In the third annual auction for electricity capacity to keep Britain’s lights on, flexible industrial, commercial and public-sector energy users have handed a saving worth £40 million to bill-payers.
This proves that businesses responding voluntarily to electricity price spikes, demand peaks and power station failures, can make electricity cheaper and more secure for everyone, according to Edinburgh-based demand response aggregator, Flexitricity.
In order to secure back-up energy supplies for 2020, this week’s four-year-ahead capacity auction has bought 13% more capacity at a price 25% higher than the equivalent auction last year, costing a total of £1.2 billion.
While part of the rise can be put down to changes in government tactics for these auctions, much of this higher bill will go towards keeping old fossil-fuelled power stations running and building new peaking generators.
However, Flexitricity says that the cost would have been even higher if the company hadn’t brought industrial and public-sector energy users, like manufacturers, hospitals, data centres, cold stores and supermarkets, into the Capacity Market through its ‘demand response’ programme.
Flexitricity estimates the saving this year to be at least £40 million across industry, after taking account of the payment which those companies will receive for taking part.
Dr Alastair Martin, Flexitricity founder, explained: “Capacity to keep the lights on can come from anywhere – it doesn’t all need to be provided by centralised, energy-wasting power plant. By paying businesses to turn down consumption briefly when there’s a peak or a failure somewhere else in the country, we make it unnecessary to keep large power stations warm or running inefficiently at part load.
“All over Britain there are thousands of megawatts of flexibility in industry, commerce and the public sector. This capacity can be made available without getting in the way of these organisations’ day jobs. Cold stores can turn off the fridges for short periods, and hospitals can align the test runs of their vital standby generators to periods when electricity is expensive. Similarly, efficient, localised resources like combined heat and power (CHP) generators can make small changes to their schedules to deliver when they’re most needed.
“By doing this as part of a demand response network, businesses can generate revenue as well as keep electricity costs down. On top of the £40 million saving to all customers, these companies and public-sector organisations will share £45 million in payments for taking part.”
He added: “We’ve managed to pull together four years of contracts from these capacity auctions, with delivery starting this October. No power station of any size has achieved that – it really is business energy users who are keeping the lights on this winter.”