Demand Side Response And Distributed Energy: Drivers, Barriers, And Benefits

1. Identify and explain the factors affecting energy resources availability and management and the impact of the rising energy demand.
2. Critically analyse the influence of current and new policies and regulation on energy availability and management
3. Appraise the impact of technological advancement on the energy sector

The application of Demand Side Management (DSM) strategies by Energy Utility companies have recently been championed as a measure to bring about desired energy efficiency measures in the United Kingdom. (LO2)

The Demand Side Response

The demand side response is concerned with the intelligent use of energy. With the help of demand side response services, businesses and customers can turn up, down or may shift in real time. The demand side response is regarded as the vital tool in helping to make a secure sustainable, secure and affordable electricity system (Behrangrad 2015). It helps in understanding that the peaks in the demand and fill in troughs, particularly during the instances when the power is more abundant, affordable and clean.

For the business and the customers, the demand side response is regarded as the smart method of saving on the total costs of energy and reducing the carbon footprint. By promoting greater and wider participation the problems of industry can be turned into the customer opportunity. The current report is based on critical analysis of the demand side management strategies and explaining the drivers of and barriers to their implementations. Considerations would also be paid in respect of technological and financial trends bought in by the regulations in the United Kingdom.

Demand side responses is regarded as one of the key demand management measures that are available to assist balancing the network. The demand side response addresses the balancing constraints by adjusting the energy consumption with the objective of mitigating over of under supply. By altering the profile of the demand and growing the flexibility of the demand side response, DSR can help the market of electricity to adopt the availability of the supply and demand requirements (Spence et al. 2015). The Demand side responses inspires the customers in undertaking short term shifting of demand i.e., to increase and decrease the consumptions in order to increase the export or take up the excess energy from the electricity network.

There are other demand side management tools that comprises of energy efficiency and distributed energy. The energy efficiency helps in reducing the demand permanently and comprises of the measures namely the building insulation, more efficient lighting solutions, with higher efficiency boilers etc. Distributed energy can be defined as generation of power on the system such as system for storage and standalone distribution units etc.

The respondents from interview has stated several benefits of demand side response and have even argued that demand side response could produce value for the GB system by introducing greater amount of efficiency in respect of system capacity (Li et al. 2017). Introducing greater efficiency helps in guaranteeing sufficient supply of security at a potentially lower costs than the thermal generation. Another benefits of demand side responses is potentially reducing the greenhouses gas emission by lowering the demand for higher emission peaking plant to create a balance in the system. In context of UK this is important in moving towards the low carbon economy where there will a constraint in the system by the intermittent generation (Goulden et al. 2014). Making effective utilization of plant help in reducing the greenhouse gases emission and resource consumption.

Benefits of Demand Side Response

An acknowledgement has been put forward by interviewees which states the benefits of DSR is difficult to quantify, even though some have pointed in the direction of specific papers for indicative estimates (Gelazanskas and Gamage 2014). For instance, a report specially made by Energy UK public data states that 20% of the peak demand of 12GW can be successfully shifted on demand. A report prepared by the sustainability first defined that the technical potential of demand management is capped at system peaks which ranges between 33% during winter and 29% during summer.

There were several respondents of interview that have expressed their concern that inadequate measures were adopted to develop the market for the demand side response and demand side management in GB. The respondents also mentioned that a number of barriers is present in the roll out of DSR products and technology (Wu, Tazvinga and Xia 2015). The respondents from the interview stated number of barriers in the disposition of demand side response. The key areas include concerns relating to market structure and regulatory arrangements.

The network of distribution is presently built with sufficient capacity of network to accommodate peak flows. Consequently, there wasn’t any requirement of network operators to enthusiastically administer their networks (Arteconi et al. 2017). The increasing diffusion of renewables together with distribution networks and continuous decline in industries and large scale demand the system needs further investment in flexibility that can be provided by demand side response. Demand side response can be viewed as one of the possible solution but requires evolution in elasticity market and commercial arrangements to encourage the suppliers, aggregators and consumers.

