The UK’s energy market is undergoing a major transition. More intermittent renewable generation on the Grid and tighter generation capacity margins in the short to medium term mean National Grid is taking steps to ensure supply matches demand and maintain security of supply in the future. Businesses are playing an ever-increasing role in helping to balance the system and changes being introduced as part of P272 could help this along.
In the past, flexibility in generation has been the only real way to cover increase in demand. Put simply, ramping up coal or gas-fired power stations or turning them down to match the fluctuations between supply and demand meant the system operated smoothly for most of the time.
As the UK moves towards a more low carbon energy system, we need to find new and innovative ways to provide National Grid with the flexibility it needs to maintain the delicate balance on the system. In order to achieve this, end users must become a responsive part of the system. Ofgem and DECC have realised this and have put the consumer at the core of their plans for a smarter energy marketplace: alongside technological innovation, data gathering and increased understanding of usage patterns, consumer engagement is a key priority of energy reform. It is through demand side response schemes and new projects such as the Living Grid (see below), that the UK might complete the transition to a more flexible and interactive system; one that ensures sufficient capacity continues to exist at peak times, as well as making the most of those times when capacity exceeds demand.
Encouraging businesses to shift load away from peak demand periods or switch to on-site generation is already underway (you can learn more about demand side response here) but National Grid is also looking for businesses to participate in flexible schemes during summer months too, as schemes will also be introduced to reward those who ‘turn-up’ when wind and solar resources are producing more energy than is needed.
This is where P272 comes in: half hourly settlement will provide a new way to monitor and manage this energy use. The use of advanced or ‘smart’ meters will provide businesses with an opportunity to identify energy wastage and boost efficiency and cut costs by reducing consumption, which all has a positive effect on balancing the grid. Furthermore, the half-hourly metering introduced under P272 will enable more businesses to create new revenue streams by participating in demand side response schemes –playing an active role in ensuring security of supply. A completely fresh outlook is needed, and the ability to take control and be flexible in consumption patterns is something savvy businesses will be looking to maximise on all year round.
The data gathered from smart meters and half hourly settlement has the potential to provide a complete and thorough understanding of consumption behaviour, right across the energy marketplace. Advanced levels of insight could potentially give rise to exciting new business models and may even have the power to completely revolutionise the way we use our energy systems.
One example of how businesses are responding to change and innovating for the future is the Living Grid. This new project has Sainsbury’s, United Utilities and Aggregate Industries as its founding partners and comprises a new demand-response ‘energy ecosystem’ which aims to create 200MW of flexible power across the UK. The system works by creating a network of smart equipment, with appliances that power up or down to respond to peaks and troughs in energy demand. The three companies involved are expected to generate annual carbon savings of almost 90,000 tonnes by 2020 by being part of the Living Grid. They will also be financially rewarded for their energy-reduction efforts, while the demand-response system will also help them to reduce bills by avoiding peak-time energy pricing.
Whilst Living Grid is just one example of the demand side initiatives underway, it serves as an example of what is possible and may hopefully inspire businesses to choose to participate on a scale that is suitable for them. P272 will make flexibility a very real option for thousands more businesses across the UK, improving security of supply and unlocking revenue streams at a time when rising costs is on the horizon – yet another example of how P272 presents an opportunity for medium-sized energy users.