Manufacturers shy away from UK’s demand reserve scheme

19 June 2014 08:26 Source:ICIS

A senior policy adviser to the UK manufacturers’ organisation has warned that a proposed scheme to entice large energy consumers to reduce consumption during peak winter periods does not have the unanimous support of the industry.

Last week, transmission system operator National Grid revealed details of a tender process for its new demand side balancing reserve (DSBR) service, designed to increase supply margins during peak winter working day hours by encouraging companies to reduce dependence on the grid ( see EDEM 10 June 2014 ).

National Grid has targeted 330MW of reserve capacity for the upcoming winter, with a substantial jump to 1.8GW for winter 2015/16.

Respondents to a survey earlier this year indicated that this winter’s target would be comfortably met, while up to 1GW of reserve capacity would be freed up from the DSBR service for winter 2015/16.

But while the industry is confident that this winter’s reserve target will be achieved, Richard Warren, a senior energy and environment policy adviser to UK manufacturers’ organisation EEF, has raised doubts about the service meeting the following winter’s target.

“This winter is not an issue. The challenge is next winter. In the manufacturing sector, there is a lot of demand side management already,” Warren said.

“There needs to be additional benefits to manufacturers as they don’t want to be in the business of demand side management.”

Although the current design of the DSBR will ensure companies are compensated for forfeiting access to the grid, Warren hopes other businesses beyond the manufacturing sector will be able to engage in the required supply load management.

National Grid has designed an ancillary service called the supplemental balancing reserve (SBR), which will also contribute to the 1.8GW target for winter 2015/16. The SBR is intended to guarantee the service of some mothballed power plants in a back-up capacity for peak winter periods.

Therefore the prospect of heavy industries that are traditionally reliant on grid power not entering the DSBR tender process will place more emphasis on the SBR to deliver the necessary capacity.

Expressions of interest for participation in the service have amounted to 2GW of potential capacity, National Grid has said.

But some manufacturer associations have been open in their reluctance to back the DSBR proposal by highlighting difficulties that would be encountered by energy intensive industries attempting to reduce power consumption at short notice.

In responses to a consultation ran last year by National Grid on its DSBR proposal, both the Chemical Industries Association, which represents chemical and pharmaceutical businesses, and the Confederation of Paper Industries indicated that their members’ dependence on continuous grid connection would make them unsuitable for participation in the service.

Yet National Grid remains confident that the expressions of interest will crystallise into something more substantive during the tender process.

“From our perspective, we are in regular dialogue with a range of companies on these initiatives and are pleased with the response we’ve had to our DSBR and SBR tender,” a spokesman said. Henry Evans

By Henry Evans