Why the DSR numbers need to add up first

The Major Energy Users Council (MEUC) is an independent, consumer-led body representing industrial, commercial, retail and public sector organisations for whom electricity and gas is a significant operational cost. Eddie Proffitt, the MEUC’s Technical Director, explains why more needs to be done before members fully embrace Demand Side Response (DSR).

The combined electricity usage of MEUC members is equivalent to one third of the UK’s total non-domestic electricity consumption. We’re huge energy users, and for many members a secure, uninterrupted electricity supply is absolutely critical to the day-to-day running of their operations.

Naturally they have stand-by equipment and contingency plans to ensure they’re not totally exposed. And such equipment can be used to support DSR at times of peak demand, while others can switch off fridges, pumps and air conditioning for short periods as well.

The combined electricity usage of MEUC members is equivalent to one third of the UK’s total non-domestic electricity consumption.

Keep it simple

However, using stand-by equipment in this way and synchronising it with the grid supply is a big cost. Equally, many members who have equipment running on oil are obliged by law to only use them in emergency situations.

That’s not to say our members aren’t involved in DSR. The most common technique among MEUC members is triad avoidance, which is simple and doesn’t require a contract, prior notice or prior commitment.

This is in marked contrast to National Grid’s new Demand Side Balancing Reserve (DSBR) scheme, which many of our members see as far too complex. The contract terms stretch to 27 pages and the Frequently Asked Questions section to 19 pages alone.

Fundamentally, DSR will only be taken up by larger customers if they see it as a cost saver.

Furthermore its payment terms of two months mean action to reduce demand taken in one financial year might only see payment in the next, not something that goes down well with finance directors. Add to that the fact that anyone who participated in triad chasing is not eligible for DSBR, and you can see why many organisations feel the new scheme is simply not worthwhile.

Lack of resources

Fundamentally, DSR will only be taken up by larger customers if they see it as a cost saver. The fact that DSBR is only a short-term measure that will be replaced by the Capacity Market in 2018 lessens its appeal even more.

The rules for the Capacity Market published last year were 151 pages long with amendments this year being a further 83 pages, and it’s telling that no consumers were in attendance at its first stakeholder event in January.

I quote the length of contracts and rules to make a serious point. Very few have the resource to read all this material and attend frequent stakeholder gatherings. To some extent National Grid’s approach has been ‘if you build it, they will come’. Schemes have been developed in isolation with the hope that consumers will come forward.

Perhaps now is the time to become more proactive and actively sell schemes to potential participants. Power Responsive is a welcome step in that direction and a good opportunity to talk further about the issues mentioned above.