Demand-side response is the term given to deals between power network operators and large consumers to reduce or shift their electricity use at peak times.
The agreements are seen as increasingly vital to meeting future energy demand. Across the world, governments recognise that they cannot fund the construction of enough conventional infrastructure to meet the expected increases in demand for power. Creating more flexibility through demand-side response is one solution to addressing the shortfall.
Until now, network operators have had limited incentives to encourage flexibility. Creating competition could change that. “We see a future in which the power utility has to take on a little bit more market risk and is forced to rely more on flexibility,” says Martin Wilcox, a senior power consultant at Mott MacDonald.
Despite the relatively simple concepts that underpin flexibility, the devil is in the detail: what a business energy customer is charged varies depending on where it is geographically and the way in which the power network is put together around them. In effect, every deal between supplier and consumer will be bespoke.
Martin says negotiating an equitable agreement requires a combination of a strong understanding of the local network and regulations combined with technical design expertise. Companies will also need access to ‘behind the scenes’ economists who have a much better take on how to use financial levers to achieve the desired outcome.
Ireland’s power consumers take the lead
Contestable grid connections accelerate construction of datacentres
Where a power generator in Ireland needs a new transmission connection to the power grid, it can opt to build the necessary substation and link to the grid, and then hand over the assets to the utility. This is known as ‘contestability’ and is the right of connected customers to construct all or part of their grid connection to the transmission system.
In many countries, utility companies construct their own new connections to the grid. This can often result in significant delays, especially where the firm’s resources are already constrained.
For many years now, renewable generation developers in Ireland have mostly opted to build their grid connection substations contestably and then, on completion hand them over to EirGrid. This enables developers to accelerate the build; manage the construction costs directly; appoint a specialist consultant and contractor; quickly complete the design and connect turbines to the grid; and start generating power and earning money.
Ireland has recently experienced an increase in demand for datacentres to store and process electronic data. The power requirements for these are significant and many require transmission connections at 110kV, 220kV or 400kV.
Datacentre developers can also benefit from self-building grid connections. The sooner the link to the grid is in place the sooner the developer can have their facility up and running and generating revenue.