Production of electricity and its use must always match every second of the day to keep the system in balance. Historically, system balance has been ensured by increasing or decreasing generation at a few large power stations. However, with demand-side response (DSR), businesses can reduce their demand on the system or use different kinds of on-site generation to keep the electricity system in balance.

Demand-side response depends entirely on the actions of an energy user, whether that is an industrial manufacturer, a leisure centre, or a retail store. Through DSR, these users become active participants in the energy system, rather than passive bill payers. They can be paid to change their demand by:

• Turning down the use of electricityconsuming devices, such as turning off refrigeration units for a period of time, using the fridge’s insulation to maintain low temperatures;
• Changing when they use electricity, such as a quarry pausing its rock crushing unit if it has sufficient, stored rock supply available; or,
• Turning on or increasing production from on-site generation, such as highly efficient combined heat and power (CHP), or by using energy storage.

Main Findings
Demand-side response can contribute a range of benefits to the electricity system, from securing supply and balancing the system, to increasing competition and reducing network investments. The size of today’s active DSR market is challenging to estimate as the information on the various services that businesses and public sector organisations provide is not recorded. Approximately 930 MW cleared the most recent Capacity Market and Transitional Arrangements auctions, while 708 MW participates in the balancing National Grid uses to keep the system in balance.

Demand-side response in 2020
The total potential DSR capacity across the industrial, commercial and public sectors, including highly efficient CHP assets and on-site back-up generation, is conservatively estimated to be 9.8 GW by 2020. This includes:

• 2.8 GW from industrial demand flexibility
• 1.7 GW from commercial and public sector demand flexibility
• 2.3 GW in flexibility available from the 5.2 GW of current on-site CHP capacity
• 3 GW of on-site back-up generation capacity (non-CHP)

Delivering UK’s potential 9.8 GW of DSR capacity would deliver substantial benefits across both the energy system and UK industrial, commercial and public sectors.