National Grid is set to radically overhaul the way it balances the UK’s electricity system to rely mostly on demand-side measures by 2030 rather than using large generating assets.
Currently the transmission system operator spends around £850 million per year to keep the UK’s supply and demand in balance, with the vast majority of this spent on paying generators to ramp up or curtail power output to meet fluctuating demand.
But National Grid’s head of commercial operations Duncan Burt revealed at an industry workshop that it is preparing to revolutionise how it maintains secure supply by relying on demand-side measures for “well over 50 per cent of the time” In the next five years National Grid says it will work with commercial and industrial energy users to “normalise” the use of demand-side response before engaging with the domestic sector to broaden the scale of flexible demand capacity. This is likely to mean a very much needed boost to the sector which has been growing capacity quicker than National Grid has been accepting capacity, resulting in over subscription and potentially damagingly low prices.
This is a significant ambition and one that Duncan couldn’t have envisaged even a short time ago.“Even three years ago I would not have said that demand-side response would play as big a role as we expect it to now”.
National Grid has long procured limited demand-side services and encouraged demand-side management but the increased deployment of intermittent renewable energy, advances in demand-side technology and a greater need for business to reduce energy costs means that an active demand side market is “critical”, Burt said at the launch of National Grid’s ‘power responsive’ campaign on Thursday.
At the same event, National Grid’s director of market operations Cordi O’Hara stated that the industry is at “an inflection point” which will require the market to turn on its head. “For the most part generation has followed demand, but now demand is going to follow generation – and we need to ask how demand can be more intelligent,” National Grid’s campaign aims to engage the industry in order to “co-create” the framework needed to develop a demand-side market by removing “real and perceived barriers” and providing education on how to take advantage of measures already in place. Central to removing barriers will be helping to create a mind-set shift through greater market engagement and education of the products on offer.
National Grid has come under criticism in recent years for opting for failing to promote the demand-side by relying more heavily on supply-side options, most notably in its winter balancing reserve which in its first round for delivery last winter paid £30 million of the £32 million total to old thermal plants with the remainder paid to those willing to cut their energy use at the time of peak demand.