What is Demand-Side Response?

Demand-Side Response, or DSR, is the systematic change in power usage (demand-side) when certain conditions are triggered (response). In essence, when lots of people are using power, and the grid is under strain, certain users turn off their power to keep the electricity grid balanced. For example, when the adverts come on during the Great British Bake Off, and two million kettles are boiled using grid electricity, your local factory might turn down its machines to keep total usage steady.

There are different types of demand side response. As well as energy users abstaining from using it, those with energy generation capability can also add power to the grid to keep it balanced. In the past, it would be someone’s responsibility to turn down factory equipment when asked, or to turn on backup generators if extra power was needed. These days, Fast Frequency Response (FFR) uses IoT technology to automatically adjust power usage without anyone even needing to know.

Why is DSR important?

Electricity grids run at a certain frequency. In the UK, the electricity grid runs at 50Hz; in the US, it’s 60Hz. If a grid strays too far away from its frequency, equipment which is running on grid electricity can be permanently damaged. As such, the National Grid is incentivised to keep the grid at that level. Serious swings in frequency can cause automatic triggers to cut off power to certain areas, causing blackouts.

Therefore, the National Grid pays people who either use energy or can put energy into the grid to be on standby. These people get paid whether they are called to action or not. Because there might be thousands of people on standby, aggregators pool these together. These companies use that IoT software to manage a whole host of assets, synchronising them to turn on, off, up or down at the same time.

What happened during the August blackout?

According to the National Grid, the blackout was caused by two large electricity generators simultaneously shutting down. This graph, shared by Statera (a DSR aggregator) shows the amount of power being used by backup batteries controlled by them as the blackout hit. What’s fascinating is how instantly DSR kicked in to provide power to the grid, and how, just hours after a huge spike in supply, Statera’s assets were reducing demand from the grid compared to normal operation.

There wasn’t enough power in the DSR system to prevent the blackout. At least, not this time round.

What is the potential of DSR?

DSR is effectively an addition to the energy mix. Shifting power usage can replace the need for creating more energy from power plants. The Association for Decentralised Energy believes that, at its maximum safe capacity, DSR could provide 16% of a system’s peak electricity requirement. That’s around five times the amount supplied by coal in the UK in Q1 2019.

At White Space, we are hugely excited about the potential of DSR. Because many industrial users have flexible power needs (supermarket fridges can be turned down during peak times, for example), there is a huge amount of power that could be taken off the grid if needed. We have the technology to add this to the energy mix now, and, of course, it’s completely carbon-free.

How can companies capitalise on DSR?

In recent weeks, the National Grid has urged the energy regulator to review the backup energy available in the UK. It’s not unlikely that more DSR will be needed in the UK. If your business has high energy usage, or unused backup generators, you can be paid just for flexibly volunteering your power in case it’s ever needed.

In the energy sector, companies are jumping on DSR. In November 2018, Engie acquired a major stake in aggregator Kiwi Power; Shell followed suit by acquiring leading aggregator Limejump in February 2019. Whilst there are many complexities to DSR, we believe it has the potential to make a big, positive impact on the world’s energy supply and stability.

We have worked with companies in the DSR space to help them understand their customers, to target different areas of the market, and to refine their propositions and messaging.

From an M&A standpoint, we are equipped to give evidence-led advice on strategic acquisitions and disposals, and we have a wealth of experience in market sizing, proposition development and competitor analysis in the energy space.

If you have any questions about this article, or want to know more, please get in touch!

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