For the best part of the last century, electricity grids have been designed in a specific way in order to meet the demand from consumers. Operators were tasked with forecasting and then adjusting the electricity supply in accordance with peak demand times. Although most operators would not admit it, this task was relatively simple, given that a predictable supply of power was available from the various power plants which fed in to the system.
The energy transition has changed all of that. With an increasing amount of wind and solar energy being connected to the grid, and the number of fossil fuel-based energy sources decreasing, the energy supply is becoming more unstable. Operators are now finding it much harder to predict the extent of supply at any given time, leading to uncertainty on both sides of the supply and demand dynamic.
Despite the tabloid-like concerns over news of an unstable grid, experts suggest that this is not a cause for alarm, and merely highlights the need for a broader understanding of both supply and demand to keep the grid in balance. Paul Troughton, senior director of regulatory affairs at Enel X, says that it is no longer adequate to continue thinking about the supply and demand dynamic of the grid in the same way, and advocates a more holistic approach using demand response to control consumer demand.
“Demand response is treating consumer demand as something which you have some control over. It is not a new idea by any means, we have had tariffs going back decades that give a price signal to get people to consume at times when there is less demand and more supply – for example from daytime to night-time. That is a very old and crude approach with very fixed timetables, but there are many people participating in these types of schemes. It gets more interesting, and more sophisticated, if operators were to offer different price points every half-an-hour, and customers are aware of these price points ahead of time.”
These schemes are collectively known as ‘implicit demand response’, where price signals encourage the customer to act in their own interest to minimise energy costs by shifting their usual consumption times. ‘Explicit demand response’ is another way to encourage people to shape their consumption in a way which helps the power system, bu offering their flexibility in the same markets as traditional energy generators, such that they get paid to reduce demand when system conditions are tight.
Either way, these two aspects work in a similar manner – either the customer pays less for their power, or they get paid to provide power flexibility to the grid. According to Troughton however, explicit demand response has the additional upside of providing a service which helps with price formation, making better economic use of that capability. This is where an aggregator comes in.
The role of an aggregator
Rather than an individual customer having to decide whether demand response is a viable option, an aggregator pools the demand flexibility resources from a number of different consumers so that each individuals needs can be met alongside the needs of the grid.
equiwatt, for example, is an energy management platform which, during times of peak demand, automatically switches off appliances and pauses smart charging across the community via their app. By doing this, the startup hopes that the collective power of saving energy will help build a ‘virtual power plant’ that balances demand on the grid as well as reduces the need for fossil fuel-based power plants.
CEO and founder, Johnson Fernandes, says that one of the main benefits of their system is that it is simple, fun, and rewarding, without the need for participants to be burdened with the knowledge of complex grid service mechanisms.
“Demand side response can be communicated to users in a very simple way, if you provide a simple service with tangible benefits. We run regular energy saving events – or equivents – which users receive notifications about, that use of a combination of energy monitoring, smart plugs, and automation of electric vehicle charging to deliver energy savings at the same time as helping balance the grid at peak times.
“Those savings are then delivered to the user in the form of points, which are redeemed for rewards. Users can earn a points value of anywhere between 40 to 150 pounds per year, on average.”
Although equiwatt is still at an early stage of development, they have attracted users in the thousands, and say that they have received a lot of positive feedback from those users, who enjoy the concept of being paid for doing something which they feel contributes toward a better environment.
Challenges to overcome
“Eventually, we will not have any power sources that are carbon intensive left on the grid, and so we have to answer the question about how that affects the structure of our power systems. I think there will be a mix of lots of different ways that will enable consumers to get value from the grid from all of the potential sources of flexibility. It will be the norm that, whatever the load, there will be some way of being flexible,” supposes Troughton.
However, there remain a number of challenges before that becomes a reality at scale. For Troughton, market and product design are critical stages which operators and policymakers must get right in order to ensure the success of grid flexibility. Historically, ancillary services products have been designed around conventional technologies, such as combined gas turbines or gas plants. To meet the demands of a diversified energy system and encourage customer participation, new products should be defined which better accommodate different technologies.
At the same time, technology will not solve the problem by itself if a potential consumer does not understand or trust it. It is up to aggregators to explain the benefits of demand flexibility, both from the perspective of the grid and also what it can provide to the individual.
“Consumers need to play a greater role, because without consumers joining together, we are not going to be able to hit out net-zero targets,” concludes Fernandes. “I think demand side response will become more of a behavioural habit; people are going to become more conscious of how and when they use energy, and how collective behaviour action can impact on their energy bills as well as their carbon footprint and the environment.”
