What is DSR?
Demand Side Response services emphasise the intelligent use of energy, rather than how it's generated. DSR grid-balancing initiatives incentivise investment in more sustainable, low-carbon energy alternatives for the network. Responders help mitigate the risk of power outages and potentially unpredictable resources, such as wind and solar generation, by providing capacity when there’s insufficient output. The National Grid compensates responders for providing a variety of grid-balancing services to soften the peaks and troughs of energy volatility and encourage sustainability.
Demand side responders limit the amount of time out-dated, polluting generators are required to run by employing a variety of load shifting techniques during times of peak system stress (e.g. Triad periods). In exchange, responders receive a fixed revenue stream (£/kW-year), can receive reductions on their energy bills, and can defer expensive investment in unnecessary network management costs so demand always meets supply. Bilateral Power Purchase Agreements (PPAs) are often used to stipulate compensation and penalisation for DSR services.
The Association for Decentralised Energy (ADE) estimates that 16% of the UK’s peak electricity requirement could be provided by DSR providers, saving consumers approximately £600m by 2020 and £2.3bn by 2035. Because approximately 70% of the UK’s electricity is consumed by large commercial businesses, DSR schemes have played a significant role in encouraging more businesses to adopt more sustainable forms of energy.
Why was DSR introduced?
Ofgem’s latest Electricity Market Reform (EMR) policies introduced a variety of new measures, such as the Capacity Market, the Balancing Services Market, the Capacity Mechanism (CM), the Operational Costs Levy (OCL), Demand Side Response (DSR) services, the Carbon Price Floor (CPF), Contracts for Difference (CfD), Emissions Performance Standards (EPS), and smart meters.
The Capacity Market and Balancing Services Market specifically provide smaller-scale electricity market participants with opportunities to maintain grid capacity using renewable resources - and DSR is just one of them. Other grid-balancing mechanisms include Dynamic Containment (DC) services, Short-Term Operating Reserve (STOR), Static Firm Frequency Response (SFFR) or Dynamic Firm Frequency Response (DFFR), Triad avoidance, Super SEL, and Black Start.
What are some examples of Capacity Market and Balancing Market schemes?
Responders can participate in both markets by providing a variety of balancing measures, including:
Through the FIT scheme, businesses of all sizes that generate their own energy (e.g. solar, wind, hydro, and biomass) can both reduce the costs of their utility bills and receive payments for feeding excess energy back to the grid. In contrast, SFFR, DFFR, and Triad management schemes pay generators to either reduce or increase capacity load on the grid to balance supply and flatten energy price volatility.
How can DSR help my business?
If you’re on a half-hourly (HH) or pass-through contract and your business has the ability to modify your electricity demand in response to system operator signals, we can advise you on the best solutions to optimise your electricity usage. With our guidance, we can transform demand challenges into financially viable opportunities to increase revenue and corporate social responsibility.
Our team assures greater access to your business’ electricity usage data, too. This permits you to make use of energy when demand is low and renewable output is high, identify ways to reduce day-to-day consumption, and improve onsite renewable energy generation and storage.
The result? Complete access to your stored energy when demand is highest, allowing you to feed residual supply back to the grid to balance out additional demand.
Ready when you are.
Get in touch today to speak with an advisor about how to make the most of your existing energy assets to cut costs and optimise efficiency specifically according to your budget and objectives.