Octopus: Flexibility service can be scaled up to balance grid

The success of this winter’s Demand Flexibility Service (DFS) shows that it offers a “scalable” mechanism for balancing the grid during periods of stress, Octopus has claimed.

The supplier was one of the main suppliers to participate in a series of exercises, run by the National Grid Electricity System Operator (ESO) between November and April, when customers were offered money off their bills in return for reducing or shifting their electricity demand at times of constrained supplies.

Around 1.6 million households and businesses took part in the DFS over the winter, saving 3.3GWh of electricity, according to the ESO.

Lucy Yu, CEO of the Octopus’ Centre for Net Zero, told a panel session at the Innovation Zero conference in London that the supplier’s analysis showed that its customers demonstrably changed their energy consumption patterns during the exercise.

She also said that the DFS has put to bed the argument that persuading customers to shift demand would never play a “scalable” or significant” role in balancing the grid.

Speaking at a conference in March, Scottish Power chief executive Keith Anderson dismissed as “total nonsense” the notion that offering customers small discounts would achieve meaningful reductions in demand.

Yu said: “That’s not what we saw with the demand flexibility service over the winter.

“We saw nearly 3GWh of energy shifted away from peak periods. This is very significant. This is not an indicator of a behaviour or a service, which is not scalable. In fact, it’s quite the opposite.”

The analysis also showed a “greater per household” average electricity reduction on the coldest days and that customers could be relied upon to shifts consumption intraday  when asked to do so at short notice, she said: “This is very important because this starts to bring us closer to thinking about really balancing that supply and demand at something beginning approaching real time.”

Yu added there is “much more potential to be unlocked” through “intelligent automation” of the kinds of demand reductions and shifts seen in the DFS, which during last winter’s exercise remained a largely manual exercise.

Octopus Energy said nearly 700,000 of those participating in the DFS were its customers, the largest number for any supplier.

Sarah Merrick, CEO of renewable energy platform Ripple Energy, told a different panel session at the conference that Ofgem and the National Grid had failed many years ago to anticipate surging demand for network infrastructure, which has resulted in renewable energy developers now facing decade plus long waits for grid connections.

“None of this is new. We know roughly where the solar is going to be, roughly where the wind is going to be and we know where we need to build the grid to get it connected.

“The fact the National Grid and Ofgem have sat on their hands for 15 years is just crazy because it is going to cost consumers so much more than it needs to. The short-term view of Ofgem, in terms of protecting consumers, is now beginning to come back to bite them.”

She said Ripple’s pipeline of projects is still very healthy because the developers, which the company is working with, secured their place in the grid connection queue years ago.

However Merrick warned that grid connections will be a problem for all companies in five to ten years unless existing blockages are fixed.

“If you can’t connect to the grid, you’re not going to have a supply chain because there’s not going to be any projects getting built: it’s going to affect absolutely everyone.”