What does demand side response mean for you

What is demand side response and why do we need it?

Demand side response (DSR) is a generic term for mechanisms that encourage electricity users to reduce usage at periods of peak demand. And it’s a great opportunity for homes and business to earn financial rewards.

Every second, minute and hour of every day and night, 365.25 days a year, grid operators are working to ensure the amount of electricity on the grid matches the level of demand. Why? So that we, the consumer can enjoy uninterrupted power to our homes and businesses.

In the past, balancing electricity on the grid was largely achieved by adjusting the supply, turning the most flexible fossil-fuel power stations on or off. But climate change and a new, powerful urge to achieve energy independence is rapidly driving us towards more sustainable, renewable sources of generation. In fact, wind generation is becoming the backbone of our modern energy system and contributed 64% of the UK’s total electricity demand for a short period on 29 Jan 2022 and a record 20GW (53%) of generation on 02 November 2022.

Renewable generation has many advantages: low or zero emissions of carbon dioxide; generation is on our own soil or seabed and abundant, free fuel. But renewable generation is intermittent, it depends on the weather. Although wind and sun are largely predictable through meteorological forecasts, they are not controllable.

When you factor in the additional complication that demand can simply outstrip the capacity of all available power generators put together, you begin to understand why grid operators need a new way to balance supply and demand. Now, rather than adjusting supply, they use DSR mechanisms to adjust demand.

How to benefit from DSR at home

Anyone who uses electricity can participate in DSR. At its simplest, consumers can make a conscious decision to reduce usage at peak times, typically between 17:00-20:00 on weekdays after most people have finished work and it starts to get dark outside. Choosing to put the dishwasher on, charge an electric vehicle or run a load of washing off peak will all help reduce stress on the grid and contribute to better grid balancing. Depending on your electricity tariff, it may also benefit you financially to shift usage to off-peak periods, usually between 22:00-07:00 when electricity costs per unit can be significantly cheaper.

Some electricity suppliers are inviting groups of customers to participate in small-scale demand flexibility service (DFS) trials. Early results indicate that households will use less energy at times of high demand for relatively small financial incentives. Alerts are sent to customers at periods of peak demand and rewards are offered for households that successfully reduce demand during those periods.

Householders in the UK who have not been invited to a trial by their supplier can still benefit from DSR by connecting their smart household technologies – like smart meters, smart plugs and smart EV chargers – to equiwatt’s app. Participants receive a notification to take part in  energy saving events at periods of peak demand. They can then pause or turn off their appliances or EV charging for the duration of the event. Energy and CO2 savings are rewarded with points that translate into cash vouchers for big brands such as Amazon and John Lewis.

How business can benefit financially from DSR

Organisations or businesses that can reduce their electricity usage by more than 1 MW on request can participate in National Grid ESO’s demand flexibility service (DFS). Actions could be as straightforward as reducing air conditioning, switching off non-essential machines or switching to off-grid electricity sources like backup batteries or solar panels. Done correctly, there should be no detrimental impact to participating businesses.

The DFS is a temporary mechanism that operates between November 2022 and 31 March 2023. Each participant gets up to 12 opportunities to reduce the amount of electricity they take from the grid for a minimum of 30 minutes at periods of peak demand. In return, for every MWh reduced, they will earn £3,000.

A similar but longer-term mechanism for businesses to get involved with DSR is the Capacity Market (CM). Like DFS, businesses are paid to flex their electricity usage at periods of peak demand, but the CM offers contracts that span years rather than months. It is a well-established system that can deliver around £16,000-£17,000 per flexible MW per year over 4 years. Interested businesses can register before 31 March 2023 for participation from 1 October 2023.

If you are not familiar with energy flexibility services, it is probably easier and more efficient to use an experienced provider like Enel X. Their team can handle all the complexities and paperwork on behalf of your business, leaving you to enjoy the financial rewards.

The power of a thank you

The way we generate electricity is changing with increasing amounts of renewables contributing to our supply. This has huge environmental benefits as we work towards a target of net zero emissions by 2050. It also helps to reduce reliance on energy imports and build our own energy independence.

By participating in DSR mechanisms and shifting energy use away from peak periods, businesses and householders can all help to accommodate renewables and support grid operators as they balance supply and demand.

We believe that the power of a financial ‘thank you’ will encourage and reward even more participants in the future.

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