Can You Help National Grid Get the Balance Right?

           Energy Markets

Our clients are becoming increasingly concerned with the impact of pass-through costs to their overall energy supply contract costs. One of the ways in which we are looking to work with our larger clients to manage energy costs is the integration of Demand Side Response (DSR) services to a wider energy strategy. This energy strategy may also include consideration of energy efficiency measures, on-site generation and renewables, and risk management of procurement. FR (Frequency Response) is one of the programs that has started attracting more attention recently, due to the intermittent nature of renewable supply and its growing representation in the supply mix.

What is DSR (Demand Side Response)?

DSR is operated by National Grid to either reduce electricity consumption or provide short-term aggregated generation at peak times across industrial and commercial clients.

Commercial and industrial sites are paid to participate and contribute to a greener, more cost-effective grid, reducing the need for inefficient backup power stations and providing vital balancing requirements. Aggregators are organisations that bring together commercial and industrial clients to deliver sufficient demand reduction and/or provision of backup power, such that it is an effective and coordinated response to grid demands.

Our aggregation partner works with National Grid and aggregates assets from multiple clients and sites during peak times to help balance the grid. This arrangement enables clients to use their existing energy assets to participate in a wide portfolio of revenue-generating demand response programs such as FR, STOR, TRIAD, and the Capacity Market.

What is FR (Frequency Response)?

A program for FR helps National Grid control the system frequency around the UK in real time by balancing electricity demand with generation, ensuring the system stays within the tolerance levels of ±1% of 50Hz. For example, if there is a shortfall in generation, such as when a large power station or interconnector fails, frequency can fall rapidly, and this is when National Grid would require an aggregator’s FR service, to main the correct frequency.

I always find an analogy useful to describe an unfamiliar subject and recently saw an example to illustrate the National Grid’s requirement to maintain frequency, using the likeness of attempting to maintain a water level in a bathtub without plugging the drain. The balance of demand and supply of electricity is like a bathtub with a set water level, where the faucet running at an agreed flow rate delivers water into the tub at the same rate at which it exits through the drain. If the faucet flow is greater than the capacity to drain, the water level rises. Likewise, in a power grid scenario, if supply generation is greater than demand, then the system frequency will rise. Conversely, if the drain is larger than the supply of water from the faucet (or if in the case of the Grid, demand exceeds supply), then system frequency drops.

FR as a service corrects frequency deviations by generating or reducing load in order to effectively increase or decrease the size of the faucet relative to the drain.

How can you participate?

FR is designed for energy partners who can generate or reduce load within real time to 30 seconds and can then provide this generation or load reduction for up to a fixed 30-minute period should the national electricity system frequency deviate below the pre-determined 49.7Hz set point. Example assets that can take advantage of FR are:

  • Rapid Load Drop
  • Energy Storage
  • HVAC
  • Pumping
  • Refrigeration

It is typical to generate revenues of around £50,000 to around £150,000 per MW per annum through contracting to the FR Service, assuming 24/7/365 availability.

Without understanding the process of engagement, it may seem an impossible consideration. However, the response time and level of response required are managed within your constraints (only with your express agreement on each occasion) by our delivery partner, using sophisticated software and hardware. Importantly, disruption to time and processes is minimal.

We recognise the need to get the balance right while participating in demand response programs so that you can participate but remain in control of your energy assets.

If you want to learn more about demand response, we will be running a series of educational events in the near future. Contact us if you would like to register your interest in learning more about Demand Response.

Nick Barrance

Nick has 16 years of experience in the energy market, supporting bid management, product development, and the establishment of OJEU-compliant processes for public sector procurement. Prior to joining Alfa Energy, Nick was instrumental in the establishment and growth of an energy consultancy now trading as Kinect and part of World Fuels, providing input to the launch of the company, product development, supplier management. and marketing the business. Nick is responsible for proposal and RFP responses, Service Level Agreements, public sector procurement compliance, and a number of campaign-led initiatives.