2016 Conference Presentation Slides Content 1. Demand-side - - PowerPoint PPT Presentation

2016 Conference Presentation Slides

Content

1. 2. 3. Demand-side markets; now and in the future

Andrew Wright, Ofgem – p. 3 - 12

Realising the value from Flexibility

Jeff Whittingham, Dong Energy – p. 13 - 20

Demand Response; Aggregators

Yoav Zingher, KiWi Power – p. 21 - 32

Demand-side markets; now and in the future

Andrew Wright

16th June

The Demand Side : the opportunity will knock

2 > Climate Change > Technological Change > Changes in the system mix > Smart systems >Increased value

• f flexibility

>Easier and lower cost access to DSR

Increased

• pportunity

for DSR

Barriers to realising the demand- side opportunity

• Regulatory/ market arrangements designed for the “old world”
• Various barriers for flexibility in general
• A fragmented and complex market….
• …which is not designed for DSR participation
• Commercial challenges
• Cultural / informational/ behavioural barriers

3

SYSTEM INCENTIVES

Low carbon support Fuel incentives and taxes Electricity cash out Payments for balancing actions Connection charges Capacity auctions Payments for system services BSUoS CM penalties Transmission and Distribution Use of System Recovery of capacity payments and environmental levies System operator disconnection and curtailment Environmental Incentives

5

High Level Principles

Incentives reflect costs / value to the whole system As much as possible in the market A level playing field Non-distortive recovery of fixed and sunk costs Consistent with European integration

POTENTIAL FUTURE ARRANGEMENTS

6

As much as possible in the market?

A more granular wholesale market

• Location
• Time
• Connection level

A market in capacity and constraints

• Firm vs. non firm grid access
• Capacity rights and obligations
• Secondary markets

Flexibility markets

• Rationalise flexibility products
• “Marketise” SO activities
• DSO/ SO integration

Local markets

• Managing local congestion
• Enabling local solutions
• Supply and demand side

constraints

POTENTIAL FUTURE ARRANGEMENTS

7

A level playing-field between ….

Supply side vs demand side Technologies Network vs Generation Grid connected vs Embedded vs On site Imported vs Domestic

POTENTIAL FUTURE ARRANGEMENTS

Relevant Ofgem/DECC work

• Imminent joint “call for evidence” with DECC

– DSR and aggregators – Network charging – DSOs and local markets

• Enhanced SO
• Review of “Whole system” costs
• Embedded benefits review

8

Joint Call for Evidence with DECC

1. Removing policy and regulatory barriers 2. Providing price signals for flexibility 3. A system for the consumer 4. The role of different parties in system and network

• peration

5. Innovation

9

For I&C DSR:

• Many of the enablers in place
• Large users have commercial incentive to participate
• Traditional provision from largest users, typically using
• n-site generation
• Many do not participate (as much as they could) as

unaware of the opportunities or wary of the risks

• Some existing initiatives to address this

However, we need to:

• Consider ways to engage with harder-to-reach groups
• Increase awareness of the full range of DSR
• pportunities available (beyond NG balancing)
• Help identify the options most appropriate to each

individual consumer

DONG ENERGY

RE A LIS I NG THE V A LUE F ROM F LE XIB I L I T Y

The Energy Transformation and Flexibility

THE CHALLENGE Transformation to cost effective, green, sustainable energy Innovate to develop the energy system to support this transformation THE SOLUTION Demand side flexibility fundamental Change the way we consume Help UK business’s along this journey

The customer challenges

Availability and volume requirements Access to greater value through additional revenue streams Decision making, where to begin Not incur a penalty for non-delivery Accessing and implementing on site

The global leader in offshore wind and we have a large generation portfolio to balance. By using the flexibility within customer portfolios we can reduce consumption during times of low system margin, reducing our imbalance costs. Customers receive a share of the savings on delivery of flexible consumption. Simple to set-up and use:

• generate revenue at times that suit you
• commitment free – no penalties for not delivering
• no minimum volume requirements for participation

Renewable Balancing Reserve

Renewable Balancing Reserve – How it works Removing the barriers

1 2 3 5 4

Identifying and understanding flexibility

Energy Vision & Site Optimisation

Flexibility – what is holding you back?

Manage demand and reduce commodity costs Unlock your flexibility and generate new revenue

DONG Energy Innovation

Transparent electricity contracts Range of Flexibility solutions Renewable electricity at no premium

Demand Response Aggregators

Power Responsive Conference II 2016

Why do we need demand response?

25% of the UK’s generating capacity will have shut down within 10 years as old coal and nuclear power stations close due to Large Combustion Plant Directive (LCPD, 2001/80/EC)

Source: Department of Energy & Climate Change, Electricity Market Reform White Paper 2011, July 12, 2011 http://www.decc.gov.uk/en/content/cms/legislation/white_papers/emr_wp_2011/emr_wp_2011.aspx

= £110bn investment

20

Over £110bn in investment required to build the equivalent

• f 20 large power stations and

upgrade the grid

2050 2015

By 2050, electricity demand is set to double, as we switch transport and heating onto the electricity grid

2014 2023

Deceasing capacity Increasing demand Investment required

50%

Goal for UK balancing to be provided by Demand Response CEO National Grid, Power Responsive Conference June 2015

£400 million

Value of DSR to National Grid per year Based on 50% of 2015 balancing costs

£8 billion

Annual savings to UK consumers from deployment of DSR, interconnectors and storage National Infrastructure Commission Report, "Smart Power" March 2016

Routes to Market

• Market fit with assets and

flexibility

• Pricing and tendering

strategies

• Modeling and analytics

Direct

Large to very large capacity Bespoke bids ✗Market expertise – present and future ✗Asset analytics ✗Project management ✗Metering, controls and communications technology development capability ✗Single site risk ✗Bidding risk ✗24/7 in-house DSR team

Aggregator

Small to large capacity Access to all markets Technology Outsourced turnkey solution Project management and upgrades Earnings protection through portfolio management ✗Fee

Qualifying your assets for participation in demand response

Response time Duration Events per year Does your site have these assets?

Can your asset(s) respond in 30 seconds to 30 minutes? Can it hold for 30 minutes to 2 hours? Up to 5 or up to 50 times year

Chiller plant Hot water plant Extractor fan Air handling unit UPS DRUPS Heat pump Lighting

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