response is more prevalent, large consumers can reduce their annual energy bill by up to 10% through participating in demand response programmes.  There are examples of companies in the UK already taking advantage of demand response schemes, demonstrating that the barriers to further take up are due to the policy framework around it, not technological issues.

The National Infrastructure Commission suggested that flexibility could lead to consumer savings worth £2.9-8.1 billion per year by 2030, equivalent to a reduction in the average household energy bill of £30-90 annually[ii].

The system operator has set an aspiration to meet 30–50% of balancing capability from demand side response by 2020[iii] to help keep generation, demand and network capacity in balance at the least cost for consumers.

“La bataille de l’effacement fait rage”, L’Usine de l’Energie, April 2014

[ii] Smart Power, Energy report by National Infrastructure Commission, March 2016

[iii] Demand side flexibility, Power Responsive, 2016 – page 3

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