National Grid rejects demand side balancing for the coming winter

National Grid has decided not to procure any Demand Side Balancing Reserve (DSBR) for the coming winter.

The announcement came after the results of the tender, which closed in June, “showed minimal volume would be available across this period”.

“DSBR was always intended as a transitional product to provide additional reserves ahead of the capacity mechanism,” it said in an open letter. The scheme was designed to target consumers who had so far refused to shift their demand or made use of embedded generation during peak times in response to pricing signals. “It is clear this has not been successful,” the system operator said.

The letter continued: “Our decision not to procure DSBR for 2016/17 has been made using all relevant information available to us at the time and following detailed analysis of volume over peak; giving appropriate consideration to the cost and expected benefit of DSBR and our licence requirement to procure services on an economic and efficient basis.”

National Grid will work with those capable of offering demand side reserve over the winter to see if any “alternative delivery routes” can be developed. It said it remains committed development of demand side response and will continue to encourage innovation through its Power Responsive campaign.

The decision not to procure any DSBR for this winter marks a significant turnaround for National Grid. Only last year the firm’s head of commercial operations at the time, Duncan Burt, told Utility Week that demand side measures would be used to meet “well over 50 per cent” of balancing requirements by 2030.

Last week Ofgem proposed giving National Grid an additional £4.5 million of funding for the Supplemental Balancing Reserve (SBR) and DBSR for the period 1 April 2013 to 31 March 2017. The firm had requested a £4.56 million increase. Ofgem said it planned to cut overall funding to National Grid by £185.4 million as part of a mid-period spending review.