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Demand Side Response Aggregators – the rising stars of peak load reduction

With all the focus on residential smart meter roll outs, it’s easy to forget that in many regions, commercial and industrial businesses still account for up to 70% of total electricity consumption.

Encouraging some of those power hungry, but highly valuable clients, to drop peak consumption could shave several percent off a grid’s peak load, or drastically reduce a retailer’s exposure to high spot prices. That’s where aggregators fit in.

Our CEO was particularly impressed by the impact aggregators can have after a recent visit to a customer of ours, Energy Response of Melbourne. Energy Response run Demand Side Response (DSR) programs with customers in the Australian NEM, Western Australia and NZ electricity markets. They have been in the press recently too, having been recently acquired by a US demand response specialist – see Energy Response acquired by ENROC.

On paper, DSR is a fairly simple concept of providing financial incentives for energy users to reduce their electricity demand for short periods of time. DSR is viewed as “energy or capacity not consumed”.

In reality of course, it’s not quite so simple. Aggregators need to work very closely with these energy users, in the DSR world called ‘providers’, to look at their overall energy consumption and load shape, help them understand how much load can be dropped and at what times. Curtailment plans are thus tailored to each provider who is financially rewarded for both the commitment to dropping load, and actual load curtailment. The level of payment may also depend on the frequency and length of the DSR period.

That’s where a billing system like Gentrack Velocity comes in. As well as managing these customised curtailment plans for each ‘provider’, a DSR billing and CRM solution needs to manage the upload and verification of the metering data from interval meters to ascertain the energy not used during any DSR event. The system will also calculate payments to providers, invoices to the ’buyer’ and the aggregator’s commission, as well as automating the exchange of data between all parties.  And the buyer can be one of several parties; a retailer, a network company or a market operator, any of whom may need to drop load at a particular time.

Another emerging pre-requisite of DSR billing systems is the ability to feed real time and historical usage information, including multi-site aggregation data, into a customer web portal which is used for further energy efficiency analysis.

Today however, many aggregators have a fairly manual approach to billing, reconciliation and data exchange. But those with aggressive growth plans now understand that moving to automated billing systems that can handle large volumes of interval data will free up more time to focus on their core competencies - building their client base and working out optimal energy efficiency and DSR plans for each. Opting for a cloud based billing solution is an increasingly attractive alternative to a traditional onsite implementation. It lowers the upfront capital investment while providing the scalability required to underpin business growth.

And this market is set to grow. While the impact of demand response aggregators like ENROC has already been significant in many US states, the DSR market elsewhere is fairly underdeveloped. But this is changing.

A recent report by Capgemini, VaasaETT and Enerdata shows that demand response alone could achieve between 25-50 percent of the European Union's 2020 targets for energy savings and CO2 emission cuts.  The DSR message, and the role aggregators will play in realising DSR goals, is at last beginning to resonate across the UK and Europe.

Filed under: DSR Energy Response Gentrack Velocity billing software
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