Demand reduction
Introduction
A supermarket is looking to provide Flexible Services to Electricity North West through an Operational Utilisation & Variable Availability contract by reducing their energy usage at peak times.
About Flexible Services
When the demand for electricity is greater than the amount that Electricity North West can provide, we procure Flexible Services to alleviate constraints on our network during peak times. These services are provided by companies or individual customers known as Flexibility Providers, who own assets in our region such as generators, battery storage and Electric Vehicle (EV) charge points that can generate more or use less electricity during a pre-agreed service delivery window, and can provide a minimum of 10kW either individually or via an aggregator. This allows us to balance supply and demand, ensuring a safe and reliable supply of energy for our customers and in return for providing extra capacity, flexibility providers receive payment from Electricity North West.
Delivering an Operational Utilisation & Variable Availability service through demand reduction
The Operational Utilisation & Variable Availability service is a pre-scheduled product that is procured to manage daily demand peaks or post fault response on the network. There are a number of ways the supermarket can reduce their energy consumption to deliver the service during the required window. These include temporarily switching off:
Store heating and cooling systems: Account for between 30% and 50% of a supermarkets total electricity consumption. Freezers may be able to be pre-cooled in advance of a service delivery window and then switched off for the duration of the service window to reduce electrical demand. These can be linked to temperature sensors which will cause the cooling to resume if the temperature within the fridge/freezer drops below a safe temperature.
Electrical ovens: By scheduling in store baking to times other than during the service delivery window this will allow the store to switch off the electric ovens utilised within the bakery reducing the stores electrical demands during these periods.
EV charge points: Controlling the number of electric vehicles on charge or the rate of charging to reduce electrical demand. This could be either via an automated smart chagrining technology or by manual scheduling. This is likely to be more controllable for fleet vehicles of the supermarket (e.g. delivery vans) and staff EV charging. For example if all the delivery vans are left at the store overnight they can be charged up when there is no flexible services requirements and then they are not adding to the stores electrical demands during the delivery period.
Heating and cooling systems: Store heating and cooling systems can be temporarily reduced in output/switched off during the service delivery window to reduce the sites electrical demand. Heat and cold storage technologies could be utilised to maintain the stores temperature whilst not increasing the stores electrical demands. Alternatively, hybrid heating systems such as a combined electrical and gas heat pump system could be used to swap from electrical demand to gas demand during the service delivery window.
Pre-tender
Our tenders are published on the ElectronConnect and Piclo Max platforms twice a year in Spring and Autumn in line with our Network Development Plan (NDP) and Distribution Future Electricity Scenarios (DFES) publications to reflect our latest network requirements. To be notified of our upcoming tenders, the supermarket signs up to our flexibility mailing list.
Prior to the launch of the tender, the supermarket:
- Registers the company onto either ElectronConnect or Piclo Max (whichever platform they prefer) to pre-qualify to participate. The information submitted such as credit checks and insurance details are assessed by Electricity North West and once approved, the company's commercial qualification remains valid for future tender rounds.
- Electricity North West utilises the framework style Standard Flexibility Services Agreement developed by the Energy Networks Association Open Networks Project. The supermarket can sign up to the general T&Cs of this agreement as part of commercial qualification, and a signed copy must be returned via Electron or Piclo prior to placing a bid.
- Registers their asset(s) onto their preferred platform.
Tender process
Pre- Qualification
Once the Invitation to Tender (ITT) has been published, the supermarket reviews the network's flexible service's requirements using the interactive map on the platform and upon establishing that their supermarket is located within a requirement zone seeking an Operational Utilisation & Variable Availability service, they calculate how much of the required demand response it can offer, when, and at what price. Prior to submitting a bid, the supermarket uses the cost calculator tool on our website to check that the prices they are prepared to offer for availability and utilisation don't exceed the ceiling price that we are offering for the service as part of this tender round. The cost calculator can be found within the ITT appendices. At this point, the supermarket has decided they would like to participate in the tender.
Their next step is to complete technical qualification on their chosen platform by confirming the assets they wish to put forward in the competition. Electricity North West then assess the technical details of the participating assets and their capability for delivery. If the supermarket is unable to provide 10kW of flexible capacity, it can still take part via an aggregator- aggregators such as electricity suppliers, combine load from multiple customers to provide flexible services. The supermarket is notified via ElectronConnect or Piclo that their assets meet the requirements of this tender, allowing them to move to the bidding stage of the process.
Submitting a bid
For the final stage of the procurement process, the supermarket submits a bid to the tender via their chosen platform. This is carried out by linking the pre-registered assets to the Availability and Utilisation payments, as well as the periods where the supermarket can deliver availability of the response. Once the bidding window has closed, Electricity North West assesses the tender responses before accepting or rejecting bids based on the proposed payment and the asset's ability to meet the specification. If the supermarkets's bids are successful they will then enter into a Flexible Services Agreement with Electricity North West to deliver the service within the required service windows.
Helpful tips to consider prior to submitting a bid:
- Prices should be made up of an Availability payment and a Utilisation payment. Availability is the price paid to the provider even if Electricity North West don’t call on the flexible service and Utilisation is the price paid to the provider for the level of response they have actually provided on request. Note: Electricity North West will not always utilise as much energy as they have requested availability for, there is a level of over procurement built in to ensure that there will be a sufficient response available if required.
