DSR: Being Power Responsive, 18th June - Full Slidepack

Demand Side Response

Conference

Being Power Responsive

18th June

London

Agenda

Opening Address Steve Holliday, National Grid

Session 1: Electricity Demand Side Markets Today

Chair: Professor Dieter Helm CBE, University of Oxford

Speakers:

David Capper, DECC

John Pettigrew, National Grid

Gab Barbaro, British Gas

Martin Wilcox, UK Power Networks

Coffee break

Session 2: Opportunities for Your Business

Chair: Professor Jim Skea CBE, Imperial College, London

Speakers:

Maxine Frerk, Ofgem

Paul Crewe, J Sainsbury plc

Dr Alastair Martin, Flexitricity

Neil Gillespie, United Utilities

13:00 Lunch

Agenda

14:00 Session 3: Incentives & Barriers for Businesses

Roundtable Chairs:

Judith Ward, Sustainability First

Eddie Proffitt, Major Energy Users

Council

Dan Roberts, Frontier Economics

Tea break

Session 4: Delivering Flexibility at Scale

Chair: Cordi O’Hara, National Grid

Interview panel:

Sara Vaughan, E.ON UK

John Barnett, Northern Power Grid

Maxine Frerk, Ofgem

Duncan Burt, National Grid

Closing Address John Pettigrew, National Grid

16:45 to 18:30 Networking Drinks Reception

Session 1:

Electricity Demand Side Markets Today

David Capper

Deputy Director &

Head of Future

Electricity Networks

Electricity system capacity is driven by peak

demand

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10

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50

60

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Non dom. demand

Total Demand

Projected increase in peak electricity demand from

increasing electrification of heat and transport

(EA Technology 2012)

24hr business day demand profile

(DDM reference case)

Domestic demand

Demand – GW Peak Demand – GW

120

100

80

60

40

120

0

2012

2030

2050

Cumulative Total

Assumed base load

(load growth and

energy efficiency)

Heat Pump Load

EV Load

DSR: a perspective from Government

Can we reduce the costs of a conventional

response to this challenge?

Reduce the cost of our future low carbon energy system and

ensure the system remains stable so that customers’ bills are lower

and their supply is secure

Maximise the use

of low carbon,

inflexible

generation to get

value for money

Reduce the need

for conventional

generation,

including peaking

plant

Optimise short

term balancing of

the system

Defer or avoid

investment in

network

reinforcement

expenditure


There are alternatives which could balance

the system more efficiently…

Supply via

interconnector

Export of excess supply

via interconnector

Intermittent

renewable

generation

Excess electricity stored &

used when demand

exceeds supply Intermittent renewable

generation

Demand decrease

Interconnection

Energy

Efficiency

DSR and Storage

(i.e. Smart

Energy)


So how much DSR potential is there?

• Current DSR restricted to large industry & embedded

generation (c.2 GW) and Economy 7 tariffs (c. 2.4 GW)

• Study has estimated total technical potential of up to

c.18GW of shiftable load on a winter weekday evening,

increasing over time

• Report has assessed the technical potential for load shifting

in the commercial sector at 1.2 - 4.4GW

• Extrapolating from UK trials, the present domestic potential

could be in the region of 1.3 – 2.5 GW

• Longer term potential likely to be higher


DSR in the Capacity Market

• Capacity market aims to deliver:

• Security of electricity supply

• Cost-effectiveness

• Specific features for DSR participation

• Transitional arrangements


DECC has launched Phase II pf the EDR Pilot

• £6million available to projects which improve energy efficiency at

peak times

• Wide range of projects eligible to take part, including replacement

of old pumps, motors, refrigerators and light fittings with new high

efficiency equivalents

• Improvements made from Phase I

• Register by 3 September and submit your full application by 15

October 2015. The auction will take place in January 2016

• Guidance, forms and information about workshops and other

events can be found on

www.gov.uk/electricity-demand-reduction-pilot

Electricity Demand Reduction Pilot


http://www.gov.uk/electricity-demand-reduction-pilot







John Pettigrew

UK Executive Director

National Grid

Commercial and Domestic Customers

Electricity Distribution

Networks

National Grid Gas

Distribution UK

Other Gas Distribution

Networks

National Grid Transmission UK (Electricity & Gas)

Electricity Generators

Gas Producers and Importers

Syst

em

Op

era

tor

Our Core Role in UK

Wind Installed Onshore & Offshore Capacity (MW)

Fossil Reduction in Generation Capacity (GW)

