A new scheme is being deployed by National Grid that pays business users to use more energy during times of high generation. The concept behind the plan is to encourage businesses to utilise the excess energy that will be generated this coming summer from renewable energy sources such as solar PV and wind turbines.
The longer, brighter days of summer create an energy challenge that is the polar opposite of winter and demand side response schemes, where companies are paid to turn down during times of peak demand.
During the warm season, power system operators need to find a use for any excess unused energy, and as large scale batteries are in there infancy, accomplishing this will be a challange due to the additional wind and solar power sources now connected to the grid.
The increased use of renewable energy across Britain has exceeded all expectations and renewable energy sources such as solar panels now produce so much additional power, that during certain periods of time, National Grid doesn’t know what to do with it. To capitalise on this, National Grid will hold a ‘demand turn up’ auction.
Successful businesses that are able to efficiently use the excess power will be invited to participate. The six highest bidders will be selected for the summer excess program. According to National Grid, this scheme will save consumers approximately £500,000 during the summer months.
Companies signing up for the auction have either the flexibility of altering their operations without hindering business, or an on-site generator that can be manually adjusted to accommodate excess energy consumption from the grid.
National Grid has disclosed that approximately 4GW of energy will go unused if no action is taken. This estimation of energy is the equivalent to average output generated by a few nuclear power plants.
In the past, power system operators managed the supply of energy according to the demand on the electrical grid. This radical change from traditional methods is projected to continue. By the end of the 2020s, National Grid anticipates using the new demand-side management to regulate the majority of its system balancing.
Accommodating for the excess energy generated by renewable energy sources in such a manner has been met with criticism.
National Grid has stated that they will pay approximately £14 million to businesses that cut their power during the winter. These companies will be paid £45 per kilowatt to lower their winter use, however, they will be paid less than £7 per kilowatt to increase their energy consumption in the summer. These figures raise numerous questions about the economics of the demand management plan.
The chief executive of Association for Decentralised Energy, Tim Rotheray, said that comparing the contracts is akin to “comparing apples and oranges” and “The main difference is that when you build a new power station through a National Grid auction you’re offered a fifteen-year contract. For managing demand you’re offered one year.”
Rotheray noted that energy suppliers have numerous ways to manage their energy and sell it. In regards to the demand management plan Rotheray stated:
It is saving consumers millions of pounds in other markets in the world, particularly the US where demand-response is well-developed. When you a start a new market – any new market – the costs are higher before they begin to fall. You can’t expect a totally new market to be the same price as a really well established one.