Firms could provide power "equal to six new power stations"

Manufacturing sites, hospitals and retail stores could provide an electricity supply equal to 6 new power stations and “address the UK's electricity capacity concerns,” claims a new report from the Association for Decentralised Energy (ADE).

The new study argues that up to 9.8 GW, the equivalent of 16 per cent of the UK’s peak electricity requirement, could be provided by businesses through flexing their electricity demand and making better use of onsite generation, while also representing an almost 10-fold increase in demand-side response (DSR).

The analysis, which comes ahead of December’s Capacity Market auction, is hoped to “help fill the gap in keeping the nation’s electricity supply and demand in balance,” with the ADE stating that UK energy consumers would save £600m by 2020 and £2.3 billion by 2035, if the “wasteful” construction of more than 1,300 diesel engines “which may only run a few hours a year” is prevented.

The report also highlights that more businesses-led demand-side response would reduce demand on the electricity network and lower costs by £8.1 billion by 2030, the equivalent of more than £300 per household, while also finding numerous DSR opportunities, including the provision of 2.8 GW from industrial demand flexibility, such as a quarry delaying the use of a rock crushing unit by relying on a previously stored supply.

Other potential gains include an estimated 1.7 GW from commercial and public sector demand flexibility, such as a retail store turning off their refrigeration units for a period of time and using the fridge’s insulation to maintain low temperatures, as well as 2.3 GW in “flexible availability” from highly efficient, on-site combined heat and power capacity and 3 GW from on-site back-up generation.

Tim Rotheray, ADE Director, believes that keeping the lights on and factories running is becoming increasingly challenging as the electricity market changes.

“We are building more wind and solar, which cannot always be depended on, and we are seeing our traditional large nuclear and coal power plants close down. If we are to meet this challenge successfully, we need to access the enormous resource that energy users can provide, whether they are NHS hospitals, pharmaceutical manufacturers or your local retail store,” he said.

“Today’s report shows that by putting these users at the heart of the energy system, we will make it more cost-effective, reduce carbon emissions, and give customers a chance to participate in the system and take control of their energy use.

“Unfortunately, we too often miss the true size of this potential, and design our systems to meet the needs of an older, less flexible, and more centralised energy system. By making these changes to the Balancing Market, the Capacity Market and Balancing Services, we will allow businesses to compete fairly and help deliver the UK’s demand-side response potential.”

The paper argues that businesses contributing DSR struggle to compete fairly in different energy markets, preventing demand-side response services from reaching their full potential, with ADE suggesting three changes to support such firms, including independent access in the Wholesale Market and Balancing Mechanism, fair treatment in the Capacity Market along with equal contract lengths and simplified, user-friendly Balancing Services.

Cathy McClay, Head of Commercial, Electricity at National Grid, cites the work the firm is doing on how the electricity industry can enable increased participation of a range of flexibility sources in the sector’s markets.

“We believe that there are great opportunities for consumers of energy to play an active role in flexibility and realise benefits of doing so,” she said.

“National Grid welcomes the report and is committed through Power Responsive to continue to focus on actions to help unlock the potential volumes of demand side response.”

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