For decades now, the task of balancing our electricity network has been supported by large businesses. Through services like Short Term Operating Reserve (STOR) and peak avoidance, businesses have contributed to resolving any mismatch between demand and supply, supporting National Grid in avoiding potentially disruptive balancing events.

 

But as we transition to a low carbon energy system and balancing the system becomes increasingly complex, it’s time to rethink demand response. We are no longer dealing with a linear generator-to-consumer model built around dispatchable, fossil fuel-powered generation. Now our generators are ‘greener’, but they’re also more distributed, more intermittent and less dispatchable. And with a wave of electric vehicles and heat pumps set to connect to the system over the coming years, the shape, volume and variability of electricity demand will grow significantly, putting extra pressure on the system.

 

This means that system operators will become increasingly reliant on flexibility to ensure demand can match supply. In fact, The Carbon Trust1 recently suggested that in order to operate an efficient net zero energy system by 2050, 11GW of flexible demand will be needed from commercial users, 12GW from smart assets, and 48GW from electric vehicles.

 

It’s clear that demand flexibility is critical to an efficient net zero energy system, so why aren’t more businesses being helped and encouraged to participate? While the tools and mechanisms have been developing to meet those needs, the investment now must go into developing consumer-based flexibility products with real appeal.

A UNIQUE ROLE IN DECARBONISATION

In a net zero system, responsible consumption isn’t just about using less energy; it’s equally about when you use it. The more consumers can synchronise their energy usage with renewable generators, the easier it will be to support a system powered on renewables alone. If we could always time our electricity usage to coincide with periods when the sun is shining or the wind is blowing, there would be considerably less requirement to store and shift generated power, or to deploy fossil fuel generators to fill the gaps.

 

Whilst necessary to decarbonise, the roll-out of electric transport and heating will also put networks under increased stress at specific times. For instance, a cold evening where entire neighbourhoods switch on their heat-pumps and plug in their cars would cause existing networks to fail. Dynamic management of these assets (and others) would help to avoid network stress events, mitigating the need for the expensive and time-consuming infrastructure upgrades.

 

Put simply, smart consumption of electricity will both enable and support the transition to net zero.

THE EVOLVING VALUE PROPOSITION OF DEMAND FLEXIBILITY

Until now, DSR schemes have been largely focused on targeting red band periods: the 7% of the year when avoidable energy costs are the most concentrated. In today’s more sophisticated energy landscape, this approach is outdated, limiting participation from businesses unable to turn down during this time and failing to offer support to the system throughout the day. The value of red band avoidance will also be greatly diminished once the Targeted Charging Review (TCR) takes effect. Today, demand flexibility needs to be more continuous, subtle and agile; to enable greater participation and support the system’s flexibility needs for 100% of the year. We will need to focus on ‘optimisation’ rather than ‘turning down’, and to do so at scale.

 

For businesses prepared to participate in an agile energy system, there are financial advantages to be gained, from saving money to accessing new revenue streams. For instance, organisations opting for Bryt Energy’s optimisation solutions are able to offset 20% of their energy spend by allowing us to subtly tweak their consumption (within agreed limits) in line with system needs, without impacting their operations2.

MEASURING SUSTAINABILITY SUCCESS

Whereas the financial incentives of optimisation are increasingly clear, the carbon incentive for businesses remains less so. Unlike installing a solar PV system or switching to an electric vehicle, where carbon savings can be easily measured and reported on, there is currently no mechanism for businesses to account for the benefits created through demand flexibility.

 

What we believe businesses need next is a means of articulating the success of their optimisation efforts. While it’s not possible to put a tangible metric on the tonnes of carbon saved through optimisation at an individual business level, we’d like to see incentives for participation and a recognition of their contribution to a cleaner energy system. That’s when we’ll see a real acceleration in adoption, as sustainability-focused businesses will be able to demonstrate how energy optimisation is supporting system decarbonisation.

DEMAND FLEXIBILITY SERVICES THAT ARE FIT FOR THE FUTURE

Given the clear system requirements and value proposition, the foundations to accelerate adoption of demand flexibility certainly exist. However, to truly make a difference, flexibility needs to be accessible to businesses of all sizes and types. It must be simple to understand, place no additional time or resource strain on the business, and create no operational disruption. It should also be able to provide all of the commercial, environmental and reputational benefits that come with making a commitment to net zero.

