Building on the recent development of local flexibility markets, a couple of domestic demand-side response (“DSR”) trials are underway to explore whether households can provide flexibility to local electricity networks. The trials take different approaches: WPD’s Sustain-H trial uses suppliers as intermediaries while in Seco’s FLATLINE project, Seco itself acts as an energy service provider, optimising household energy assets.
WPD launches new domestic DSR trial through suppliers
Western Power Distribution (“WPD”) has launched a new domestic demand side response trial, Sustain-H, that will see households paid to restrict their electricity usage during weekday demand peaks. The trial differs from previous domestic flexibility trials in which consumers were asked to reduce their consumption by a specified amount.
Sustain-H is WPD’s first flexibility service aimed specifically at domestic customers is already proving popular, with eight suppliers signing up to offer it to their customers: EDF, Octopus Energy, Ecotricity; Kaluza, SMS, Stemy Energy, ev.energy and myenergi. Five of these will go live with the service this month, with the rest following in March 2021.
The electrification of heating and transport is increasing demand during peak hours, potentially stressing network infrastructure. The new low-carbon technologies with the greatest impact on the network are home EV charging points, battery storage (with or without co-located solar PV), and heat pumps.
When WPD calculates the maximum substation load for network planning, if assumes that when similar consumers with similar types of new technologies are grouped together, their collective consumption pattern is less than the proportional scaling of the demand profile by the number of consumers.
As constraints in the low voltage distribution network are rare, WPD is applying the highly diversified profiles used for the Extra High Voltage (“EHV”) distribution network planning as the basis to assess network benefits and as a baseline for the Sustain-H scheme. A domestic consumer without any low carbon technologies is described in network planning by the diversified demand profile shown below, as well as the diversified EV charging and heat pump demand profiles used in network planning.
Participating customers located in Constraint Management Zones within the Midlands, South West and Wales will be asked to keep their usage at or below set levels during two four-hour windows on weekdays: 8am – 12pm and 4pm – 8pm.
Consumers within the scheme could expect to earn about £10 per year if their home has an electric vehicle charge point, and up to £60 per year if they have a full suite of flexible technologies, including a heat pump and battery.
The Government estimates that in 2019 households paid on average £610 for gas and £679 for electricity, with a combined energy bill of £1,289. According to Graham Campbell of SP Energy Networks speaking at a Regen webinar on network charging yesterday, domestic customers on its network pay around 30p /day in network costs, so it remains to be seen whether the levels of these incentives will be high enough to change consumer behaviours.
The chances of success would be higher if consumers agree up front to allow suppliers to control their flexible asses for them remotely, reducing the need to rely on sustained changes in behaviour.
Welsh DSR trial explores energy as a service concept
WPD is also involved in another domestic DSR scheme. In August, the first residents moved into the newbuild homes that have been designated as part of the FLATLINE project, the UK’s largest domestic DSR trial. The development, located at the Mill in Cardiff, hopes to reduce energy bills for the residents by combining demand side response and demand shifting for heat and electricity, while providing a home comfort service.
FLATLINE (“Fixed Level Affordable Tariffs Led by Intelligently Networked Energy”) is backed by the Department of Business, Energy and Industrial Strategy, and is being co-ordinated by energy services provider, Sero Group, and uses energy optimisation software developed by PassivSystems. Tirion Homes, Pobl Group, Western Power Distribution, Sonnen and Mixergy are also involved in the project, with Octopus Energy providing 100% renewable energy for the homes. Half-hourly tariffs will help residents to benefit from low energy prices.
Residents will be able to use an app to control their energy preferences such as room temperature and hot water needs, and Sero will use this information along with the residents’ overall lifestyle, to forecast the energy demands for each home, and manage their energy systems flexibly.
Each home will have a number of different smart energy technologies: a 6 kW Kensa Shoebox ground source heat pump, a 5 kW Sonnen 9.43 hybrid battery storage system, and a 3.6 kW Viridian Clearline Fusion solar PV system. Each house also has provisions for a 7 kW EV charger. These technologies work alongside a series of smart controls and meters, including three Thermokon 698214 thrermostats, CO2 sensors, Sharkey heat meters, Eastron electric consumption meters and dedicated fibre broadband.
Sero will manage and optimise these energy assets in order to avoid drawing electricity from the grid during peak times, and provide grid balancing services thereby keeping energy expenses and carbon intensity to a minimum. This optimisation should be largely un-noticed by the residents.
Along with the Mill, a further 46 homes are being developed at a separate site, Parc Eirin in Tonyrefail, also in South Wales, which will bring the total number of homes involved in the trial up to 225.