- When calculating the tender bid prices the provider should consider the cost of lost revenues, fuel costs, environmental or permit fees, initial set up costs, maintenance, other revenue streams available, energy savings benefits etc.
- When thinking about the Availability periods the provider should consider the practicalities of these Availability periods, the processes required to ensure that the service can be delivered, seasonal considerations e.g. major televised events, Christmas period, weather related issues e.g. extreme cold weather increasing heating demand and maintenance periods.
Flexible Service products
Electricity North West procure three common products (services), which align with the Open Networks service definitions:
- Peak Reduction
- Operational Utilisation
- Operational Utilisation & Variable Availability.
The Operational Utilisation and Variable Availability product is used to keep the power flowing during an unplanned network event during maintenance work or network thermal constraints.
The supermarket ensures it is available to deliver the demand reduction response during the service windows specified in their bid response.
Payment
The Operational Utilisation & Variable Availability product consists of an Availability and Utilisation fee.
- By accepting an Availability fee, the supermarket is expected to be ready to respond to Utilisation calls within the agreed response time (15 minutes maximum) during the service window(s). Availability is the price paid to the provider even if Electricity North West don’t call on the flexible service. It is measured in £/MW/h. The availability windows are refined in terms of the required maximum capacity (MW) and period (days & hours) a week ahead each Thursday for the following week (commencing Monday). The supermarket will be paid Availability Payments based upon the required availability which following any alterations/refinements to capacity and periods.
- Utilisation payment is awarded on delivery. Utilisation is the price paid to the supermarket for the level of response they have actually provided on request. It is measured in £/MWh.
- It should be noted that Availability and Utilisation Fees payable to the supermarket under this product are subject to Electricity North West’s actual availability requirements and actual utilisation of the supermarket’s flexibility services closer to real-time.
Dispatch
The supermarket can choose to receive dispatch instruction via Application Programming Interface (API), email, or Electricity North West owned Remote Terminal Units (RTU).
Worked Example
The Supermarket has an installed capacity of 100MW and can reduce its demand by up to 20MW, during certain pre-determined time periods. In this example, the pre-determined period is November-February every Mon-Fri between 12am-5am & 3pm-12am. The Supermarket said they can respond to requests for demand reduction within 10 minutes. The restoration time after responding to electricity demand reductions is 1 hour.
Availability dispatch
It is assumed there is a network constraint in December. On Thursday, Electricity North West will notify the Supermarket to be available to reduce its demand by up to 15MW the following week on Wednesday between 3pm-10pm*. The Supermarket is expected to be ready to respond to Utilisation calls within 10 minutes from receiving Electricity North West’s dispatch signal. Availability fees will be paid to the Supermarket to remain in a state of readiness to respond immediately to a Utilisation instruction during the service window (i.e. on Wednesday between 3pm-10pm), even if Electricity North West don’t ask them to reduce its demand. In this example, the Supermarket will be paid for 10MW of availability over 7 hours.
Below is an example of the supermarket responding to an availability instruction for demand reduction
Utilisation dispatch
If Electricity North West sends a dispatch request in real-time to the Supermarket asking them to reduce its demand on Wednesday by 8MW between 4pm-9pm**, then they will receive an additional Utilisation payment. The supermarket will be paid for the reduced energy in MWh in their demand profile between 4pm-9pm compared to their expected energy demands (based on its historical demand profiles).
* The DNO can refine a week ahead the volume of availability required (i.e. 15 MW instead of 20MW) and the availability windows required (days & hours) (i.e. Wednesday instead of Monday-Friday and 3pm-10pm instead of 12am-5am & 5pm-12am)
**The DNO can instruct/utilise a portion of the available volume (i.e. 8kW instead of 15MW) and only for a portion of the refined available time window (4pm-9pm instead of 3pm-10pm)
Below is an example of the supermarket responding to a utilisation instruction for demand reduction
Baselining
A baseline is a reference used to measure the amount of flexible capacity delivered to the network by flexibility providers. There are different kinds of baselining methodologies used depending on the type of asset and service being provided. These include historical baselines (using past meter readings to estimate the baseline using standard algorithms) and nominated baselines (using other forecasting techniques such as weather-based models to estimate the future baseline). The baselining methodology will be agreed between Electricity North West and the supermarket post contract award and at least 6 months prior to the first utilisation period. More information on the different types of baselining methodologies can be found on our FAQs page.
Invoicing
Subject to the delivery of Flexible Services, the supermarket will invoice Electricity North West and will receive payment by bulk electronic clearing (BACS) by the end of the following month (after such invoice is received).
Useful links
Register for updates
Sign up to our flexibility mailing list to get notified when we publish a new requirement and receive invites to our events.
Get in touch
Please get in touch if you have any questions relating to flexible services, would like to leave feedback or book a meeting with a member of our team.
One-to-one discussions
We host one-to-one discussions every Wednesday afternoon to guide stakeholders through the process of providing flexibility to the network.