Due to multiple power plant failures, the National Grid (NG-UK) has issued a Notification of Inadequate System Margin (NISM), highlighting concerns about shrinking reserve capacity, particularly during winter months. While an immediate risk of a blackout has been ruled out, NG is urgently requesting an additional 500 MW capacity between 16:30 and 18:30 (peak demand hours) on Wednesday.
To address this need, short-term capacity can be sourced by either reducing energy demand or increasing output from additional power plants. Short Term Operating Reserves (STOR) aggregators play a vital role in providing this short-term capacity to NG on short notice. These aggregators have agreements with independent power plant operators and large industrial consumers. NG incurs costs for both the availability period (£/hour/MW) and delivery payments (£/hour/MW) in case energy is delivered.
Large commercial and industrial customers can financially benefit by either reducing their energy consumption or providing emergency capacity through STOR aggregators. While technology exists to implement demand-side reduction with financial incentives, widespread acceptance poses a challenge. To make demand-side management (DSM) widely acceptable, the energy regulator, OFGEM (Office of Gas and Electricity Market), could intervene by developing DSM standards.
To uncover the real benefits of the smart meter initiative, regulators should collaborate closely with NG, energy suppliers, and customers. Despite the UK-wide rollout of smart meters and automation, incentivizing domestic customers to participate in DSM remains challenging due to low real-time power consumption and dependence on family lifestyles.
Maintaining an adequate system margin and controlling energy costs are imperative for NG. The implementation of DSM eliminates the need to build reserve power plants. To achieve the best of both worlds, OFGEM should play a key role in defining DSM standards tailored to each market segment (e.g., domestic, commercial, large commercial, and industrial). This strategic approach ensures efficiency and resilience in the energy system, ultimately benefiting both consumers and the overall grid stability.