If demand could be controlled on the fly, we could do away with expensive and polluting coal-fired balancing plant, says Andrew Howe

There's a tug of war going on in the energy industry, and National Grid is at the heart of it. On one side, consumers and industry. On the other, environmental campaigners. Caught in the midst of this struggle, balancing supply and demand is becoming ever more complicated.

Demand on the grid continues to grow. We are using more power than ever before, yet at the same time pressure to reduce carbon emissions is mounting in the face of increasingly stringent legislation. It is clear that renewable energy sources must play a greater role in our energy provision. The difficulty is their predictably unpredictable supply, which complicates the issue of grid balancing, as does the rising reliance on nuclear power and the impact of the recently introduced Large Combustion Plant Directive.

The financial implications of balancing power supply in the usual way, by using coal-fired plant as spinning reserve, continue to escalate. However, in the wake of the credit crunch and huge fuel price increases, passing the cost on to consumers is, at best, difficult.

Smart meters
There has been much discussion within industry and government about smart metering as a way of reducing demand. In the US, "time-of-use" tariffs have been introduced, using the smart meter as a communication gateway to the consumer. However, the technology requires end-user response and its inability to provide an instant adjustment limits the benefits it offers grids and does little to alleviate the balancing problem.

Slightly further along the "smart" evolution is demand response technology. Certainly it addresses the two key shortcomings of smart metering: by adjusting power supply directly at appliance level, the onus is taken off consumers to take action. Not only that, but the potential is there to respond quickly to demand exceeding supply. But the inherent degradation of performance within its application makes it unlikely that it will be widely adopted without significant modification. Not only is it mono-directional but, crucially, the application of demand response technology is limited to appliances that do not need to be on all the time.

Demand response causes appliances or equipment to cut out completely in response to supply shortage. It generally gives them no way to come back on automatically once frequency balance is resumed, and is therefore disruptive to the consumer.

Dynamic demand
However, dynamic demand technology overcomes the challenges presented by both smart metering and demand response, and offers a workable solution to the problems associated with balancing supply. It measures the constantly changing variable determined by the balance between supply and demand - known as grid frequency - which decreases when demand exceeds supply and vice versa. This knowledge, combined with the fact that many domestic and industrial units, such as refrigerators, have inherent energy storage, forms the basis for the technology.

Dynamic demand is fitted in electrical appliances and devices and adjusts their electricity consumption within their control parameters, in line with the needs of the grid. Unlike smart metering, the technology automatically responds to grid imbalances on a second-by-second basis without human input. Unlike demand response, dynamic demand technology offers the adjustment to the grid with no loss of performance in the appliance to which it is fitted. This is the crucial feature of dynamic demand: automation with no impact on the consumer.

In the US, only 5 per cent of electricity consumers use some form of incentive-based demand response programme or time-of-use rates, and advanced metering has a penetration of only 6 per cent of installed meters, according to a report by the Federal Energy Regulatory Commission. These figures indicate a reluctance by consumers to integrate the new technology into their daily lives. This reluctance is perhaps unsurprising given the obligation on them to change their habits.

Instant response
The key advantages of dynamic demand are clear. It offers instant response with no effort on the part of end users. It affords significant cost reductions for the grid, by allowing it to run more efficiently. And it provides a cost-effective and logistically straightforward way of immediately reducing carbon emissions and, importantly, allowing enhanced renewables integration, protecting the grid from the inevitable changes to come.

In addition, the supply itself is secured against unexpected peaks in demand, or unscheduled breaks in supply such as those suffered by 500,000 homes and businesses across the UK in May this year. Although this break in supply was seen as a freak event, it was widely reported as a symptom of fragility in Britain's power infrastructure.

There are also financial implications of using dynamic demand. National Grid has forecast a spend of £544 million on balancing the grid for the financial year 2008/09, an increase of 13 per cent on the previous year. But that estimate has now spiralled to £770 million, which is passed on to consumers through the Balancing Services Use of System (BSUoS) charge. For July the charge was running at well over £2/MWh.
In a climate of rising fuel prices and with mounting pressure on suppliers to avert cases of fuel poverty, savings on a sum like this could be important. Dynamic demand technology can reduce the costs associated with traditional balancing and presents an attractive alternative to the current scenario whereby balancing power stations run inefficiently and uneconomically at reduced capacity.

Applications
The current lead applications for dynamic demand are domestic and commercial refrigeration and heating and ventilation systems. In the commercial sector, supermarkets and retailers represent a significant proportion - between 2.5 and 5 per cent - of the UK's total electricity consumption. It is not difficult to see why dynamic demand suppliers are targeting these major retailers.

If many millions of appliances were fitted with dynamic demand technology, it would provide a form of distributed battery, or virtual power station, in which electricity could be stored. Early research carried out by the Centre for Renewable Energy Systems Technology at Loughborough University shows that used together, these appliances have the potential for a large dynamic demand. In principle this can reduce demand more rapidly than a traditional generator could increase its supply. Widespread use of dynamic demand technology could displace all the short to medium-term balancing services, making the financial and environmental potential of this technology significant.
That positive environmental impact of dynamic demand is significant. National and international legislation on greenhouse gas emissions control is extensive and growing. The ability to reduce carbon emissions, given the burgeoning carbon trading schemes such as the Carbon Reduction Commitment in the UK, also opens the technology up to additional revenues.

CSR potential
But just as valuable, given the current public mood, is the corporate social responsibility potential of the environmental credentials of using this technology. A recent poll in The Guardian newspaper suggested that even in the current economic downturn, consumers believe that the environment should be a priority. Being green sells, and this is as true in the energy sector as elsewhere, with the images of carbon-belching power stations never far away. Estimates for the UK alone suggest that coal-powered balancing stations waste two millions tonnes of carbon dioxide each year. The perception that electricity suppliers are taking steps to alleviate at least some of their carbon footprint can be a very powerful sales and marketing tool.

Not only could dynamic demand technology remove the need for one of these coal-fired power stations, but it could also pave the way for the integration of more renewables to the grid. In recent speeches focused on the environment, prime minister Gordon Brown has revealed a plan to build 7,000 more windfarms in the UK and has said that there will be no enforced cap on the number of new nuclear reactors. These are laudable aims from an environmental perspective undoubtedly, but serious hurdles to jump for those charged with maintaining a stable electricity supply. Indeed, estimates for the increased cost of short-term grid balancing to manage the additional wind load vary from a 70p/MWh to £5/MWh, which will be felt by consumers through the BSUoS charge. These charges have already doubled in the past two years and look set to continue to rise over the years to come.

Dynamic demand technology has the capacity to counter some of the difficulties of balancing supply. As renewable energy becomes a greater part of the country's infrastructure, with the government seeking to meet European Union-set targets to derive 15 per cent of the UK's energy from renewable sources by 2015, dynamic demand could have a big role to play.

Saturated market
The time for dynamic demand technology has arrived. The aim is that response capacity will be built up over a number of years until the market is saturated. The pressures on the national grid are by no means limited to the UK - all over the world the energy industry is facing up to two key challenges. The first is meeting increased demand for power while cutting down on the number of coal-fired power stations. The industry also has the challenge of developing its infrastructure to accommodate the introduction of a significantly increased use of renewable energy. In developing countries this challenge is even greater.

Dynamic demand technology really does have the potential to transform the face of electricity supply throughout the world, and it's ready now. We just need to start using it.

Andrew Howe is chief executive of RLtec, a clean technology company that delivers solutions for the reduction of carbon emissions from generation. Web: www.rltec.com

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