National Grid in the UK has set an aspiration to meet 30–50% of balancing capability from demand response by 2020.
The ADE calculates that 16% of the UK’s peak electricity requirement – or 9.8 gigawatts (GW) – could be provided by businesses being flexible in their energy demand, which could save UK energy consumers £600 million by 2020 and £2.3bn by 2035.
The need for flexibility is increasing as more renewable power generation capacity is installed in Great Britain. Traditional thermal generation plants (coal, oil gas and nuclear), which have historically provided this flexibility, are closing due to a combination of carbon taxes and the retirement of ageing power stations.
In total, circa 23 GW of thermal capacity has been closed or mothballed since 2010, and a further 24 GWs of coal and nuclear capacity are expected to close between now and 2025.
The growth of DSR and the flexibility it provides is crucial in supporting the UK’s transition to lower-carbon generation.
Financial incentives for demand response
Businesses which are able to be flexible in their energy use can take advantage of price fluctuations in the energy market and receive payments for their dynamic interactions with the grid.
The DSR market is growing and in Europe, where DSR is more prevalent, large consumers can reduce their annual energy bills by up to 10% by participating in DSR.