“Perfectly obvious” barriers to the rise of demand-side response are being overlooked by government officials because they have little idea of how it works in practice.
They need to leave their offices, make more site visits and speak to the “people in the blue overalls”, independent aggregator Flexitricity has told Utility Week.
“Until you’ve actually been on a customer site talking to the people in the blue overalls – living with the assets day-by-day – you don’t actually know what’s feasible and not feasible in demand-side response,” said Flexitricity co-founder and chief strategy officer Alastair Martin.
He continued: “If the Department for Business, Energy and Industrial Strategy (BEIS) could just get themselves a couple of train tickets and few pairs of wellington boots and some hard hats, then we would potentially be able to show them an awful lot of real life that might strongly influence their thinking and understanding of how demand response works.”
Martin claimed government officials lack a “realistic grasp” of how demand-side response functions in practice and are writing rules and regulations on something which they only understand in theory. “We’ve come up against a number of cases where legislation that accidentally excludes some perfectly obvious thing that would be worth doing.”
He said the BEIS does deal with the issues which aggregators raise, but only a few at a time. “You get progress but it’s very slow… It’s quite a painstaking process to convince them that what we’re talking about are real practical issues.”
Martin held up as an example the rules which prevent aggregators from swapping one provider for another in the portfolios which make up capacity market units. “That one is still unresolved after three years of trying.”
His concern over the issue is shared by EnerNOC senior director of regulatory affairs Paul Troughton, who said monitoring a portfolio and replacing customers from time to time to ensure it can deliver is “a fundamental part of what an aggregator does… At the moment, the capacity market rules make that impossible.”
Aggregators are unable to prevent providers from dropping out but are left “completely stuffed” when they do. If, during test dispatches, they cannot deliver the full volume of capacity they have agreed to provide, then they lose the entire contract and are forced to pay back all of the associated revenues.
Providers often reduce the volume demand-side response they can deliver because they have improved the energy efficiency of their operations, something which should be encouraged. And, he added, there is no reason to keep the current rules in place.
“From the point of view of keeping the lights, which is what the capacity market is there for, it doesn’t matter who’s providing the service as long as enough capacity is provided at the right time.”
Troughton said the failure to resolve the problem may relate to the changes which would be required to the contract between the government and the electricity settlement company Elexon.
Nevertheless, he argued that an outdated mindset among officials allowed the issue to arise in the first place. “There’s this whole problem that if the only thing you know is the traditional technologies, it is very easy to assume that everything that looks like that.”
He said the government does appear to be “trying” and described the call for evidence on a smart, flexible power system as “encouraging”. BEIS has yet to respond to a request for comment.