Demand Side Response in the UK Domestic Market
The grid was originally designed to transport energy from large central generation plants to the consumers through a hierarchy of networks. Since then a number of things have changed. Renewable generation is injecting more energy at different points in the grid, often quite close to the edge (e.g. Photo Voltaic cells on homes). Many renewable generation sources vary (as the sun shines and the wind blows). Other low carbon sources such as nuclear generation are difficult to vary, they operate most efficiently when they produce a constant amount of power.
We are also increasing the load on networks, especially in residential areas where the networks were designed and implemented before Electric Vehicles (EVs) and heat pumps became viable for personal use.
To accommodate these changes the network can either be re-enforced by adding more transformers, conductors and other electrical engineering components or it can be managed in a smarter way - one of which is to curtail demand when it exceeds supply. This is Demand Side Response (DSR).
To manage demand cost effectively we require large loads that can be reduced without impacting the utility they provide too much. I will refer to these as "killer loads". In the US for example, air-conditioning (A/C) makes up a large part of the summer peak load. Fortunately A/C can be turned off for short periods when demands exceeds supply without significantly impacting the comfort of the house-holder.
In the UK we currently lack such a killer load. We have some electric space & water heating though 2/3rds of our heating is powered by mains gas. Most of our electricity load is either quite small (e.g. washing machines, electric dryers, fridges, dishwashers) or difficult to shift (e.g. cooking). Even if the small loads add up to quite a bit of power consumption in total, the technical complexity and / or impact on the house holder of managing that many devices in the home makes it more difficult to come up with a positive Cost Benefit Analysis (CBA) for DSR.
There are two loads that can be shifted and are worth shifting:
- Space heating
- EVs (I will mainly talk about battery storage, but hydrogen provides similar challenges and opportunities)
Both of these are predicted to increase, primarily due to carbon targets. They pose a challenge to the Electricity system as they can significantly increase demand but they also happen to be ideal for DSR.
Space (and water) heating needs to move away from gas to a clean energy source for the majority of UK households to meet long term Green House Gas (GHG) reduction targets. Heat pumps (mainly air source but also ground source) are seen as the most likely replacement. This is driven by efficiency gains over the last few years as well as mitigation of concerns such as size and noise. Peak shaving without discomfort can be achieved by storing energy when supply exceeds demand (e.g. in water tanks, fabric of the building).
The adoption of EVs was seen as the most likely route to de-carbonise personal transport. They would allow peak shaving (temporary reduction in charging rate) load shifting by scheduling charging during the middle of the day and night as well as the potential to provide energy back to the grid, a concept referred to a Vehicle to Grid (V2G).
Both of these changes will however only significantly reduce GHGs if the electricity source is clean.
What has Changed?
A few years ago industry analysts predicted the wide spread adoption of these killer loads to be imminent. Why has this not happened? A combination of factors have slowed the increase of both these loads:
- Government policy has focused on low carbon or Green energy, Security of supply and low cost or Cheap energy. In my opinion we however seen a subtle change rhetoric (if not priorities) from Green/Secure/Cheap to Secure/Green/Cheap to Cheap/Secure/Green.
- The discovery of more gas both conventional reserves (e.g in the north sea) as well as shale (especially in the US) has changed the attitude towards gas. Even though the global price has not plummeted as some had hoped, there is much less concern over the security of gas supply. This has slowed the electrification of heating and led to an increase in electricity generation using gas.
- Breakthroughs in battery technology have not happened yet.
- The downturn in the economy has reduced investment in research and development by investors and capital spending by consumers.
- A combination of the economic downturn and safety concerns following the Fukushima disaster have slowed the new nuclear build programme.
This does not mean that these additional loads on the electricity network will not materialise, they have just been slower in coming. I don't see any fundamental changes in technology options for reducing GHGs nor do I believe that, in the long term, we will abandon our drive to minimise climate change.
The Future of DSR in the UK
There are multiple drivers for DSR, here are three important ones:
- National Supply: DSR can help to balance the overall consumption with generation capacity which is managed by National Grid
- Local Distribution Network Operator (DNO) constraints: At a local level, DNOs may have challenges in accepting generation connections or new loads but could do so if they had some control over them
- Supplier cost: Energy Suppliers buy much of their energy on the wholesale market. They could provide more competitive prices to their customers if the energy was consumed during lower cost periods - though this may require changes to the settlement system.
It is difficult to forecast when the drivers for DSR will make the adoption compelling, but, in my opinion, it is likely to be during the next decade. It is also difficult to know how quickly and wide-spread the adoption will be. There are a number of factors that could lead to a sudden acceleration of DSR implementations, events that create tipping points. These include:
- Increase in gas prices
- A breakthrough in battery (or other storage) technology
- Political changes that threaten security of supply (especially gas)
- Reduction in the cost of implementing DSR (e.g. through the deployment of smart meters and Consumer Access Devices)
- New evidence that provides a stronger link between GHG emissions and climate change or that climate change is accelerating faster than we currently estimate.
It is therefore important that we develop, pilot and test DSR solutions so that the utilities and their suppliers understand the business processes, implication on regulations, costs, benefits, risks and technology associated with DSR. This understanding will enable us to know when and where DSR solutions provide the best option for addressing the challenges that our energy system will face.
Erwin Frank-Schultz, Technical Leader for Energy and Utilities in the UK, Twitter: @erwinfranks
I would like to thank Andy Stanford-Clark, Brian MacDonald, Jeremy Willsmore and Laurence Carpanini for their input to and review of this entry.
The opinions in this article are my own and don't necessarily represent IBM's positions, strategies or opinions.