Upload
emex
View
445
Download
0
Embed Size (px)
Citation preview
Ilse Dubois Unlocking demand flexibility for cheaper electricity 12th November 2015
Inefficient electricity systems and inflexible demand result in higher electricity bills
Demand flexibility offers opportunities for improved, efficient electricity systems and cost savings
Unlocking demand flexibility for cheaper electricity
Energy industry in transition
In the past Transition
• Engineering infrastructure investment opportunity
• Large capital and long term investment with low returns based on generation revenue
• Significant risk premium paid by customers
• Technology enabled opportunity
• Low investment needed that enables arbitrage opportunities and higher margins
• Transition inevitable, pace of change driven by innovation
• Government policy still focused on driving capital investment
• New business models with greater risk sharing
Vertical integration in a traditional supplier business model is focused on maximising the amount of electricity sold to customers, not minimizing cost to customers
‘Big 6’ supplier business model
- The market is dominated by the ‘Big 6’ suppliers who also own generation assets
- Their supply businesses primarily exist to buy electricity
from their generation businesses and they are not interested in when customers use energy as they are settled based on assumed time profiles
- This is unhelpful and inefficient for the system, and means they cannot take the opportunity to make savings through demand flexibility
Explanation
Supplier buys from own generation plant well in advance (e.g. 1 year)…
…Supplier aims to maximise how much they sell to customers…
…usage based on assumed time profiles so no saving opportunities through offering demand flexibility
…can only influence their own operating
costs…
…limited savings passed onto
customers
The system is built to service peak demand – which comes at a cost to customers
-Generation and network infrastructure built to meet peak demand
-In UK in 2014:
-Peak demand for the year ~2.5 times higher than the minimum
-Within a day peak can be twice the minimum
-Generation assets only utilised on average at ~58%
Demand
Capacity margin ~10%
Under utilised assets
Total Capacity (de-rated) ~58.2GW
time
GW
System demand and capacity over a day (illustrative example) Explanation
A day in the UK market - Fluctuations in electricity prices
Impact of demand and generation fluctuations on price [UK half hourly spot prices, 27th Oct 2014, £/MWh]
66
225
69
2
3
0 50 100 150 200 250
£8-20
£20-50
£50-100
£100-200
Over £200
0
10
20
30
40
50
60
70
80
90
100
time (half hourly
periods)
£MWh
£86/MWh
£17/MWh
Number of days
Difference between max and min prices in a day [£, number of days, 2014]
Influencing the timing of electricity use becomes crucial as we transition to a low-carbon system if we are to avoid huge costs in building new assets
This transition will further increase the intraday electricity price volatility
Due to greater electrification especially in transport and heating
Impact of low-carbon transition (illustrative example)
GW Under utilised assets
time
Increase in capacity required
Increase in demand peak
Due to new inflexible nuclear and intermittent renewable generation assets (e.g. wind & solar) reducing generation flexibility
Inefficient electricity systems and inflexible demand result in higher electricity bills
Demand flexibility offers opportunities for improved, efficient electricity systems and cost reductions
Unlocking demand flexibility for cheaper electricity
Utilising demand flexibility changes the way suppliers buy electricity, saving money by improving the efficiency of the system
Suppliers with a traditional model use an assumed demand profile for NHH customers to estimate usage rather than actual data so when customers use electricity it makes no difference to them
Demand flexibility (illustrative example)
Flexible demand profile
time
GW
Current demand profile
Consumption of flexible customers can be moved to cheaper periods
The physical structure of energy delivery defines the industry’s cost structure; the Energy Supplier is the hub that manages the financial flows associated
ENERGY SUPPLIER
Distribution Network Operator
Transmission Network/System Operator
CUSTOMER
Physical Energy Flow
Financial Flow
Wholesale Energy Price
Transmission Network Charge &
Balancing costs
Distribution Network Charge
Generator
Regulatory control
Wholesale costs
Supplier operating costs Supplier
profit
Environmental & Social costs
VAT
Network costs
Demand flexibility can be used to optimise most elements that make up the bill
Minimised by shifting flexible demand to off-peak periods
Reduced by actively trading
and varying demand to
match low price periods
Household Bill Savings with demand flexibility
Balancing charges also minimised by
managing usage in real time
Wholesale costs, 39%
Supplier operating costs, 13%
Supplier profit, 6%
Environmental & Social costs, 11%
VAT, 5%
Network costs, 26%
Household Electricity Bill Breakdown (Ofgem 2015)
Government taxes, regulations and legislations Costs of running a supply business
[the only costs that traditional suppliers can effectively control]
Transmission and distribution costs
Cost of electricity trading
11 Further opportunities can arise from raising revenue from participating in balancing services and capacity market
Inefficient electricity systems and inflexible demand result in higher electricity bills
Demand flexibility offers opportunities for improved, efficient electricity systems and cost reductions
Unlocking demand flexibility for cheaper electricity
Tempus unlocks value from customer flexibility to reduce its cost of supply
This approach increases the efficiencies in the system in generation, transmission, distribution and balancing, resulting in lower electricity bills for the customer
We acquire customers who have the potential to be flexible in their electricity use
We fit equipment in their premises to unlock their flexibility
We work with their flexibility to obtain electricity as cheaply as possible
We share this value with our supplied customers by offering more competitive tariffs
Tempus can operate this model due to its proprietary optimisation and control technology, the SAM™
SAM™ (Smart Aggregation Manager)
Customers
Energy purchase based on prediction
‘Real-time’ demand flexibility according to changing market needs
Control signals
Real-time usage data (KWh)
Flexibility profiles (KW)
Consumption profiles (KWh)
Weather data
Market data
System data
…shows variations from
predicted demand…
…over/under use in Grid… In 30 min
settlement period
Prediction
The SAM™ model
Tempus’ system interacts with existing technology at the customer site
Existing
New
Interface controller (secondary equipment)
Tempus Energy Control
BMS control based on Demand Flexibility plan
Existing BMS controller
BMS cloud services
BMS control override and other cloud services (e.g.
energy analysis, maintenance functions)
Internet
… Other
Key:
Assets
Head Office
Cold Storage HVAC Hot water
BMS = Building Management System
- Smart meters: Need to settle customers on their actual consumption to extract value from flexibility
- Non-time sensitive, non-critical load
Thank you!