Solar Installed Capacity (MW)

Demand Weather Corrected Annual Electricity (TWh)

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0 2008 2009 2010 2011 2012 2013 2014

2008 2009 2010 2011 2012 2013 2014

360

340

320

300

280 2008 2010 2012 2014

Changing Energy Landscape

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

2009 2010

2011 2012 2013 2014

3

1

-1

-3

-5

-7

System Operation Changes

Replacement Energy Sources

Lower Minimum Demands

Future Supply & Capacity


Transmission Charging

EMR Delivery Body

Balancing Services

Industry Facilitation

Summary

Gab Barbaro

Managing Director,

British Gas Business

Services

Martin Wilcox

Head of Future Networks

2015. UK Power Networks. All rights reserved

Agenda

• Why UK Power Networks and other DNOs are exploring DSR

• Our experience – Low Carbon London

• Our view on the current markets

• Next steps in UK Power Networks’ engagement with the demand

side


Why are we considering DSR?

0

500

1,000

1,500

2,000

2,500

3,000

+ HIGH HEAT PUMP UPTAKE

+ HIGH ELECTRIC VECHICLE UPTAKE

+ HIGH RESIDENTIAL SOLAR UPTAKE

UKPN CORE

SCENARIO: £1545m

Co

st o

f re

info

rcem

en

t,

incl

ud

ing

Smar

t (£

m)

Source: UK Power Networks analysis using the Transform model

configured for its own licence areas


Why are we considering DSR?

Smart solutions can help manage future networks peaks

Source: Forecast household demands in 2025 taken from P. Djapic, M. Kairudeen, M. Aunedi,

J. Dragovic, D. Papadaskalopoulos, I. Konstantelos, G. Strbac, “Design and real-time control of

smart distribution networks”, Low Carbon London Report D3, Imperial College London, 2014.

Business as Usual Smart

Time of day Time of day

Div

ers

ifie

d d

em

an

d p

er

ho

us

eh

old

(k

W)

Div

ers

ifie

d d

em

an

d p

er

ho

us

eh

old

(k

W)

Baseline Appliances Electric Vehicles Heat pumps


Attractiveness of DSR to address the

challenges

• Established contractual arrangements led historically by the GB

System Operator (National Grid)

• It re-utilises standby generation assets

• Leverages increasing sophistication in building controls and building

automation

• In the case of some I&C customers, DNOs currently retain some

direct interaction with them

We started our initiative “Low Carbon London” in 2011 to trial I&C and residential DSR at scale and build confidence of this service


Low Carbon London What did we trial?

£/M

w/h

r

£0

£20

£40

£60

£80

£100

£120

0 1 2 3 4 5 6

Trial Period

Low Carbon London DSR Trials

Winter 2012-13 Summer 2013 Winter 2013-14 Winter 2014-15 Summer 2012 Winter 2011-12

Size

6MW Site

200kW Site

Diesel

CHP

Load Reduction

Gas

Type

Source: Analysis of Low Carbon London trial data

Availa

bili

ty P

aym

ent

(£ /

MW

/ h

r)


Case study: the use of I&C DSR

• Reliability: Out of 185 unique events called during our Low Carbon London

trials, only 19 events received a null response

• Shifting peaks: Payback after achieving load reduction is not as large as

the reduction itself

• Procurement: there is a need to account for availability risk

• Technology F-factors

𝐷𝑆𝑅 𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑡𝑜 𝑏𝑒 𝑃𝑟𝑜𝑐𝑢𝑟𝑒𝑑 [𝑀𝑊] = 𝐷𝑆𝑅 𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑡𝑜 𝑀𝑒𝑒𝑡 𝐸𝑛𝑒𝑟𝑔𝑦 𝑎𝑡 𝑅𝑖𝑠𝑘 [𝑀𝑊]

𝐹 𝐹𝑎𝑐𝑡𝑜𝑟 [%]

Number of DSR facilities

DSR technology type 1 2… 5… 9 10

Diesel 70% 72% 78% 80% 81%

Demand Reduction 54% 58% 62% 63% 64%


What is our view of the current market?