Energy as a service is likely to elicit a stronger response than ToU tariffs alone
It will be interesting to see how these domestic DSR trials progress. I have long been of the opinion that energy as a service is likely to be the optimal way to deliver domestic demand-side response benefits with the heavy lifting being done not by the consumer but by a service provider. Bundling the provision of energy with the types of energy assets being used in this trial allows for maximum flexibility, and the thermal characteristics of homes mean that active space and water heating can be turned down in peak times without the residents noticing any change in temperature or comfort.
This model has, in my view, a higher chance of success than approaches that require consumers themselves to undertake their own optimisation activities. This is supported by some of the research into the field. Trials of time-of-use tariffs have so far elicited fairly small reductions in demand. Faruqui and Sergici (A. Faruqui , S. Sergici, Household response to dynamic pricing of electricity: a survey of 15 experiments, J. Regul. Econ. 38 (2010) 193–225) reviewed 15 trials, mostly using realistic three-step pricing (peak, off-peak and shoulder), which suggested reductions in peak consumption of around 3–6%, while Sæle and Grande (H. Sæle , O.S. Grande , Demand response from household customers: experiences from a pilot study in Norway, IEE Trans. Smart Grid 2 (1) (2011) 102–109) found a 4.2% reduction after a Norwegian trial.
“When even people who have elected to take part in pricing trials make such limited shifts, it is clear there are substantial barriers to behaviour change that need to be better understood if DSR of more than a few percent is to be achieved,”
– I Walker and A Hope (Householders’ readiness for demand-side response: A qualitative study of how domestic tasks might be shifted in time; Energy & Buildings 215 (2020))
In the FLATLINE trial, the homes are new-builds so the energy systems have been installed from new. If the trial successfully proves the concept, similar schemes could be rolled out for existing homes, where the cost of new energy assets could be amortised over the lifetime of the energy services contract, thereby avoiding the need for consumers to make large up-front investments in new assets.
A range of business models can be anticipated that take advantage of Government schemes and grants while taking into account the needs of individual consumers.
The real question is whether consumers will be willing to hand over control of their energy assets, but comfort could be drawn from suitably robust contracts which ensure that consumers have the ultimate say in when their assets are used.
If consumers are satisfied that they have overall control and are able to sacrifice some cost optimisation at their own discretion eg if their demand patterns change due to days off work, having house guests, or needing to charge their car earlier due to an ad hoc trip, or simply because they feel like changing their usual habits, then such arrangements will have a greater chance of gaining traction.
I agree that energy as a service is probably the way to go for demand side response, £10 a year doesn’t sound that inticing. Individuals are busy anyway, and are very sensitive to loss aversion psychology (I could do it before but I can ‘t do it now!) so voluntarily giving-up privelage is a hard to make stick. What do you think about potentially going quite far into energy as a service, and general taxation paying for the ‘electricity and heat’ basics per citizen, as long as they allow their energy equipment to be part of a service package? (any more than standard energy use would have to be paid for though otherwise I guess people would be wasteful.) This would get the state involved in home energy use and give a guideline on what households should be consuming without taking anything away from them. Private companies would still do the energy grid, just paid by general taxation..
I don’t really think the state should be involved in this, but then I don’t think the state should do a lot of things that can be done by the private sector.
I do think that Ofgem’s idea of a basic tariff for vulnerable consumers has merit. The idea is that a base level of consumption is defined by the regulator that cannot be subjected to ToU pricing so that vulnerable consumers don’t self-disconnect for economic reasons.
The way these services are delivered would vary depending on the type of property. In social housing for example, the housing association could contract with ther service provider and agree the installation of energy assets on the site. Ther provider would optimise those assets and supply energy to the residents who would pay for what they use based on the optmised consumption across the development. This would mean some reduction in the ability of tenants to choose their own supplier, but in a social housing context this could be acceptable subject to suitable regulatory protections.
I hesitate to post this advert I’ve received from EDF Powervault, This blog is far more sophisticated than my limited understanding of the issue, but here goes! https://www.edfenergy.com/for-home/battery-storage
The price levels on this advert are quite intersting – the £100/pa grid services income is similar to the income available from the DSR trials mentioned here, but of course, that has to be set against the cost of the batteries themselves. The payback period without taking into account the time value of money is 8 years, but that assumes utilisation by EDF – if they don’t use your battery for grid services in any year, then there is no payment for that year.
I’d be interested if any readers have information on the typical number of cylces a domestic battery contracted for grid services would make in any year and how this compares with the battery warranty – the T&Cs linked to the advert make reference to separate T&Cs that are not provided. I’d want to know that the battery was being operated in line with the manufacturer’s warranty when being used by the supplier for grid services.
Some Ts and Cs here, https://www.edfenergy.com/sites/default/files/h2215_powervault_customer_tcs_final.pdf interesting to note our local council has procured a deal for a battery installer a 3kW battery for less than £3k. Less than the powervault variant!