Andrew Howe, RLtec, UK
Industrial and commercial energy users are facing a ‘double whammy’ a general economic slowdown on one hand and record energy costs on the other.
The price of oil has hit highs never seen before, in real terms, and with the price of gas and power correlated to the price of a barrel of crude, it is perhaps no wonder that once vanquished spectres of the 1970s oil shocks and stagflation (an economic situation in which inflation and economic stagnation occur simultaneously and remain unchecked for a period of time) are looming once more.
Controlling energy costs is a serious concern, and one that both industrial and commercial consumers have been grappling with for some time.
Efforts have largely been focused on energy efficiency and reducing consumption, with a corresponding growth in data management, meter bill reconciliation, smart metering and of course, consultancy services. In addition, energy buying is moving away from the procurement-only function to a more risk-focused trading operation.
These measures are an essential part of managing energy consumption and its resultant costs. But while they help control an individual company’s own outgoings, they do not help control costs that large utilities like the UK’s National Grid incurs and passes on to its users.
In fact, between 4-5 per cent of each bill consists of the ‘Balancing Services Use of System’ (BSUoS) charge, which is levied by National Grid to cover the costs of ensuring that demand across the whole grid consistently matches supply.
Maintaining Grid Stability
Balancing is a key function of any grid system operator. Since electricity cannot be stored efficiently or effectively, grid system operators must have mechanisms in place to maintain a constant balance between generation output and the power consumed by industry and households.
However, maintaining that grid stability is far from straightforward, and is certainly not cheap. The grid is in a constant state of flux, as levels of consumption and generation alter on a second-by-second basis.
This goes beyond the predictable daily patterns of consumption peaks and troughs, based on known behavioural habits. Within that daily pattern of domestic and commercial life, there are constant variations in demand taking the form of a series of smaller, random alternations.
The current solution deployed by grid system operators across the world is to deploy balancing power stations, which provide rapid response to changes in demand. Known as spinning reserve, these plants run at reduced capacity, ready to supply additional electricity at very short notice.
Unfortunately, this method of energy generation is both financially and environmentally inefficient. The plant is designed to operate at full power for optimum energy efficiency, not when partly loaded.
In addition to the inherent inefficiency, the operators of the power stations must be compensated for the lost generating opportunity, plus wear and tear to the control systems and steam valves that control their output. Furthermore, although fuel is burnt the resultant electricity does not necessarily get translated into purchasable power supply so the generator requires some form of compensation.
Balancing has to be paid for in the form of the BSUoS, which currently stands at over £2/MWh ($2.9/MWh). National Grid is forecasting a spend of £544 million for the year 2008-2009, which represents an increase of 13 per cent on last year. The BSUoS has in fact doubled in the last two years alone and further rises can almost certainly be expected.
Alternative Balancing Methods Required
Not surprisingly, therefore, a significant amount of research has gone into finding alternative methods of balancing. And one of the most likely candidates is dynamic demand. Fitted in electrical appliances, dynamic demand technology enables that appliance to respond to fluctuations between supply and demand measured in terms of frequency and modify energy consumption accordingly. When widely deployed it creates a virtual power station, reducing the amount of expensive spinning reserve required.
Dynamic demand is most suited to commercial refrigeration, heating and ventilation systems. All these applications rely on a degree of energy storage, and in order to maintain constant temperature, controlled by a thermostat, do not use power on a consistent basis, as does a lighting unit, for example.
That means they can reduce consumption temporarily and then resume normal operations once the grid’s frequency is back within allowed parameters.
Trials have shown that there is no effect on the performance or life span of devices fitted with dynamic demand. The technology has been refined and proven with both a major white goods manufacturer, and with a major retail chain.
Dynamic demand provides an alternative to expensive spinning reserve, and can reduce the grid operator’s overall balancing costs.
But by installing dynamic demand technology, major energy users can contract with the national grid as providers of balancing services themselves.
The refrigeration units in a supermarket chain alone, represents a response of 7.5 MW that can be sold back to the grid. As a result, firms can expect to recoup a portion of the BSUoS charge, which makes up on average four to five per cent of the total electricity bill. As margins tighten, and energy costs make up a greater proportion of outgoings, any savings can be significant.
Changing Generation Landscape
But there is an additional, and equally pressing incentive for widespread adoption of dynamic demand. The world’s energy mix is changing, with greater emphasis on wind, solar and nuclear power. This creates a new series of balancing challenges for grid operators and for major consumers.
Wind and solar power is inherently sporadic and provides intermittent supply. Without balancing services their use will make the grid much more unstable. This is a significant risk for firms whose contract with the grid stipulates that they will stop operations when overall supply is compromised as happened during the blackouts in May of last year, which affected over 500 000 across the UK.
More generally, the use of renewables will increase balancing costs. Since nuclear power stations are ill-suited to providing balancing services nuclear power is either on or off the grid will need to increase the amount of coal fired spinning reserve at its disposal to mitigate against the risk presented by renewable energy.
There are, therefore, hard quantifiable benefits to adopting dynamic demand. But there are soft advantages too. By displacing the emissions produced by inefficient coal fired plant, dynamic demand has strong environmental credentials, which despite the economic climate still resonate with the public.
The Carbon Trust reports that more than a third of business leaders, who have carbon reduction targets, say the issue is rising up their agenda. The Carbon Trust’s findings are supported by a recent poll by the UK’s Guardian newspaper, which suggested that consumers still believe that the environment should be a priority. Perhaps more compelling on the environmental front, is the almost certain development of stricter environmental regulation.
Although the final nature of regulation and the role that dynamic demand could play cannot be known, the technology is already eligible for the UK government’s new Carbon Emissions Reduction Target (CERTs) legislation, and has the potential to be considered as measure to reduce carbon emissions albeit an indirect one.
Fortunately, dynamic demand is not a complicated technology to introduce. It can be integrated into building management systems and retrofitted into control units of individual appliances. The technology is available now. What is still required is a commitment from appliance manufacturers, business and government to work together to make it happen. If they do, the results could be electric.
Andrew Howe is the chief executive officer of RLtec, which is a clean technology company that delivers innovative solutions for the reduction of carbon emissions from electricity generation. For more information visit www.rltec.com
Dynamic demand technology how it works
- The grid is a dynamic entity in a constant state of flux, as levels of consumption and generation alter and shift on a second-by-second basis throughout the day.
- Electricity cannot be stored economically so the grid operator is required to ensure that, at any point in time, the amount of electricity being produced by power generators (i.e. the supply), is equal to the amount being consumed by the customers (i.e. the demand).
- Dynamic demand technology is fitted to appliances whose performance is not dependent on a constant supply of energy, such as fridges, air conditioning units or heaters.
- The technology monitors the constantly fluctuating grid frequency and makes subtle adjustments to the appliances’ energy consumption in order to help balance the grid.
- When a significant number of units are fitted with the technology, an automatic balancing service is created, reducing demand when there is a supply shortage and vice versa.
- The effect is indiscernible, and has no effect on the appliances’ performance or lifetime.