2016 Conference Presentation Slides
Content 1. Demand-side markets; now and in the future Andrew Wright, Ofgem – p. 3 - 12 2. Realising the value from Flexibility Jeff Whittingham, Dong Energy – p. 13 - 20 3. Demand Response; Aggregators Yoav Zingher, KiWi Power – p. 21 - 32
Demand-side markets; now and in the future Andrew Wright 16 th June
The Demand Side : the opportunity will knock >Increased value > Climate > Changes in the of flexibility Increased Change system mix opportunity >Easier and > Technological for DSR > Smart systems lower cost Change access to DSR 2
Barriers to realising the demand- side opportunity • R egulatory/ 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 Environmental Incentives Fuel incentives and taxes Low carbon support Capacity auctions Connection charges Payments for balancing Payments for system actions services System operator disconnection and curtailment Electricity cash out CM penalties BSUoS Transmission and Distribution Use of System Recovery of capacity payments and environmental levies
POTENTIAL FUTURE ARRANGEMENTS High Level Principles Incentives reflect As much as A level playing costs / value to possible in the field the whole system market Non-distortive Consistent with recovery of fixed European and sunk costs integration 5
POTENTIAL FUTURE ARRANGEMENTS As much as possible in the market? A more granular A market in capacity and wholesale market constraints • Location • Firm vs. non firm grid access • Time • Capacity rights and obligations • Connection level • Secondary markets Flexibility markets Local markets • Rationalise flexibility products • Managing local congestion •“Marketise” SO activities • Enabling local solutions • DSO/ SO integration • Supply and demand side constraints 6
POTENTIAL FUTURE ARRANGEMENTS A level playing- field between …. Supply side Network vs Imported vs vs demand Generation Domestic side Grid connected vs Technologies Embedded vs On site 7
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 For I&C DSR : • regulatory barriers Many of the enablers in place • Large users have commercial incentive to participate 2. Providing price • Traditional provision from largest users, typically using signals for flexibility on-site generation • Many do not participate (as much as they could) as 3. A system for the unaware of the opportunities or wary of the risks consumer • Some existing initiatives to address this 4. The role of different However, we need to : parties in system • Consider ways to engage with harder-to-reach groups and network • Increase awareness of the full range of DSR operation opportunities available (beyond NG balancing) • Help identify the options most appropriate to each 5. Innovation individual consumer 9
DONG ENERGY RE A LIS I NG THE V A LUE F ROM F LE XIB I L I T Y DONG ENERGY JUNE 2016
The Energy Transformation and Flexibility THE SOLUTION THE CHALLENGE Demand side flexibility Transformation to cost effective, fundamental green, sustainable energy Change the way we consume Innovate to develop the energy system to support this Help UK business’s along this transformation journey 2 DONG ENERGY JUNE 2016
The customer challenges Access to greater value through additional revenue streams Availability and volume requirements Decision making, where to begin Not incur a penalty for non-delivery Accessing and implementing on site 3 DONG ENERGY JUNE 2016
Renewable Balancing Reserve 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 4 DONG ENERGY JUNE 2016
Renewable Balancing Reserve – How it works Removing the barriers 1 2 5 3 4 5 DONG ENERGY JUNE 2016
Identifying and understanding flexibility Energy Vision & Site Optimisation 6 DONG ENERGY JUNE 2016
Flexibility – what is holding you back? Manage demand Unlock your flexibility and reduce commodity costs and generate new revenue 7 DONG ENERGY JUNE 2016
DONG Energy Innovation Renewable electricity at no premium Gas Sustainability Range of Flexibility Transparent electricity Electricity solutions contracts Flexibility Trading Solutions 8 DONG ENERGY JUNE 2016
Demand Response Aggregators Power Responsive Conference II 2016
Why do we need demand response? Deceasing capacity Increasing demand Investment required Over £110bn in investment 25% of the UK’s required to build the equivalent generating capacity will 2014 of 20 large power stations and have shut down within DEMAND upgrade the grid 10 years as old coal By 2050, and nuclear power electricity 20 stations close due to 2015 demand is set Large Combustion to double, as Plant Directive (LCPD, we switch 2001/80/EC) transport and heating onto DEMAND 2023 the electricity grid 2050 = £110bn investment 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
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 Aggregator Large to very large capacity Small to large capacity Bespoke bids Access to all markets ✗ Market expertise – present and future Technology ✗ Asset analytics Outsourced turnkey solution ✗ Project management Project management and upgrades ✗ Metering, controls and communications technology development capability Earnings protection through portfolio ✗ Single site risk management ✗ Bidding risk ✗ Fee ✗ 24/7 in-house DSR team
Qualifying your assets for participation in demand response Does your site have < these assets? Air handling unit Response time Extractor fan Can your asset(s) respond in 30 seconds Lighting to 30 minutes? UPS Duration Heat pump Can it hold for 30 minutes to 2 hours? DRUPS Events per year Chiller plant Up to 5 or up to 50 times Hot water plant year
Thank you. Please contact KiWi Power today: +44 (0) 20 7 183 1030 | info@kiwipowered.com | @kiwipowered www.kiwipowered.com
To get in touch… Power Responsive Campaign : www.powerresponsive.com LinkedIn : Power Responsive For National Grid service opportunities : commercial.operation@nationalgrid.com
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