 

So, we’re developing a range of optimisation solutions to help businesses use electricity more intelligently and sustainably, and to support the energy system in achieving net zero. Combining our expertise in renewables and market access with industry leading technology providers, our solutions seamlessly integrate with customer assets and buildings to optimise their electricity usage and unlock the value from their operations. This approach helps to secure an efficient, affordable and reliable renewable future for us all.

 

Over the coming weeks, we’ll be releasing some exciting announcements about our partnerships with leading technology providers, and the ongoing development of our business optimisation solutions. So be sure to follow us on social media to hear about the latest news!

 

If you’re interested in how our optimisation solutions can support your business on the next step of its sustainability journey, get in touch with our team of experts at solutions@brytenergy.co.uk or on 0121 726 7575.

Sources

https://publications.carbontrust.com/flex-gb/analysis/

Bryt Energy and partner’s analysis

It has been a challenging few weeks for the UK energy market, from low generation capacity to volatile energy prices. With many businesses wondering how they will be affected, we’ve taken a look back at the recent events and the opportunities available to those prepared to support the system with demand flexibility.
THE SITUATION

As has been well publicised in the news, over the past few weeks energy prices have increased drastically, due to unexpected pressure on the UK’s energy system. Day ahead auction prices for energy (N2EX) have reached record highs of £2,500 per MWh1, compared to averages of £50 per MWh this time last year2.

SO WHY HAVE ENERGY PRICES BEEN SO HIGH?

There are various factors contributing to the current pressure on the system, leading to volatile energy prices.

Firstly, the UK has experienced one of the least windy summers on record3, meaning less wind power has been generated than usual. It has also not been particularly sunny or bright, so overall we have had considerably less renewable energy generated in the system than we would normally expect at this time of year. In addition, some power stations that usually provide capacity are currently offline, due to planned maintenance and servicing. And a recent fire at an electricity interconnector in Kent has unexpectedly reduced access to European generation capacity. This means that we have been limited in terms of switching on other generators to replace the missing renewable energy.

As a result, gas and coal-fired electricity plants have been called upon to make up the shortfall. However, gas prices have recently soared, due to additional demand for Liquid Natural Gas (LNG) from Asia creating a global shortage, and historic low levels of gas in storage ahead of winter causing the UK to rely on expensive imports. This has in turn pushed up electricity prices in the UK.

The return of coal to help meet demand is disappointing news after celebrating record-breaking coal-free periods last year, especially in the run up to COP26 – the Glasgow Climate Summit.

THE OPPORTUNITY FOR BUSINESSES

Whilst the current market situation presents some challenges, it also highlights the importance of flexibility and the rewards businesses could gain for supporting the system.

As we transition away from fossil fuels towards renewable energy, we will be more reliant on intermittent generation affected by weather, such as the period of low wind we are currently experiencing. The resulting volatile prices are a signal that the system needs support in balancing supply with demand.

With the right set-up and market access, consumers can be paid for supporting the system in times of need, by shifting their usage away from the expensive periods. For example, last week we were able to sell some of our customers’ energy back at the £2,500 auction price referenced above. This allowed our customers to generate revenue whilst directly supporting the energy system, offsetting coal emissions in the energy mix along the way.

Increasing business participation in demand flexibility will be crucial in the transition to net zero and will help reduce the system’s reliance on fossil fuels, one KWh at a time. If you’d like to learn more about how our optimisation solutions can help your business, get in touch with our team of experts at solutions@brytenergy.co.uk or on 0121 726 7575.

Sources

https://www.standard.co.uk/news/uk/electricity-prices-soar-fire-national-grid-sellindge-kent-b955632.html

 

https://www.nordpoolgroup.com/Market-data1/GB/Auction-prices/UK/Hourly/?view=table

 

https://www.theguardian.com/business/2021/sep/13/britain-last-coal-power-stations-to-be-paid-huge-sums-to-keep-lights-on-record-energy-prices