Another barrier to demand side response is the economic barriers. Consumers needs financial incentives to alter their patterns of electricity consumptions. This needs investment in terms of both the money and effort by the customers (López et al. 2015). It also exposes them to the risk of not delivering services for which they liable for penalties. In order to make the participation attractive the benefits should offset the costs and risks.

The regulatory requirements states that the energy policy of the UK government has largely focussed on permanent reduction of demand with the measures namely the Green Deal and the Energy Saving Opportunity Scheme (Finn and Fitzpatrick 2014). Most of the demand side responses have the access to the wholesale and the balancing market. Hence the inability of the demand side participants to access the balancing markets and the wholesale markets may create a knock on the effects of capacity market.

Barriers to Implementation of Demand Side Response

Distribution can be defined as the embedded generation. Distributed Generation is regarded as the electricity generation plant which is connected to the network of distribution instead of the transmission network (Behrangrad 2015). There are numerous types and size of distribution generation that included combined heat and power plants, wind farms, hydroelectric power or any one of the innovating smaller generation.

Over the recent years a dramatic growth has been noticed in the number of distribution generators that seek to connect with the distribution network. Carrying forward the dramatic growth in the volume of connections there has been concerns where customers are experiencing certain numbers of difficulties in navigating their way with the help of connection procedure. Distribution network is referred as the variety of technologies which enable the supply of the power at or near the solar panels, heat pumps and batteries (Finn and Fitzpatrick 2014). These small scale assets is denoted to distributed energy resources and as a result of this they are turning out to be increasingly cost effective and in demand.

Distributed Generated resources establishes more sustainable and cost effective mix to the consumers. The growth is largely driven by the competitiveness of the solar, wind and battery technologies. Identical to almost every industrial activity, the development of these distributed generation has resulted an exponential learning curve (Sheikhi et al. 2015). This is because with the increase in volume and building of knowledge there is a drop in price. While prices have not yet dropped to the level of whole sale electricity price level.

The distributed energy responses have additional benefits such as reducing the needs of the expensive peaker plants, diminishing spending on the new transmission and lines of distribution that increases the reliability of energy network. As the distribution energy responses turn out to be more prevalent, they provide an opportunity to supplant the traditional baseload generation and creates a disruption in the structure of the energy industry value chain (Goulden et al. 2014). One of the key opportunities of acquiring the revenue is installing the distributed energy resources in the households. The residential consumers will be able to generate and store the energy which will further reduce their dependence on the variability of grid price and enable them to sell energy locally at the selected times. A connected community at homes would help in facilitating the energy collaboration by communicating with each other to recognize the best time of purchasing or selling energy.

Distributed Energy Resources

The distribution generation can help in benefiting the environment given that its use lowers the volume of electricity that should be produced at the central power plant. This can in turn lower the ecological effects of the centralized generation (Sheng et al. 2016). The current cost effective distributed generation technologies can be considered useful in generating energy at households and business that are consuming renewable source of energy such as solar and wind energy. Additionally, the distributed generation can help in harnessing the energy that may otherwise be wasted for instance through a collective heat and system of power.

By making use of the local energy resources the distribution generation helps in reducing or eliminating the wasted energy which happens during the transmission and distribution in the electricity distribution system (Sedghi et al. 2016). Despite the benefits of distributed generation there are certain negative environmental impacts.

The distributed generation system need a footprint and as they are situated close to the end users, there are some distributed generation system which may not be pleasing to the eye and may result in land usage concern. The distribution generation technologies that comprises of incineration especially burning fossil fuels can generate several similar sorts of effects since bigger fossil fuel power plants causes’ air pollution (Muñoz-Delgado et al. 2015). The impacts from the bigger fossil fuel might be smaller in scale but might be closely located to the populated areas. There are some distributed generation technologies namely the waste burning, biomass burning and collective heat and power might need water for the purpose of steam generation and cooling (Rahbari-Asr et al. 2014). The distributed generation system which makes the use of combustion might be less significant than the centralized power plants because of the efficacies of scale. Distributed energy technologies might result in undesirable ecological problems upon the conclusion of their useful life when the same is substituted or detached.

