Published on Monday, 7 January 2019
With the market experiencing constant development and transformation, the energy ecosystem is speaking the language of digitalization, which is opening up a constant stream of new opportunities for the benefit of clients. The fight against climate change is having an increasingly profound impact on energy production and distribution methods. The goal of reducing CO2 emissions I leading a growing number of conventional generating plants to convert to renewable energy sources. This means that the old production model in which a handful of large power stations burning fossil fuels to generate electricity is transforming into a system of distributed generation in which energy consumers can also play their part.
Renewable resources are evolving constantly, and the Transmission System Operators (TSOs) increasingly need to rely on resources that offer a certain degree of distribution flexibility. As a result, flexibility has become a valuable asset. Thanks to technological innovation, the networks are now capable of receiving data, processing information, and setting up a real-time dialogue between grid operators and energy consumers.
Energy consumers are also evolving from passive consumers to energy producers and active, bi-directional players on the grid, enabled by new technological solutions and the companies managing these energy flows – aggregators like Enel X.
Demand Response is the best way to facilitate this period of profound transformation within the energy ecosystem.
What is Demand Response?
Demand response programs pay commercial and industrial energy consumers for reducing energy consumption temporarily when called upon. For example, an electric grid operator or utility may call on a demand response network when demand for electricity reaches abnormally high levels that exceed the electricity supply available.
Instead of calling on power generators to suddenly generate more electricity—which is expensive and requires the use of fossil fuel-dependent infrastructure—the demand response program reduces the amount of electricity needed to maintain reliable access to power across the grid. Effectively, this reduction in electricity demand provides the same relief as the injection of new electricity supply, but in a cleaner and more efficient way.
This makes it possible to ensure the stability of the grid even when the most “energy hungry” clients like industrial facilities consume higher-than-average amounts of energy or when production (renewable energy, for example) deviates from expected patterns.
How does Demand Response work?
Let’s take a concrete example: the TSO, which monitors the state of the grid in real time, detects a stress point on the grid and asks Enel X to manage its client portfolio. The TSO says it needs, hypothetically, 20 megawatts and Enel X responds to this request by calling on its customers to enact their custom, pre-determined energy reduction or load transfer plan. This could consist of shutting down energy-intensive equipment or transferring load onto distributed generation or energy storage resources, and often involves Enel X enacting the plan for the customer remotely. For every facility, Enel X helps to determine the optimal participation to maximize both payments for the customer and the flexibility delivered to the grid. . DR, therefore, is a service based on the use of third-party modifiable resources that the TSO can rely on during the most critical periods.
A typical DR dispatch involves four steps:
The Demand Response revolution lies in the opportunity for companies to generate income. Put simply, they are compensated for their flexibility. Flexibility represents a real added value that not only places energy consumers at the centre of a resource contributing to the reliability and efficiency of the energy market, but also enables them to monetise their own flexibility.
Energy is difficult to store on a large scale, so the balance between supply and demand can be delicate. For example, electricity demand during summer heat waves can be extremely high. Now, with Demand Response, grid operators have an alternative to generating more energy to add to the system, and energy consumers can receive financial compensation for reducing their consumption and helping to maintain the stability of the grid.
Let’s use the airline industry as an analogy. It would be too expensive for the airlines to permanently expand capacity (i.e., add additional planes, crew, gates, etc.) simply to meet the demand for flights on the heaviest travel days. Instead, it’s more cost-effective to be efficient with their finite resources by creating incentives for those who are willing to be flexible with their schedule when a flight is overbooked. Similarly, DR programs incentivize facilities for their energy flexibility—offering substantial payments in exchange for temporary energy reductions when demand is high.
Demand Response programmes function according to this same principle – when higher demand is detected, the participating clients temporarily shed load in exchange for significant financial compensation. This approach creates what is commonly referred to as a “virtual power plant,” or a resource that delivers capacity to the electric grid through simultaneous voluntary reductions in demand.
How to take part in a Demand Response programme
Simply contact Enel X and a member of our team will review your facility’s electricity needs and develop an optimal participation plan.
Once the enrollment target and participation plan is established, Enel X will enroll the site in the DR programmes and will establish an operational process to ensure the facility can respond in the event of a dispatch.
In Italy, after our participation in the UVAC pilot programme in 2017 and 2018, we will are taking part in the new UVAM pilot programme. Enel X also manages DR programmes in Ireland, the UK, and Poland. In Ireland and the UK, we are active in the capacity market, while in Ireland we also manage the DS3 programmes, which provides stability by reacting to fluctuations in frequency on the grid within seconds. In Poland, we are currently managing DSR emergency programmes while awaiting the opening of the capacity market scheduled for 2021, and we are participating actively in auctions, consolidating our foothold and positioning ourselves as leader in the DR market in the country.
Enel X is a world leader in the Demand Response market, after having brought the US company EnerNOC under the Enel X umbrella. We are currently active in 12 countries with more than 30 grid and utility operators that can sign DR contracts with national grid operators like Terna in Italy, National Grid in the UK, Eirgrid in Ireland, PJM or CAISO in the USA, KPE in South Korea and AEMO in Australia.
Outside Europe, Enel X North America is currently operating in the US and Canada through 28 public utility services and operators providing Capacity, Economic, Ancillary, Frequency, and Peak Demand Management services. In Latin America, Enel X is currently managing a Peak Demand Management programme in Chile, but is already exploring new market opportunities for the year 2019 that will involve other South American countries. In the Asia-Pacific region Enel X is managing DR programmes in Japan, South Korea, Australia, and New Zealand. We are operating in the ancillary market in the Japanese archipelago, and in South Korea we are active in the capacity and financial markets. Enel X has developed a wide range of programmes in Australia and New Zealand covering capacity, auxiliary services, and peak demand management, and is also participating in the frequency market in both countries, making an important contribution to grid stability.
A concrete example of how the Enel X Demand Response programme can have an impact on optimising a company’s energy management is the case of Kimberly-Clark. The leading global paper product manufacturer partnered with Enel X to maximize payments through the Demand Response programme administered by Ontario’s grid operator. As a result of our partnership, Enel X identified new opportunities to reduce energy consumption without disrupting operations at its plant in Huntsville, Canada, which increased the capacity delivered to the program from 500 kW to 5.3 MW. Since 2011, this energy reduction plan has delivered more than $2.3M in DR payments for the facility.
Enel X is constantly monitoring existing and emerging energy markets to identify new opportunities where Demand Response can help manage the impact of rising demand for electricity.
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