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2016 Conference
Presentation
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Content
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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 of flexibility
>Easier and lower cost access to DSR
Increased opportunity
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 operation
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
on-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
opportunities 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 RO M F LE XIB I L I T Y
DONG ENERGY JUNE 2016
The Energy Transformation and Flexibility
2
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
DONG ENERGY JUNE 2016
The customer challenges
3
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
DONG ENERGY JUNE 2016
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
4 DONG ENERGY JUNE 2016
Renewable Balancing Reserve – How it works
Removing the barriers
5
1 2 3 5 4
DONG ENERGY JUNE 2016
6
Identifying and understanding flexibility
Energy Vision & Site
Optimisation
DONG ENERGY JUNE 2016
Flexibility – what is holding you back?
7
Manage demand
and reduce commodity costs
Unlock your flexibility
and generate new revenue
DONG ENERGY JUNE 2016
DONG Energy Innovation
Gas
Electricity
Trading
Solutions
Flexibility
Sustainability Transparent electricity
contracts
Range of Flexibility
solutions
Renewable electricity at no premium
8 DONG ENERGY JUNE 2016
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 of 20 large power stations and
upgrade the grid
DEMAND
DEMAND
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
<
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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