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Four demand management schemes you need to be aware of this year

We’ve seen some significant milestones in the UK’s journey from fossil fuels to renewable generation in 2017 – in April, we saw the first coal-free working day since the Industrial Revolution, and we set a new renewables peak power record of 19.3GW in the first week of June. As we come to rely more heavily on renewables, which are more unpredictable than traditional generation, it will become more difficult for National Grid to balance the system.

Although we reference this year, any plans that you put in place now can be replicated subsequently.  So the investment in time now (no capital expenditure is normally required) will be repaid many times over in the years ahead.

One of the ways that National Grid maintains the balance between supply and demand is through demand management – asking businesses and generators to adjust their consumption to match generation. Whether your business is large or small, demand management can be a great opportunity for you to mitigate rising energy costs – as you can earn revenue simply by taking part.

Let’s take a look at some of the demand management schemes that your business could get involved in:

  1. The Capacity Market

Best for: businesses with high consumption

From October, National Grid will pay businesses and generators to supply or remove capacity from the system with a pre-agreed volume of electricity as and when it’s needed. To get involved, businesses must enter a Capacity Market auction to bid for a Capacity Agreement. If National Grid sends a Capacity Market Warning to a business, they’ll be paid for reducing their demand or to switch to on-site generation by the agreed amount for a set period of time – although participating businesses receive payment even if they aren’t called on to shift demand.

  1. Frequency Response

Best for: businesses with machinery or equipment (‘assets’) that can respond quickly

Fluctuating supply and demand levels affect the frequency of the electrical grid system, which National Grid is responsible for keeping balanced at ± one per cent of 50Hz. If there’s a sudden unexpected change in frequency, such as if a power station fails, National Grid must act quickly to correct it. It calls on businesses involved in its Frequency Response scheme to turn their assets up or down for a short period of time. The financial returns can be substantial, but not all businesses will be eligible to participate – assets must be able to be adjusted remotely and within seconds of National Grid requesting action.

  1. Demand Turn Up

Best for: businesses with flexible schedules

When supply considerably exceeds demand – typically during evenings and weekends – National Grid can either pay wind farms significant amounts to shut down, or pay businesses to increase their demand instead. From  March 27 to  October 28 2017, businesses involved in the Demand Turn Up scheme will be paid to shift their consumption to a period of low demand. As these periods are typically late at night or at weekends, Demand Turn Up is only accessible to businesses that aren’t constrained to traditional working hours.

  1. STOR

Best for: businesses with generation assets

Businesses that have on-site generation assets can get involved in the National Grid’s Short Term Operating Reserve (STOR) system. There’s some strict criteria for eligibility – renewable methods of generation aren’t accepted, because they are unpredictable and can’t always provide electricity on demand, and businesses must be able to provide at least 3MW of generation. Businesses that are selected to participate need to provide the agreed capacity for at least two hours if they’re called upon within the set availability periods.

Not sure where to start when it comes to demand management? Don’t miss out on the opportunity to make money simply by adjusting your consumption – check out our Demand Management Guide for a straightforward overview of the options available, then give our experts a call on 08451 46 36 26 or email to find out how your business can get involved!