Flexible demand

The preceding ‘shock resilience’ indicators have shown that the short-term flexibility of electricity generation is likely to decline in a transition to a low-carbon electricity system. Therefore, it would be desirable to make up this flexibility somewhere, and one of the most promising options is DSR. Unfortunately, the demand data in the pathways is limited, and therefore it is very difficult to estimate flexible demand capability. Therefore this indicator examines possible technical potential for demand shifting, and to what extent this might be realisable for the three pathways.

5.9.4.1 Flexible demand in the current UK electricity system

The majority of DSR in the UK is currently undertaken by large industrial and commercial consumers who have interruptible contracts, although DSR only accounted for 1% of the successful bids into the first round of Capacity Market auctions in 2015 (Hatchwell 2014). A three-year project by Sustainability First (Dudeney et al 2014) set out to assess the potential for DSR in the current UK electricity sector. The project found that the technical shiftable potential across all sectors today may be up to ~18GW on a January weekday winter evening, and up to ~10 GW on an August weekend evening. However, the amount that is realistically shiftable is unclear, but is certainly much less. Consumers may be willing to accept some interruption of some household appliances for financial benefit; however, Dudeney et al (2014) note that there might be a limited match between what currently contributes to peak demand (lighting, TV, heating, cooking) and most of the shiftable appliances (washing machines, dishwashers etc.). There may be some scope for the 0.5 million households currently using on-peak electric heating to install insulation and shift their heating use to off- peak.

There have been a number of other useful studies into load-shifting potential in the present- day UK electricity system:

 Element Energy and De Montfort University (commissioned by Ofgem) found peak load-shifting potential in non-domestic buildings of 8 to 30% (Element Energy 2012)  Smart meter trials have indicated that 7 to 10% of residential load could be shifted

without any automation (AECOM 2011)

 Palmer et al (2013) found that there is some potential to shift peak household loads using controls on washing machines, tumble dryers and dishwashers. However,

replacing appliances with more efficient ones would do more to reduce the peak than DSR at present (Dudeney et al 2014).

5.9.4.2 Peak load and shiftable potential in the pathways in 2030 and 2050

The level of peak demand in the pathways offers some indication of the amount of load which may technically be shiftable, although it is not possible to say which specific appliances this load consists of. The peak and minimum load for the pathways are shown in table 5.9. The larger the difference between peak and minimum load, the greater the assumed potential for load-shifting. The MR pathway, which has high levels of electrification but low levels of energy efficiency and demand reduction, has the greatest potential for load-shifting. However, there is a clear trade-off here between demand reduction and potential for DSR. DSR could provide valuable services to National Grid in the event of a shock; however, lower peak demand (as evidenced in the TF pathway) would create far fewer challenges for the system in meeting this peak.

Table 5-9: Peak and minimum load

Market Rules Central Coordination Thousand Flowers

Peak Minimum Peak Minimum Peak Minimum

2010 61.44 23.08 61.75 22.87 61.58 22.77

2030 86.36 26.20 78.76 23.10 60.58 19.78

2050 103.33 30.64 87.23 22.30 59.28 18.85

Figure 5-30: Peak demand. Error bars show 20% reduction of peak due to shifting

0 20 40 60 80 100 120 2010 2030 2050 P eak d em an d (G W ) MR CC TF

If 10% of the electricity load were realistically shiftable (to take a relatively conservative estimate based on the figures from AECOM [2011] and Element Energy [2012] shown above), the MR pathway would still have higher peak demand in 2050 than the other two pathways. The error bars in figure 5.30 show the impact of a reduction of 20% of peak demand: even under this more optimistic assumption, neither the MR nor the CC pathway reduce their peak demand to the same level as the TF pathway. This corroborates the conclusion from Dudeney et al (2014) which suggests that greater gains may be made from reducing overall demand, rather than load-shifting.

5.9.4.3 Could consumers in the pathways be encouraged to shift their demand?

There exist various financial, regulatory and behavioural barriers which could make it challenging to realise the optimistic 20% load-shift scenario outlined above (see Owen et al 2013). The three pathways might encounter specific issues:

- Market Rules: it is possible that market-based mechanisms, if they developed the right

kinds of incentives and removed some of the existing regulatory barriers, could be beneficial; however, this would require the introduction of a clear market incentive for suppliers and DNOs to get involved (Owen et al 2013).

- Central Coordination: government-led mechanisms, such as the UK smart meter roll-

out (see DECC 2012d), could incentivise some load-shifting. However, government-led schemes would likely benefit just as much at the moment from regulating to reduce overall demand (Dudeney et al 2014). In the future, the government could mandate load-shifting to be achieved via automation; however, potential might be limited by the fact noted above that peak load is often comprised of less-shiftable services such as cooking.

- Thousand Flowers: Dudeney et al claim that “local energy schemes are where

personal energy, drive and commitment sit to transform the energy sector to low- carbon” (2014:25). Barton et al (2015) suggest that ESCos will be critical for achieving demand shifting and overall demand reduction: it is demonstrated by Fang et al (2012) that ESCos may be able to deliver demand reductions of between 22 and 35%

compared to BAU, which would be crucial for realising the demand reductions in the TF pathway. Automated load-shifting may be used widely by local energy companies in this scenario.

5.9.4.4 Electric Vehicles and Heat Pumps as a means of shifting peak demand

Electric vehicles (EVs) and heat pumps represent very large loads on the system, and therefore represent significant potential for load-shifting, especially because they do not necessarily use power during peak times (other large loads such as cooking are far less shiftable). Figure 5.31 shows that the CC pathway has a higher percentage of EVs and heat pumps than the MR pathway, and also lower peak demand (figure 5.30). The TF pathway has much lower potential for shifting using EVs and heat pumps, but the low peak demand in this pathway suggests that the system would not be as stretched to meet peak demand anyway.

Figure 5-31: Electric vehicles (EVs) and heat pumps