UK has already made commitment of reducing by 34% in the emission of the green house by the year 2020. This could be regarded as the big step forward however in actual word it is very unlikely to be considered as the big step of stopping temperatures rising to levels which results in extreme weather happenings and droughts. Hence a developed nations like UK is required to go further (Sheng et al. 2016). This does not signifies that dropping the standard of living would help in reducing the emission. Wastefulness is rightly build into the system that is used by the individuals. There are several power plants that emits around two thirds of the waste contributing to the emission with homes and office structures are poorly insulated. However, the government research estimated that people in UK can reduce the usage of energy by 30 per cent across the board and save around £12 billion each year through reduced bills and by improving the energy efficiency.

Benefits of Distributed Energy Resources

The UK research council have issued supervision for the native public and other public regarding the lower carbon emission in their areas.  A guidance has been issued relating to the greenhouse gas emission reportage and the procedure of publishing for the native authorities (Adefarati and Bansal 2016). The objective of this direction is to inspire the native authorities in reporting the emission and helping them to submit and understand the numbers. The guide to the funding energy efficiency issued in the community segment provides explanation regarding the availability of the choices which is obtainable for the public sector organization to assist measures in fund efficiency.

Additionally, model energy performance contracts has been issued as the method intended to help the public sector organization to remodel their buildings by applying the energy preservation actions as the means of reducing carbon emission and attaining substantial amount of yearly cost savings.

Programmes such as street lightning toolkit launched during February 2015 is viewed as the tool of assistance to the local authorities in applying the street lightning or exterior lightning projects which  would help in improving energy efficiency with reduced consumptions of carbon and generating significant financial savings. The toolkit is designed with financial tool with the objective of helping the local authorities to compute the probable savings costs with separate guidance of document incorporation on the developing business (Barr and Majumder 2015). Energy efficiency strategy has been set down to maximise the current energy efficacy strategy and comprehend the IK wider energy efficiency policy over the upcoming times.

The demand side management helps in reducing the loads of electricity from the end users or the customers with the help of efficient energy and load shipping measures (Adefarati and Bansal 2016). Successful demand side management programs is encouraged by the requirements of state incentive and fiscal arrangements that decrease the quantity of energy usage by decreasing the requirement of new generation sources.

On the other hand the welfares of energy efficient technologies is computed by matching the avoided generation expenses and by avoiding electricity subsidies with the loss of revenue from the lower sales of electricity and subsidy of energy efficient technologies. The demand side management programmes is used to cut down or lessen the supplementary peak or base of weight generation capacity along with the distribution facilities (Muñoz-Delgado et al. 2015). The real advantage under the higher developed economies is that new equipment is considered to be far cheaper rather than improving the current equipment. According to the findings of World Bank losing such opportunity rather than building new cost-cutting would result in serious monetary, ecological and community consequences.

Environmental Impacts of Distributed Energy Resources

Utility demand side management strategies are regarded as the measure of resources acquisition. In other words it aims in balancing the options of supply side and measures of demand side options at the macroeconomic level till the marginal costs of the traditional and alternate energy supply side choices is equal to the marginal cost of the demand side choices.

According to Sheng et al. (2016) the end use energy efficiency improvements offer several benefits. This benefits includes higher competence with direct and indirect monetary benefits to the customers and community by lowering the requirement for supplementary supply, distribution facilities, lower customer energy costs and mitigating the risks from the yet to come price variations. Therefore, it can be stated that efficiency investment can help in stimulating the economic growth with improved energy security in UK.

UK must offer financial incentive to promote the use of the energy efficient lightning. Several scholars have viewed this programmes as the primary step towards the lease cost utility planning however concludes by stating that new policies requires removing the financial rules that favour investment in supply to investment in customer or end-use efficiency (Goulden et al. 2014).

Conclusion: 

Following an in depth analysis a conclusion is reached that peak demand reduction with better building envelop lower energy cooling and heating along with social practices would help in reducing the energy consumption. The community level and city level energy efficient technologies would help in providing guidance for the urban planning and implementing community design along with the management of energy. The study evidently puts forward that integration of the information, communication and the technologies of renewable energy at the building, community and city level intervention would help in reducing the energy emission.

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