Demand response will stabilise the UK’s electricity capacity market and keep the lights on
KiWi Power, the UK’s leading smart grid and energy demand management company, is supporting the Government’s Electricity Market Reform (EMR) measures in light of Ofgem’s news published last week, warning of a significant reduction in electricity capacity margins over the next three years.
According to Ofgem, the UK’s official independent regulating body for both the gas and electricity industries, the UK currently has 14 percent spare generation capacity to help meet the supply of electricity during times of peak demand. Under European environmental legislation, UK coal-fired power stations are facing early closure. This could see supply margins drop to just 4 percent, risking a shortfall in electricity during 2015/16.
“One of the key elements of the EMR consultation is a Capacity Mechanism. This will encourage new types of capacity to come forward to support the system, including demand response,” said Yoav Zingher, co-founder and director of KiWi Power. He continued, “Ofgem’s recent Electricity Capacity Assessment highlights unprecedented challenges facing the UK’s energy industry. It is absolutely crucial that non-traditional sources of capacity, such as demand-side response (DSR), storage and the use of standby power equipment are considered.”
Energy experts are predicting substantial development for DSR initiatives in the UK. “From 2012 through to 2018 growth in UK demand response participation looks fairly robust. In this relatively immature and emerging market there is a great deal of growth potential. A 32-35 percent annual growth rate is a realistic figure for this region,” reported Marianne Hedin, a senior energy research analyst with Pike Research.
The success of DSR in other parts of the world highlights how shortages in operating reserves can be managed effectively. In the US similar programmes have been established for more than 10 years, and play an important role in helping Independent System Operators (ISO) balance electricity demand and saving customers money through lower energy prices. For example, the inclusion of DSR capacity in the ISO New England forward capacity auction alone has been credited with saving customers around $280 million by lowering the price of electricity paid to all ‘capacity resources’.
Yoav Zingher continued, “Demand response is already active in providing balancing services to the National Grid. Looking at our capacity margins, demand response should be a part of any robust and sustainable long-term solution for the UK energy industry, participating in a fair and equivalent way to traditional generating resources.”
DSR has been highlighted in the UK Government’s EMR report as an important strategy that is able to participate in a capacity market along with non-traditional generation sources.
Demand response offers a cost-effective and environmentally sound way for the UK's electricity grid to be managed in a cleaner and smarter way.
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Marcus Edgar
Resonates
T: 01635 898 698
E: marcus@resonates.com
About KiWi Power
KiWi Power was co-founded by Yoav Zingher and Ziko Abram in 2009. KiWi Power is a smart grid company that specialises in managing the demand side of energy consumption for large industrial and commercial consumers of electricity and for government regulators. The technical term is ‘demand response’. KiWi Power operates in the UK in England, Wales and Scotland supplying demand-side management services to the National Grid. The National Grid pays for these demand reductions, thereby allowing participating companies to generate new recurring revenue streams and reduce their carbon footprint.
www.kiwipowered.com
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