Smarter energy use by industry could cut U.K. electricity demand by 75 percent

down non-essential power for short periods of time and that’s a far more environmentally friendly option than building more power stations, and will reduce peaking power issues as the grid becomes increasingly congested.”

The study also found that if businesses are given more warning (four hours or more) of the need to reduce their electricity use, then reductions in demand could be doubled in some cases. One example from the study showed that, given sufficient warning, warehouses could pre-load their fridges and build up cooling, which would allow fridges to be safely turned down and so lower electricity use when the grid needs it.

Rewarding industry to reduce their demand at critical times could make a significant contribution to the U.K. electricity “capacity market” being proposed in the government’s Energy Bill the study concluded. Under a capacity market contracts will be awarded to supply electricity (or reduce demand) at times of peak demand on the grid to help ease the potential electricity shortage as electrified transport increases and aging fossil-fuel power stations are taken off-line.

The study found, however, that a failure to explicitly cater for demand characteristics (for example, the need for longer warning periods) in the policy development, could lead to an inadvertent promotion of standby generation, such as diesel generators, rather than genuine demand turn down.

Background
A UK “capacity market”  is one of the electricity market reforms proposed in the government’s Energy Bill to help balance future electricity supply and demand while reducing climate damaging greenhouse gas emissions. A Capacity Market would reward the ability to provide electricity at critical times of system stress by auctioning contracts to electricity suppliers to provide electricity when supply is short.  A Capacity Market would provide a financial incentive for investment in electricity generation. Generation, however, is not the only option. Reducing electricity demand at these times (demand response) could also help, if implemented fairly and sensibly into the Electricity Market Reform policy. To date, less attention in the market design has been given to demand response and the extent to which it might contribute to a capacity market.

The Energy Bill, which is currently in progress through Parliament, sets out reforms aiming to deal with three major areas affecting electricity in the United Kingdom:

• Security of supply with a diverse range of energy sources: gas, renewable, nuclear, carbon capture — in sufficient quantity to minimize the risk of shortages
• Meeting the challenge of climate change by investing in low-carbon technologies
• Affordable electricity to individual and industrial consumers, maximizing benefits and minimizing costs of the change.

There is no immediate threat to security of electricity supply in the United Kingdom. At the end of 2010, the United Kingdom had a total of 83GW of electricity generating capacity connected to the high voltage transmission network, and peak demand was 61GW. There is, however, a risk to security of electricity supplies in the future, as around a fifth of existing capacity is expected to close over the next decade and more intermittent (wind) and less flexible (nuclear) generation may be built to replace it.