Scott Petersen explains how a three-pronged approach to saving energy can pay dividends.
As we emerge from lockdown and return to our workplaces, sustainability is becoming a top priority for many organisations. The intention to come back stronger and better through sustainable strategies, is a theme resonating with many.
On a macro level, decarbonisation of the UK economy is accelerating as we strive to achieve the Net Zero goal set for 2050. The increased adoption of EVs and the ramping up of investment into renewable energy technologies are two obvious manifestations of this urgency. This is however, not a challenge that can be met solely by government, it is something every business and individual must embrace if we are to succeed. But how can ordinary businesses engage with something as vast and complex as the electricity market? The answer, is because it is changing.
The COVID-19 pandemic has shown us a glimpse of what an energy supply system might look like with a higher reliance on renewables. With patterns of energy consumption disrupted by closure of retail, the switch to homeworking, as well as the decommissioning of carbon-based generation, we have begun to realise how vulnerable we are when energy production is weather dependent. So far in the UK, we have been fortunate that the grid has not reached crisis point and blackouts.
It has however, emphasised the need to work even harder to balance supply and demand across our energy supply model – a task that falls to National Grid ESO (NGESO). Flexibility is now the watchword and for the many organisations seeking to bounce back more efficient, resilient, and sustainable in 2021, this trend represents an opportunity. In this volatile market, NGESO urgently needs the involvement of businesses and organisations in grid-flexibility programmes like Demand Side Response, to help them achieve balance of supply and demand. But how?
Up until now, an individual organisation’s energy strategy might typically focus on a two-pronged approach:
- Buying well – all-inclusive tariffs to avoid paying demand charges, green tariffs, power purchase agreements, self-generation through small-scale wind and solar, or biomass
- Using less – improving operational efficiency, optimising plant and equipment, introducing energy efficiency measures such as LEDs, ensuring that BMS are tuned properly and staff awareness campaigns
Now, this strategy can be complemented by the 3rd option of Green Demand Side Response (GDSR) because technology exists that allows organisations to be flexible and control when they use their electricity not just how. And this flexibility means that they can sell their ability to reduce consumption to NGESO at critical times when the grid system is facing a shortfall on supply.
GDSR involves reducing electricity beyond normal operational levels, but not to a point where it may compromise the thermal inertia of the building and affect comfort conditions for people. These GDSR events are implemented selectively through the GDSR technology to reduce consumption on non-critical plant, for short sharp periods which will neither affect the building nor its occupants.
This is slightly different to simply reducing consumption directly through a BMS, because it is reducing or shifting energy consumption to help balance supply and demand on the grid at times when it is under stress – instances which are often unpredictable as they are dictated by the vagaries of the weather. And this is helping NGESO balance the grid whilst contributing directly to the national emissions reduction targets. If your energy strategy can incorporate these three elements it is possible to leverage even greater financial savings and CO2 reductions, because the three strands of the strategy are inter-dependent.
For example, look at the way an organisation buys energy. For commercial customers, this is made up of energy charges based on the total amount of electricity used, plus demand charges based on their highest “peak usage”. Many suppliers have recently persuaded customers to move away from this arrangement to an all-inclusive (much higher) tariff. In these fixed price contracts, your electricity supplier takes on the risk and so builds in a risk premium to allow for variations in the demand charges, under the argument that it’s not possible for clients to control their demand. But of course, that’s not taking into account the fact that GDSR can indeed reduce peak usage demand. By using GDSR, organisations can obtain much lower tariffs by managing down the demand charges and obtaining significant financial savings.
And that’s where OakTree Power fits in. We have the knowledge and the expertise to know when to implement the GDSR events when demand charges are high as well as sell the flexibility on the balancing markets, taking into account factors like time of year, time of day and market pricing. Of course, when implementing GDSR events the net result is that the organisation will be using less energy, which is the other prong in the strategy.
So, if you are an Energy Manager who wants to achieve greater energy reductions, or a Sustainability Director seeking to get even more out of your properties without buying carbon offsets, then GDSR could help you go the extra mile to Net Zero. And looking forward, connected workplaces and AI will permit even more precise planning of when and how to use energy, allowing organisations to maximise the value of participating in GDSR programmes, maximising the financial return and increasing the levels of CO2 reduction.