As the Distribution Network Operator serving customers in the North East of England, Yorkshire and parts of Lincolnshire, Northern Powergrid is at the sharp end of the debate on demand side response (DSR). Head of Regulation and Strategy Jim Cardwell explains the challenges and opportunities ahead.
In many areas of life we are already accustomed to differential pricing or congestion charging. We pay different prices for train tickets whether or not we travel at peak times. Also, in energy, the Economy 7 tariff has historically offered consumers the chance to benefit from lower prices for electricity used in the night.
In other words, society should be no stranger to the concept of demand side response (DSR). Of course, familiarity is one thing, achieving widespread DSR participation is quite another. We learned a great deal about the way domestic and commercial customers could engage with DSR by taking part in the Customer-Led Network Revolution project. This was a four-year trial with 13,000 customers to assess the potential of novel smart grid schemes and network technologies.
DSR in context
DSR is significant to a business like Northern Powergrid. We have about 3.9 million customers, of which 3.6 million are domestic households. As more renewable sources of generation and low-carbon demand such as electric vehicles and heat pumps are connected to the grid, we estimate that local grids like our own could need to carry twice as much load as they do today by 2050.
The UK could save over £5 billion in energy costs and 11 million tonnes in carbon emissions if techniques trialled in the Customer-Led Network Revolution are deployed.
We are considering how to accommodate these new low-carbon technologies at the least cost to our customers. If we can pay customers to provide us with flexible generation or to reduce their consumption at peak periods, it can defer the need for us to carry out reinforcement work.
How the trial worked
In the trial we set out to test the appetite of consumers and to understand the technical challenges of creating a smart grid for the future.
On the industrial and commercial (I&C) side we partnered with 16 customers, providing about 17 megawatts of DSR. These customers used a mix of on-site generation and ‘turn down’ to generate the load and we found no major technical hurdles – customers who declared themselves available provided around 80% reliability.
Certainly, the I&C market provides us with the quickest opportunity to widen the use of DSR and, over the next eight-year period, we have committed that before we do any reinforcement work in our major substations we will first speak to customers to see how they can help us.
Working with domestic customers
About 11,000 residential customers participated in the trial, 650 of whom tested time of use tariffs to see if they could alter their energy consumption habits and save money at the same time.
The results were interesting – we saw an average 10% lower peak consumption and about 60% of customers saved money on their bill. However, certain demographic groups, specifically families with young children and older customers, told us that they found it difficult to adjust their patterns of electricity use.
As more renewable generation and loads are connected to the grid, we estimate that local grids like our own could need to carry twice as much load as they do today by 2050.
We are supporting the widespread introduction of domestic smart meters to ensure we can respond appropriately to fix any defects on our network as the roll-out increases pace. Looking ahead, we need to ensure that we make effective use of this new source of data to develop a more efficient network.
The response from SMEs
During the trial we found that engaging the SME community was the biggest challenge. This is a very diverse group of businesses, whose focus is understandably on managing their day-to-day operations. DSR was not high on their list of priorities and I think this underlines another truth: the demand side is part of the solution, but not the only one.
We will need to continue to reinforce the network, identify and develop new smarter network technologies and integrate these approaches to maintain a reliable network service at least cost. The approaches will differ according to the situation and our work has helped to identify what solution is appropriate for different circumstances.