Demand Management to Aid Renewable Energy Expansion

As more intermittent renewable capacity is added to grid networks around the world, the need for greater system flexibility in order to cope with the variable supply is growing. In parts of the Europe, grid operators complain that balancing the system is becoming more and more difficult as new renewable sources are added, requiring ever more complex management techniques, as well as repeated use of polluting and inefficient standby capacity. Surges of solar and wind power are often not fully utilised, causing some to question the wisdom of adding further variable renewable capacity.

In the absence of cost effective storage, a partial solution appears to be increasingly sophisticated demand management, which is able to balance and absorb both the anticipated and unexpected fluctuations in renewable generation. By aligning peaks in demand with peaks in supply, systems can make far more efficient use of renewable surges, while at the same time cutting back on the need for polluting fossil fuel-based reserve capacity to balance the inevitable falls in renewable power and spikes in unmanaged demand.

Demand management systems are also able to cope with far more sources of power, making them an important element in facilitating the move towards distributed generation, with its greater potential for on-site renewables. 

Evolving Technology

Currently most demand management is done through contracts with large energy users that are “interruptible” during peak demand hours. But now smart meters and new monitoring systems are providing more real time data and ever greater system control, while cloud technologies are under development that could expand the control of demand to hundreds of thousands of individual consuming assets across the entire day, rather than just at times of peak demand.

Kimberly Getgen, VP of Tollgrade Communications said monitoring the load on medium voltage grids doesn’t affect consumers, and becomes more important as more variable supply from renewables is brought on-line, helping to “run the system smarter and put off capacity expansion.” In the U.K. she said regulator Ofgem is currently sponsoring a number of monitoring projects because it wants to integrate more low carbon technologies onto the grid. In Germany, where the level of renewables is highest, monitoring is particularly important if the grid is to continue to be effectively balanced — part of this year’s summer peak solar production, which at times represented over 50 percent of total demand, had to be exported or was wasted. 

Analysts at Navigant Research expect annual spending on demand side management (DSM) services in Europe alone to grow from $139 million in 2013 to $777 million in 2020, with new technology driving ever more sophisticated control and changing the way power markets currently operate. “We forecast that DSM is poised to transform energy markets,” said Navigant analyst, Eric Bloom.

The potential for demand management is enormous. Already peak demand can be many times average levels for any particular day, while recent forecasts from the International Energy Agency suggest it could rise further — for example, in China peak demand is expected to rise 200 percent by 2050, while overall demand is only expected to rise 152 percent. The IEA believes that smart grids and associated technology can “make more efficient use of generation assets,” including renewables.

Power of the Cloud

In the case of deregulated markets, particularly the U.K., new cloud-based systems — using advanced communications and software technology from the mobile phone sector — are being developed to shift the energy use of many individual consuming assets from one time period to another. This contrasts with fitting hardware to monitor usage or that will trip out when certain parameters are reached, and can provide energy trading opportunities in markets by moving demand to cheaper periods, including when renewable energy is available.

“Smart grid technologies show strong potential to optimise asset utilisation by shifting peak load to off?peak times,” said Marc Borret, CEO of Reactive Technologies, a DSM provider. “This type of demand management service can balance grid systems by using demand flexibility across hundreds of thousands of small devices.”

Customer Driven

While aggregated demand response should make it easier for grid operators to balance their systems, it is end-users in a deregulated market that most benefit from cloud techniques to move demand to cheaper periods of the day — the timing of which can vary and are likely to become less predictable as more variable renewable supply is added. So in competitive markets, it is the market mechanism that is likely to drive adoption of this technique, as much as central planning from grid operators (although this would be the prime driver in regulated or monopoly provider markets).

Mr Borret said that while cloud-based software platforms can deliver a huge aggregated response, no one should notice on the consuming end — there is no shutting off of demand. “Surges in renewable power can be effectively utilized, which would avoid instances such as those seen in the U.K. recently, where the grid operator paid wind producers for not generating power during periods of low demand.”

“By using the cheapest energy, a share of the saving can be passed back to the customer for providing the flexibility,” said Borret. “For example, if a company wants to keep all buildings heated to 21°C, a range of just plus or minus 0.5°C allows us to vary demand. The wider the range for that customer the more value can be created. By aggregating these responses, value can be generated in deregulated markets such as the U.K., by taking advantage of the half-hourly changes in prices that reflect the changing balance between supply and demand.”

Mr Borret said U.K. utilities were aware of and open to the new technology, especially as “customers get this and are now demanding the service from their energy suppliers.” Large consumers with multiple sites and many consuming assets would be able to make the greatest potential savings, and were most likely to be early adopters of the new cloud-based services, he added.

DSM has huge potential to play a meaningful part in moving to cleaner, greener and hopefully lower cost energy systems. To date it is, however, only a small part of most government energy strategies, with policy stuck in the traditional linear supply chain mind-set — focused on adding additional capacity in order to satisfy continually rising peak demand. Nevertheless, competitive markets alone may be enough to drive demand management using cloud based techniques, simply because it saves customers money.

Lead image: Wind turbines and transmission via Shutterstock

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Jeremy Bowden currently works as a freelance journalist and energy analyst, serving a variety of client’s across the world, with work ranging from editing and features, to in-depth reports and public relations material. His experience spans over twenty years in the energy, specialist energy media and utility sectors in a variety of positions in both Europe and Asia, including five years at IHS in Singapore as Midstream Manager for the Asian region, followed by a short spell as IHS-CERA Associate Director, Emerging Markets. Before IHS, he was employed as Senior Asian Energy Correspondent for Dow Jones in Singapore, where work included contributions to the Asian Wall Street Journal. Prior to Dow Jones he worked at Energy Argus for five years in London and Singapore, where he was editor of the daily Asia-Pacific refined products news and price report. Jeremy also reported for Argus and PH Energy in the early days of the deregulated UK gas market, and spent four years involved in regulatory reporting for Thames Water. His qualifications include a Master’s degree in International Business and Finance from Reading University in the UK, and a degree in Economics.

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