National Grid prepares for 'summer excess' with calls to use more power

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National Grid is gearing up for summer with the start of a scheme which pays companies to use more electricity when wind and solar power surges past demand.

For the power system operator the return of longer, brighter days during British Summer Time flips the winter-time challenge of securing enough supply to meet demand. Instead, it will face periods when grid demand falls and there is more wind and solar power than Britain needs.

The boom in solar panels in recent years, fuelled by subsidies, has far exceeded expectations. These panels feed the power they produce directly into homes or the local electricity grid, cutting demand on the national system to what is expected to be a record low this year.

From Monday the so-called ‘demand turn up’ scheme will pay six successful businesses who were selected through an auction and are able to commit to using more power when there is an excess in the system.

A National Grid spokesman said its figures show it will save consumers £500,000 over the summer.

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The companies which sign up typically have high-energy operations which can be easily shifted without hindering their operations, or they have their own on-site generation which they can turn off in favour of using power from the grid. They can opt either for a night time window or in the afternoon.

National Grid has warned that without taking action the electricity system would have an excess of between 3GW to 5GW, the equivalent of several gas-fired power plants or almost two nuclear plants.

The approach is a radical departure for the operator which in the past has relied solely on managing supplies by turning power plants up and down, rather than tackling demand. National Grid has said that by the end of the next decade it will use demand-side management for more than 50pc of its system balancing.

Offering companies money to adjust their demand to the challenges of balancing a renewables-heavy power system is not without criticism.

Last week National Grid said it will pay £14m to companies which can cut their power use next winter when demand climbs again. The companies will be paid £45 a kilowatt compared to contracts paid to power plants to increase supply for less than £7 a kilowatt, raising questions over the economics of relying on demand management.

Tim Rotheray, the chief executive of the UK’s Association for Decentralised Energy said comparing the size of contracts paid to manage demand with those offered to suppliers is “like comparing apples and oranges”.

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Suppliers have a range of schemes they can offer their services to in order to make money, and can also sell power directly to the wholesale market.

The burgeoning ‘demand-side’ sector needs to be given more time and support to reap its full benefit, he said.

“It is saving consumers millions of pounds in other markets in the world, particularly the US where demand-response is well-developed,” he said.

“When you a start a new market - any new market - the costs are higher before they begin to fall. You can’t expect a totally new market to be the same price as a really well established one,” he added.

He added that electricity suppliers have a number of advantages against the new breed of energy companies offering technology and services which can reduce demand or shift it to a different period.

“The main difference is that when you build a new power station through a National Grid auction you’re offered a fifteen year contract. For managing demand you’re offered one year,” he said.

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