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15 Nov 2022

What is Demand Response? Everything You Need to Know

Sympower Stand: 12.0.B170-5, 12.0.MR3
Sympower
What is Demand Response? Everything You Need to Know

It’s hard to understate the complexity in generating and distributing energy. Anyone taking part in the energy transition knows this. But an often overlooked part of that, is the integration of renewables into our energy systems. Mores specifically, the balancing of our electrical grids needs to be achieved if we are going to transition to a sustainable energy system. That requires smarter business practices, smarter technology and smart energy.

Thankfully, demand response services help to stabilise the grid, by ensuring supply and demand stay balanced. Whether you call it demand response or demand-side flexibility, knowing what these demand response services are and how they work is crucial for understanding the future of power systems around the world. That’s why we are going to take you through the key things you need to know about demand response:

 

  1. Demand Response Definition

  2. How Does Demand Response Work?

  3. Demand Response vs. Demand-side Flexibility

  4. Benefits of Demand Response

  5. Demand Response in Action

 

Demand Response Definition

Before we jump into it, let’s ask the most obvious question: What is demand response? It can sometimes feel like a highly complicated topic. But the most simply demand response definition is this:

Demand response is a change in electricity consumption by consumers (such as commercial and industrial businesses) to help keep the supply and demand of electricity in balance.

For an electricity grid, the supply and demand have to be kept very closely in balance (ideally <0.2% imbalance in normal operations). The aim is to maintain a frequency of 50Hz. If this balance is not maintained, it can lead to issues like power outages and blackouts, as well as causing damage to devices connected to the grid. 

In the past, fossil fuel power plants (coal and gas) have met energy demands by burning more fuel. When demand increases, they simply burn more to ensure a stable grid. But renewable energy sources are reliant on external factors (wind and sun). It can be challenging to rapidly change the amount of energy generated to meet demand. It’s not possible to produce more solar energy on an overcast day. For that, an alternative method of reacting to changes in demand and supply is necessary 

That’s why there’s a growing interest in how that grid stability can be maintained through demand response. Through demand response, consumers are given a signal to decrease or increase their energy usage to restore balance to the grid when demand and supply shift.

 

Demand Response vs. Demand-side Flexibility

When researching the topic of demand response services, you might have come across a number of different terms: demand response, demand-side flexibility, or even demand-side response. You might be wondering what the difference between them all is.

It’s a good question, with an easy answer. All these terms have the same meaning. In general, they refer to demand-side services; responses on the demand side (i.e. electricity consumers), to help create a balanced electricity grid. Different terms may be used in different markets all over the world. The terms can change depending on the country, market or even business, but all describe the same demand response services.

 

How Does Demand Response Work?

Now that we know what demand response is, it may leave you wondering how demand response management works. Well, it starts with consumers. When they participate and agree to have the energy consumption of their assets changed from time to time, demand response becomes possible. It’s the flexibility of these consumers and their assets that allows grid frequency to be maintained. But first, that flexibility has to be discovered.

That’s where independent aggregators come in. Independent aggregators like Sympower are the experts behind managing demand response management. They are experts in first finding and then unlocking flexibility in complex processes. By linking these energy assets to their demand response management system, independent aggregators can temporarily change the energy consumption of these assets to meet grid demands. 

Independent aggregators can also help ensure that all types of businesses can participate in demand response. Sometimes a small business will want to partake in demand response, but its assets will be too small to make an impact on grid stability. In these cases, independent aggregators group together similar assets across multiple businesses, so that they can collectively have an impact and the businesses can still benefit from providing demand response. 

From here, independent aggregators can leverage this flexibility through different demand response services to help maintain a stable grid. This is why independent aggregators work closely with transmission system operators (TSOs) whose responsibility is to maintain a stable electricity grid. Now, consumers are not only benefitting from demand response management, their assets are now being used to create a reliable grid system for everyone. 

 

Benefits of Demand Response

Thanks to demand response, the resource efficiency of electricity production increases dramatically. This leads to a number of benefits for everyone involved.

 

  • Lower electricity costs 

When consumers participate in demand response, the major benefits come from offsetting overall energy costs. Demand responses' positive impact on grid reliability means that customers benefit from additional revenue from utility and system operators. With electricity prices constantly increasing, demand response helps to offset energy costs.

 

  • A more reliable grid

Demand response lowers the likelihood of unplanned power outages. Offering the flexibility of your energy assets helps ensure that grid frequency can be maintained, avoiding these major problems. By participating in demand response, you also reduce the inconvenience for all who are connected to the grid.

 

  • Lower wholesale market prices

Demand response reduces the reliance on costly power plants during periods where electricity demand is high. This benefits the wholesale market prices and eventually translates into further savings on electricity bills by customers.

 

  • Accelerating the energy transition

The energy transition will see traditional fossil fuels phased out in favour of renewable energy. However, this poses a unique challenge given the intermittent nature of their production, and the lack of control over their generation. This is an issue to urgently overcome amid the rising demand for renewable energy. By making the grid more reliable and allowing fossil fuel plants to be safely phased out, demand response is crucial for a successful energy transition towards renewables. It’s going to play a vital role in helping countries reach their climate targets. 

 

Demand Response in Action

Misawa Homes is a sawmill located in Finland. Here they produce high quality lumber to export to Japan. As one of Sympower’s customers, they’ve been able to unlock the flexibility of their processes in order to earn revenue and save on their energy costs. 

During the milling process, Misawa Homes uses industrial fans to dry the lumber before it’s shipped overseas. But these fans don’t have to be active throughout the entire drying process. This makes them the perfect asset for demand response. Since 2017, Sympower has periodically shut down these fans during the wood drying process, to help stabilise the Finnish grid. Despite the fans being shut off, it’s had no effect on how long it takes for the wood to dry. 

More recently, Misawa Homes has expanded the types of balancing markets they’re in. This means Sympower has also started adjusting the amount of power the fans use. Rather than completely turning them on and off, we manage the energy they consume too. Not only does this expand the opportunities Misawa Homes has in participating in demand response, it’s also helping them to save money. They get paid revenue for taking part in demand response with Sympower. But thanks to our flexibility management, they’re also creating around 10% in energy savings. This means they maintain their efficient business processes, all the while gaining the benefits of demand response.


 

Sympower is dedicated to creating a fully renewable energy system. We are energy experts with years of experience in demand response and flexibility optimisation. Our goal is to turn the potential of your energy assets into extra revenue for you. We provide the technical expertise, all while you stay in control. 

Get in touch today.

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