Much has already been written on the dismay across large parts of the energy sector in response National Grid’s announcement that they are scrapping the Demand Side Balancing Reserve scheme (DSBR). This is such an important topic, however, that I make no apology in adding my own views. The UK has been a consistent thought leader on smart grid and smart energy solutions. There is a strong consensus across industry and government that developing the smart grid is not just beneficial but essential for ensuring a resilient, clean and lower cost energy network. SmartGridGB, the predecessor organisation to SmarterUK, published a series of reports that demonstrated this time and again. The first of those, Smart Grid: A Race Worth Winning? identified £19bn of direct cost savings, benefits to the supply chain of £13bn GVA, 8,000-9,000 additional jobs and £5bn in export value. The potential benefits in secondary industries dwarfs even these numbers, running into the high tens of billions. The report concluded there is a strong investment case for moving forward with smart grid development sooner rather than later. Of particular interest was the identified cost of inaction which could be considerable, perhaps as high as £126bn net present value (NPV) by 2050. The report also highlighted something that should not be in dispute – that dynamic Demand Side Response (DSR) is a core element of the smart grid, and is fundamental to the business case for the eye-wateringly expensive smart meter roll out programme. I would challenge anybody to come up with a coherent vision of the UK’s future energy system that does not include the smart grid; and to show a business case for the smart grid that does not place DSR front and centre. The benefits to the UK of developing a smart grid and an effective DSR capability are clear, but no one has pretended this will be easy. There are multiple challenges, and due to the highly regulated and prescriptive nature of the UK energy market this is not something that can be achieved by the private sector alone. Overcoming the challenges and enabling a DSR sector that can eventually stand on its feet alongside other industry players requires careful shepherding by the government, and by public and quasi-public bodies such as Ofgem – and I include in this National Grid.In a series of remarkable exchanges during our evidence session on 2 September 2014 the National Grid representative consistently failed to satisfy the committee over a number of concerns. He admitted that turning on a bank of diesel generators counted as DSR for the purposes of its demand side balancing reserve (DSBR) programme; could give no satisfactory answer why, following months of consideration, DSR companies were given just five weeks to bid into the process; and could not answer why the DSR sector was forbidden from taking part in the so-called Transitional Arrangements and bid into the enduring Capacity Market auction. This meant that the very arrangement which was billed as helping the DSR sector to ease into the process, actually had the effect of barring the DSR sector from more than 95 per cent of the available market.
Business Green 30th August 2016 read more »