Demand side response (DSR) and the flexibility it provides is crucial in supporting the UK’s transition to lower-carbon generation.
DSR is where energy users change their electricity consumption patterns in response to a signal or incentive from the network operator. The ability to tap into flexibility sources ensures power supply and demand are matched, that the grid is not overloaded and that supplies are at the correct voltage and frequency across the network.
There are broadly three types of demand side energy activities:
1. Demand response
Demand response is when energy users are provided with a financial incentive to turn down or turn off non-essential processes at times of peak demand helping the grid to balance supply and demand without the need for additional generation (e.g. power stations) to be used. Energy users can also be asked to use excess energy from the grid, for example on a windy day.
Typical processes that are turned down or off include lighting, air conditioning, electric heating, pumps, and other non-essential equipment. Participating in demand response is voluntary and is designed not to impact on day to day business operations or comfort. Demand response participants include supermarkets, industrial manufacturers, universities, commercial and public buildings, and hospitals.
2. Demand reduction
Demand reduction is the long-term reduction of demand through effective energy management, including investing in energy efficiency by upgrading lighting, insulation, refrigeration, motors and pumps. Read more about the Government's Electricity Demand Reduction Pilot here.
3. Distributed generation
Distributed generations is the local generation of heat or electricity to be used either on site or exported to the electricity grid or a heat network. Distributed generation includes combined heat and power, heat networks, heat and air pumps, hydro, solar thermal and PV, and wind.
A growing market with untapped potential
National Grid has set an aspiration to meet 30–50% of balancing capability from demand response by 2020.
The ADE calculates that 16% of the UK’s peak electricity requirement – or 9.8 gigawatts (GW) – could be provided by businesses being flexible in their energy demand, which could save UK energy consumers £600 million by 2020 and £2.3bn by 2035.
The need for flexibility is increasing as more renewable power generation capacity is installed in Great Britain. Traditional thermal generation plants (coal, oil gas and nuclear), which have historically provided this flexibility, are closing due to a combination of carbon taxes and the retirement of ageing power stations.
In total, circa 23 GW of thermal capacity has been closed or mothballed since 2010, and a further 24 GWs of coal and nuclear capacity are expected to close between now and 2025.
The growth of DSR and the flexibility it provides is crucial in supporting the UK’s transition to lower-carbon generation.
Financial incentives for demand response
Businesses which are 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.
The DSR market is growing and in Europe, where DSR is more prevalent, large consumers can reduce their annual energy bills by up to 10% by particpating in DSR.
The Capacity Market provides a payment for reliable sources of capacity. It is designed to both encourage the investment needed to replace older power stations and provide back up for more intermittent and inflexible low carbon generation sources.
Power Responsive | National Grid's vision for the future of DSR