Industrial energy users must learn to flex their consumption to avoid new charges when the capacity market launches in 2018, according to demand response provider, Flexitricity.
Reforms to the energy market mean that businesses will face a hike in bills in the coming years of around £75 per MWh during working-day winter peaks. This represents an average of £20,000 per megawatt of average consumption.
However, Flexitricity says businesses who act now can slash that cost – and in fact earn additional revenue while bolstering the country’s energy security.
Dr Alastair Martin, Flexitricity’s founder and its chief strategy officer, said: “The cost of keeping Britain’s lights on whilst new forms of generation are developed represents a significant burden for industry.
“However, by turning down energy consumption for short periods when networks are at their most stressed, businesses reduce their exposure to these charges. At the same time, they can earn positive revenue by being part of the reserve system that helps keep the lights on.
“A typical cold store, large supermarket or medium-sized office could turn a £20,000 charge into a £60,000 revenue.”
The call follows the close of the latest capacity market auction, which is held every year in a bid to identify reliable electricity sources and incentivise new generation in advance of future need.
The market was created as part of the UK government’s Electricity Market Reform package to secure additional energy supplies at a time when capacity margins are falling.
The latest market closed on 10/12/2015 and secured 46GW of capacity to deliver power from 2019 onwards, at a cost of £18.00 per kW.
Alastair added: “For companies with flexibility in the way they use energy, or generation assets such as combined heat and power systems and standby generators, the Capacity Market offers a new source of revenue from assets they already own.
“By supporting the UK’s energy needs, businesses are transforming the energy sector. No longer will people think of electricity to power lightbulbs and kettles coming solely from power stations, but potentially from supermarkets, hospitals, data centres, factories and greenhouses.
“What’s more, by using flexible load and existing generation assets, we can bring a reliable source of power to the market without undue impact on the environment – something that in itself is a key concern when considering how to meet the UK’s energy needs.”
As the first and leading demand response aggregator, Flexitricity has committed 277MW of capacity for this period. Last year it became the first company of its kind to win National Grid’s approval to participate in the Capacity Market.