quote
menu

What is demand side response?


As part of our series on energy security, we take a look at demand side response (DSR).

Traditionally, business and domestic energy customers were passive consumers of energy and demand peaks were dealt with at the point of supply: if there was a surge in demand, more power stations were brought online. If the capacity margin (the difference between energy supply and demand) was narrow, the only way consumers would notice the difference was in the cost of energy. DSR seeks to redress the balance by creating flexibility consumer side too. It does this by incentivising customers to use less energy during peak periods.

What is demand side response?

DSR involves getting paid or incentivised to use less power at peak times.

As we move to a lower carbon energy mix, overcoming intermittency of supply will be a vital. During times of high demand, companies will switch to backup generation or turn down non-essential appliances. This can be automated (by a DSR provider) or controlled by the end user. As well as helping the government meet their emissions targets, businesses will also save on energy costs and reduce their carbon footprint.

In 2015 The National Grid began a huge push on DSR, pledging that our energy system would rely on it for over fifty percent of the time by 2030 . This push was encouraged in part by new technology –  the introduction of smart meters has made it possible to get almost up to the minute information about energy usage. This has allowed the government to expand DSR by introducing so-called time of day tariffs. If you are on one of these tariffs you will be incentivised to lower energy usage during peak times. There are also DSR programs where businesses receive payments through the Capacity Auction for reducing consumption when demand is high.  

Whilst DSR is certainly a priority for the National Grid, surveys show that is probably isn’t for consumers, partly due to a lack of understanding about what it actually is.

What are the benefits of demand side response?

Managing energy peaks at supply side has a number of drawbacks – oversupply is costly and wasteful and the investment doesn’t necessarily provide any benefits. Take for example the £180 million that was spent on a supplemental balancing reserve that has never been used. Additionally if the UK buys energy at peak prices, it pushes up costs, which is never good news for consumers.

If you are on a half hourly meter, you will be billed for triad charges. These charges cover energy usage in peak times, and have increased 80% over the past five years. They could make up 15% of your bill! By using less energy during triad periods you can slash your energy bills. One study found that the UK’s energy bills could be cut by over £8 billion if businesses embraced DSR.

Many businesses worry that DSR will be disruptive – surely it will be a pain to have to shut down appliances? However inroads are being made so that changes in your energy usage should be almost imperceptible, especially if you have a backup generator – although these aren’t essential to take part in DSR.

DSR isn’t just for large businesses – businesses of all sizes have energy flexibility, and can therefore benefit. In fact, according the the WP Group:

‘Industry specialists have estimated that a typical participating business can expect to see a return of around £20,000 a year from DSR. This amounts to about 2% of its total annual bill.’

How to get started

Contact your regional Distribution Network Operator (DNO). You can find your DNO here. They will be able to tell you more about any DSR trials they are running, and how you can get involved.

Are you interested in DSR? Let us know about your experiences on Twitter @switchmybiz

Related Articles

DCP228 and Business Electricity

What is DCP228? DCP228 is a regulation to be introduced by Ofgem in April 2018 which will change the way busin...

Read More
energy news

DCP 161 – Excess Capacity Charges

If your business uses a Half Hourly (HH) meter for its energy supply, make sure you’re ready for DCP 161...

Read More
Scottish Power logo

Total Gas & Power

Total Gas & Power is a business energy supplier, wholly owned by Total SA. It has been a leading business ...

Read More
Excellent, 9.8 / 10

Mark Weeks and the rest of the team…

"Mark Weeks and the rest of the team were helpful and efficient, our switch has gone through smoothly. The deal was great too."

This review was posted by Satinder on the 23rd of October 2018

Lorraine - Excellent experience dealing with you!

"I have been talking to Lorraine over the last couple of weeks about switching our gas/electric supplies. Lorraine was more than keen to help and went to a lot of trouble researching the best prices on the market for us. These were all confirmed by emails which allowed me to compare with our current supplier in a clear way. Ultimately our current supplier made an offer we felt was comparable to the best Lorraine had found and we decided to stay with them (B.Gas) but I am very grateful for all of the help she gave me - for no result as it happens. A pleasure dealing with you Lorraine!"

This review was posted by Richard Weekley on the 22nd of October 2018

Honest brokers who will actually save you money!

"I dealt with a gentleman called Mark Weeks. He was extremely efficient, helpful and humerous. He saved me 6 pence per/k/hr, quite the saving when your annual bill is over £12,000. I will be using this service again for my water bill!"

This review was posted by EDWARD Wickman on the 22nd of October 2018

Cheryl Sreenan delivered excellent…

"Cheryl Sreenan delivered excellent customer service, professional and polite but very natural with it - it's great to deal with someone who knows their job and cares about their customers. Great savings too and a quick switch which is always good. Will be looking to switch other businesses when they are out of contract."

This review was posted by Jackie Reeves on the 22nd of October 2018

Excellent service from Pamwan Johnson

"Excellent service from Pamwan Johnson. Polite, professional and was able to provide a much better deal than I was able to secure direct. Would definitely use this service again."

This review was posted by Andrea Kirkham on the 22nd of October 2018