Capacity Market Demand Side Response - the opportunity starts right away

We’ve talked a lot in the last 12 months about Electricity Market Reform (EMR) and how to manage the risks associated with this major change to our market.

While hopefully we’ve all started to get comfortable with what this means and how to budget, what many customers aren’t aware of is the scale of the opportunity that EMR brings for customers to generate revenue and offset some of these costs.

Currently the Demand Side Response (DSR) market is small. In a recent report by Ofgem it was revealed that only 174MW of the 49.3 GW procured in the first Capacity Market auction was from Demand Side Response (DSR). That’s less than 1%. But National Grid has responded with the first really strong signal that they are backing the growth of DSR.

In a recent interview with Utility Week, National Grid has argued that demand response could play a larger role in balancing the grid than traditional large generators within the next 15 years. They have claimed that they expect to invest up to £400m p.a by 2020 on DSR. That’s a huge rate of growth.

So if the £400m isn’t going to large generators, where is it going?

It’s going to customers like you.

In a recent survey by The Energyst, more than half of respondents, from SMEs to large corporate entities, said that up to 10% of their electricity demand could be flexible without interrupting their business operations.

If this is you, you should look at participating in one of the Demand Side Response opportunities available. We can help you identify what opportunities suit your demand profile best depending on the times and extent to which you can commit to reduce your load, allowing us to optimise your revenues over the year.

Some Demand Response opportunities require customers to be able to shed load by a minimum number of MW, but EDF Energy can aggregate small loads spread across multiple customers or sites in order to reach these minimum levels.

The Capacity Market is just one of many ways to generate revenue from being able to reduce your electricity demand on request. And if you have on-site back-up generation that you need to run periodically for testing, you can run these as an alternative to reducing demand and generate revenue from your existing assets.

For Capacity Market Demand Side Response, the opportunity starts right away.

Over the next 2 years, DSR providers will have the opportunity to ‘transition’ into the Capacity Market, meaning they only need to make capacity available for limited time periods in the winter.

No one knows what price will be paid per MW, as this will be decided by auction in January 2016, but it looks like an early move to participate this year could reap major financial benefits.

Pre-qualification starts on Monday 20th July 2015 and is open for 5 weeks.

If you want to talk to us about the opportunity to flex your demand and generate additional revenue, please contact energyexperts@edfenergy.com