Demand response will be a far cheaper option than storage for balancing the increasing variability on the grid from renewables, according to professional services firm Accenture.

“At first, you might think that there’s a need to invest in flexible solutions like storage, which can be expensive,” says Sander van Ginkel, managing director of the company’s European Utilities Strategy practice.

"But of course, demand-response may be a cheaper solution, leveraging demand-side assets to make them more active in the system and avoid additional investment, be it connected home technologies or utilising storage that’s already in place such as electric vehicle batteries."

Accenture’s recent report, Flex and Balances, explains that as more variable renewables come onto the network, the amount of flexible capacity — traditionally fossil-fuel plants and pumped hydro, but increasingly batteries — needed to balance the grid also rises. Yet as the grid gets smarter, through digitalisation, this flexible capacity will be needed less often.

“If demand [response] is not going to actively participate [in the market], balancing the grid is going to be really costly,” van Ginkel tells Recharge.

But if demand response is ever to become a significant fixture, changes will have to be made in the energy system.

“Early on, there’s a need to redefine the regulation and the market framework,” says van Ginkel. “But for me, the process really begins with the customer, specifically with developing [demand-response] services for the customer.”

These services — which would include controlling internet-connected appliances and heating systems, as well as electric-vehicle smart-charging — must be so easy to use that the customer will not even have to think about it. They will also have to be connected to real-time (or close to real-time) wholesale markets, where prices vary according to the supply and demand on the network, explains van Ginkel.

“And there should be incentives for the customer so that there's money on the table if they’re going to participate,” he says.

Van Ginkel explains that technology will not be the barrier for increasing demand response in the energy system — smart meters are already being rolled out, IoT (internet of things) technologies like smart heating already exists, while the grid is increasingly being digitalised with sensors and automated substations.

“I think the technology to measure everything is in place. But I think there’s some work to do on the forecasting. Can we really predict where there will be congestion issues in our grids sufficiently early that we can build it in our grid investment programmes?

“TSOs [transmission system operators] used to just have to know the number of [grid] connections and where they are connected in the grid. Now it’s the number of connections and what is the load pattern — and it’s not a fixed load pattern, it’s a dynamic load pattern.”

The bigger issue, van Ginkel says, is how to intelligently connect demand-response equipment and services to the network. This will require what he describes as a “platform” — a kind of operating system or web browser that works with both distribution and transmission networks.

“In the first instance, you could have one or two [platform] players who are implementing that, regulatory area by regulatory area. But you need, at a certain point in time — not too early, not too late — to standardise.

Could this single grid-wide energy-management platform be based on blockchain?

“To be honest, I think blockchain may be a little hyped,” says van Ginkel. “From a technological viewpoint, there are technical constraints in the amount of transactions that can be run through a public blockchain. If you think of active demand, where all consumers are active [in the market] and the amount of transactions, it will make it tricky to do this in a blockchain.”

Many arguments in favour of blockchain revolve around a lack of trust in the management of personal data, he points out.

“You don’t need blockchain for that. We have a very reliable system and the trust among the public, here in Western Europe at least, is pretty high.”

Transition

Demand response 'far cheaper' than storage in renewables-powered future