It’s not going well. Earlier this year, National Grid held the first transitional capacity auction, aimed at encouraging demand side measures. Despite a clutch of big-name utilities winning contracts in the auction, it closed a day early having secured 100MW less than its 900 MW target. Flexitricity, the country’s largest aggregator, dubbed the auction a “trap” that was “detrimental to demand response” due to its restrictive rules.
On the face of it, businesses, particularly smaller businesses, have been slow to embrace demand side response. Why? Utility Week asked the experts.
1. Lack of knowledge
Getting paid for using less power is an attractive proposition for any business – but only if they know about it. Npower’s head of marketing for business solutions Michael Byrne says that a lack of knowledge around DSR is one of the main stumbling blocks, adding that small business customers are the “most difficult to communicate with.”
2. Minimal financial incentives
The financial incentives offered to customers in exchange for changes to the way they consume electricity are not big enough – and money talks, according to Sustainability First associate Jon Bird. He says: “People use electricity because they want to do things and to reduce demand they are going to have to stop doing them or do them at different times.
“If they can make a bit of extra money by switching to back up generation then that is great but if someone says would you stop production for a couple of hours to cut your electricity load and help us out nationally – no they’ve got better things to do.”
3. DSR is time consuming
Large companies have dedicated energy teams with prior knowledge and understanding of demand response. For smaller business, this is not the case and Flexitricity sees “nobody come through the door that isn’t willing to spend a bit of time”. The process involves working out where DSR fits for them, finding suitable equipment to help facilitate the changes and gaining an understanding of their commitment and how demand response works.
4. DSR requires specialist technology
“You’ve got to get the technology right,” says Bird. Smart meters will allow customers to effectively monitor when and where they use the most electricity – making the process of selecting where energy can be saved much easier. This increased participation in the energy market could help to spark both business and domestic consumers’ interest in further demand response measures.
5. Breaking the habit
Industry experts agree that demand response’s reliance on behavioural changes for success is a major barrier. Bird recalls a pub landlord’s uncertainty until he realised that turning off the beer chilling fridge for a while was of no detriment to him or the business. Each business has the capability to partake in demand response; how and when depends on the primary function of the business.