• The use of DSR by DNOs, and residential DSR in general, are still in their

early stages

• DNO use of DSR

– I&C DSR contracted by DNOs require process and procedures for mass

roll out;

– However, I&C DSR can have real benefits for DNOs:

– Addressing network constraint issues

– Deferring and/or avoiding network investment

– Supporting difficult construction outages

• Residential DSR (excluding Economy 7) is not yet attractive to DNOs

– Residential customers do indeed respond to price signals

– However, it must be linked to other value propositions from suppliers and

the GB System Operator in order to provide a net saving


Unlocking DSR Next Steps for UK Power Networks

• ED1 Business Plan:

– £3.3m budget provisioned in our submission to Ofgem for DSR

• Based on a high utilisation price

• Based on an availability price in excess of National Grid’s given that we

operate in a niche market

– Expected total 64MW of DSR

– Allocated to 20 schemes which are under review thoughout the period as

load growth develops

• DSR aggregators and suppliers engagement was held in Q1 2015 to inform

our strategy

• Market engagement will follow in Q3 2015 following our annual load growth

review

Session 2:

Opportunities for Your Business

•

Maxine Frerk

Interim Senior Partner for

Smarter Grids &

Governance

• GB has seen a growth in intermittent generation.

• Flexibility is now important at both the peaks and at times of low demand. The demand side can play an important role in providing this.

The GB energy system is changing …

Price peaks

And this is being reflected in prices …

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50

100

150

200

250

300

00:00 04:00 08:00 12:00 16:00 20:00

Intraday Prices - 17th October 2014 (£/MWh)

Negative prices

And this is being reflected in prices …

-20

-10

0

10

20

30

40

50

Apr May Jun

Daily Min. Intraday Price (half-hourly), Q2 2014 vs. Q2 2015 (£/MWh)

2014

2015

Balancing.

The SO uses flexibility for reserve and frequency purposes. And suppliers and generators want to manage cash-out risks

Flexibility across the value chain

Capacity.

The system needs to have enough capacity to ensure security of supply at any time of the day

Networks.

Flexibility can enable the deferral or avoidance of network investments, and support the management of faults

Flexibility is an essential feature of energy markets

29,800

30,000

30,200

30,400

30,600

30,800

31,000

31,200

31,400

31,600

31,800

15:00 14:00 16:00 17:00 18:00 19:00

Typical day

Men’s Final

Wimbledon Men’s Final Murray vs Djokovic, 7 July 2013

Match begins

End of 2nd set

Murray breaks for match drop

End of broadcast

Murray wins

End of 1st set

How flexibility can help

Demand

Time

Demand

Time

Demand

Time

Demand

Time

Demand

Time

Time-shift load

Time-critical reduction

‘Smooth’ general load

shape

A net load turn-down

Load turn-up

Source: Adapted from ENA & Energy UK. Discussion paper on Demand Response. 2012.

There are some ways in which demand can already provide flexibility ….

National Grid Demand

Balancing Services

- STOR (Short –Term Operating Reserve) - Fast Reserve - Frequency Response

Cost Avoidance

- Triad - General demand reduction/ participation in wholesale market

Aggregators

Act as intermediaries between I&C customers & National Grid/ electricity market

And more are on the way ….

• Demand Side Balancing Reserve (DSBR)

• Capacity Market Participation

• DNO – assistance with constraint management

Ofgem’s work on flexibility

• Identifying the barriers to provision and uptake

•Looking to capture value of DSR across the value chain :

- “Stack” of benefits

- Coordination important

•Recognise complexity a challenge for I & C customers not core business:

- Building understanding

- Need for tailored contracts

- Role of aggregators?

•Storage prices falling – need clarity over the regulatory position

•See non-domestic as where the immediate opportunity lies for DSR

Summary

• The GB electricity market is changing and price volatility is increasing, incentivising more flexibility.

• Ofgem has sharpened these price signals to reward flexibility through our EBSCR reform, half-hourly settlement.

• Ofgem working to remove barriers and facilitate flexibility.

• DSR already plays an important role in providing flexibility, and has the potential to develop further in the future.

We are keen to hear from DSR providers on how we can facilitate their participation in the market.

Session 4:

Delivering Flexibility at Scale

Delivering Flexibility at Scale

Education and engagement

• Simplification of information

• Clarity of value proposition

• More promotion of opportunities

• Greater understanding of schemes

Customer led products

• Clear packages for customers

• Examine product specification

• Longer term product opportunities

• Flexibility of product design

Certainty and stability

• Investigate longer term incentives

• Address longevity problem

• Elimination of uncertainties

Coordinated approach

• Use collaborative pilots

• Customer focussed forums

• Collectively agreed targets for DSR


Conference

Being Power Responsive

DSR: Being Power Responsive, 18th June - Full Slidepack

Presentations & Public Speaking

Transcript of DSR: Being Power Responsive, 18th June - Full Slidepack