A brave new world – Dong Energy
This year the UK finally began to implement the long awaited Electricity Market Reform (EMR), setting in place new Contracts for Difference and Capacity Mechanism schemes designed to support more renewables in our daily generation mix, which by nature carries more intermittency. As Ofgem pointed out in its recently published Flexibility Study, we’re moving away from a largely linear one-way flow of electricity from generator to consumer, towards a system where generation is distributed and more variable – and involves new cutting-edge technologies and emerging business models.
With business use accounting for over half of the UK’s overall consumption, it’s no surprise that flexibility is a key area of focus for the regulation and policy makers. Large consumers have an increasingly pivotal role to play in managing the complexities of system balancing, and players across the industry are identifying ways in which generators, suppliers and consumers can work together to reduce consumption and harness flexibility in demand. In fact, National Grid’s Power Responsive initiative is designed to do just that.
Is flexible demand really ‘new’ news? In a nutshell: no. Large energy users have become accustomed to turning down consumption during anticipated winter peak periods to avoid excessive transmission costs (TRIAD avoidance). For several years now, many of the UK’s largest consumers have participated in balancing schemes such as National Grid’s Short-Term Operating Reserve (STOR).
Ofgem’s Flexibility Study is a publication that merits more attention. Within it, Ofgem indicates a priority area as facilitating the move to a smarter, more interactive energy infrastructure.
Unsurprisingly, a key focus area is encouraging a greater number of industrial and commercial customers to participate in providing flexibility. In particular, they are looking to overcome barriers such as a lack of understanding of the value of flexibility, a lack of confidence in existing programmes and ensuring that the right kind of commercial incentives and frameworks exist.
This perspective is strengthened by National Grid’s Winter Outlook Report, published in October, which confirmed that 2.4GW of additional balancing services have been procured for winter 2015/16.
To read the full article see the latest November/December edition of EiBI.
