Published on Monday, 7 January 2019
With the market experiencing constant development and transformation, the energy ecosystem is speaking a new language, the language of digitalisation, and it’s 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 has seen a growing number of conventional generating plants converted to renewable energy sources. This means that the old production model of a handful of large power stations burning fossil fuels to generate electricity is being transformed into a system of distributed generation in which clients too are called on to play their part. Energy efficiency is becoming the new buzz phrase, and companies throughout the world are moving towards new consumption models. Renewable resources are evolving constantly and the TSOs (Transmission System Operators) 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 with operators. The position of clients is changing too as they evolve from being passive consumers to become 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, then, seems to be the best way to meet the urgent requirements developing in this period of profound transformation within the energy ecosystem.
What is Demand Response?
Demand Response involves a request from the manager to modify energy consumption in order to provide grid reliability and smooth out the disparity between production and consumption. Commercial and industrial clients can thus provide a response to market signals, making their flexible loads available to respond to peaks in energy supply and demand. This gives the grid greater flexibility and stability, as well as being a more efficient use of infrastructure.
How does Demand Response work?
Smart management of energy flows is now possible, coordinating the different aggregators that act as mediators between the grid and the final consumer, an operation known as “dispatching.” In this way energy demand is modulated to match effective production and the energy supplier can ask clients to reduce or defer their consumption at specific times, offering a financial inducement in exchange. 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 is all this made possible?
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 referring to its flexibility suppliers managed via its Intelligent Platform. DR, therefore, is a service based on the use of third-party modifiable resources that the TSO can rely on through load adjustment, distributed generation and storage systems that can compete directly with the conventional power plants during the most critical periods. In every case it is the task of aggregator and client together to define load dependency in order to ensure that the client is able to operate at normal levels.
For a clearer explanation of what is happening, when we talk about Demand Response we are referring to the following four steps in this service:
The Demand Response revolution lies in the opportunity for companies to generate income. Put simply, they are compensated for their flexibility, because if the purchase price of the energy and the quantity used are both important factors, then flexibility represents a real added value that not only places clients at the centre of a decision process within 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 is sometimes delicate, like, for example during summer heat waves, when demand is extremely high. Now, with Demand Response, instead of having to generate more energy to add to the system, users can be rewarded for reducing their consumption and participating in maintaining the stability of the grid.
To use an analogy, we can posit the case of an airline company that needs a larger concentration of flights during the days of greatest passenger demand. It would be too difficult to expand their capacity permanently (in terms of aircraft, crews and open gates). As a result they choose a much more convenient solution, streamlining available resources, for example, incentivising travellers who are prepared to offer their time flexibility and are willing to take a later flight in the event of overbooking. Demand Response programmes function according to this same principle – when higher demand is detected the participating clients temporarily shed load, obtaining a significant financial inducement in return. This process gives rise to a “virtual power plant,” a network of energy users comprising hundreds of companies that voluntarily reduce their electricity demand when requested.
How to take part in a Demand Response programme
Clients interested in taking part in a Demand Response programme will have to identify – with the support of the Demand Response Customer Operations Manager – the industrial processes most suited to implement the load adjustment, in some cases adapting the production site to the measuring devices and/or actions requested. At this point Enel X will be able to adapt and activate the site within the existing DR programmes, the aggregate of the commercial and industrial sites, and will communicate the operational process to provide a successful response to the balancing orders sent by the grid operator. In Italy, after our participation in the UVAC pilot programme in 2017 and 2018, we will be taking part in the new UVAM pilot programme to be launched next year. In the rest of Europe, Enel X is currently managing 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 handle the suite of DS3 programmes, providing stability by reacting in just a few seconds to fluctuations in frequency on the grid. 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 Italia, 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, supported by Enel X EIS intelligent monitoring software, can have an impact on optimising a company’s energy management is the case of Kimberly-Clark. The leading global paper product manufacturer agreed to reduce its energy consumption by 500 kW at its plant in Huntsville, Canada, in order to take part in the Demand Response programme. As a result of our visits, the Ontario-based facility discovered how it could reduce the plant’s power needs by turning its machinery off for four hours without this having any negative impact on the production cycle. We at Enel X were able to act as intermediary for the Kimberly-Clark plant by managing electrical energy demand and identifying the moments at which to reduce energy consumption in relation to demand, creating a perfect synergy between the stability of the entire system and redistributing value along the entire supply chain.
Enel X is constantly monitoring the situation around the world to identify new opportunities in existing and emerging markets, because Demand Response is the best possible solution to the increasing demands on the energy market, in all the languages of the world.
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