“Demand response: a horror story”, by IRINA Slav

Another piece from the first energy standup comedian:

Demand response: a horror story

IRINA SLAV

NOV 04, 2024

∙ PAID

Here’s a funny story for you. I had this neat idea to talk about hydrogen this sunny November Monday because it’s been a while since I last ranted on the topic. I’d lined up links, I’d lined up points and all was set. But then I saw this: UK homes to be offered payments to cut electricity use all year round. There was no way I was passing on such a great rant opportunity, so hydrogen would have to wait. Let’s talk demand response!

The story above was published in the Financial Times on Sunday, citing unnamed sources as saying the new British grid operator was planning to incentivise people and businesses to use less electricity during peak demand periods by paying them off, essentially.

Apparently, they’d done trial runs in the last two winters. Since their start, the trial runs had saved 3.7 GWh of electricity. Great job, no? Also, interestingly, rather profitable for energy suppliers. Because they get paid to supply less electricity to consumers and businesses. That’s right. You supply less electricity and you get money for that. It’s a dream setup. You do less and get paid for it. Obviously, a flawless, nothing-can-go-wrong system that would benefit all involved. Or is it?

Here’s how it works. Let’s say you’re a modest household and you want to save some money on your electricity bill. Since you can’t trust yourself to reduce your consumption at the appropriate time, you contact your supplier, the noble Octopus Energy, for instance, and give them access to your smart meter. Yes, you need a smart meter for that.

The Octopus reads your meter at regular intervals and when the time comes to save energy, down supply goes. These periods are called “events” for some no doubt rational reason. And there are going to be more of them in the future as the buildout of wind and solar continues. Unabated, I might add. Severely unabated, I might even go as far as to say.

So, you run your washing machine at dawn instead of the afternoon, the Octopus gets 3 pounds per every 1 kWh saved and you get a lower electricity bill because you Responded to Demand by reducing yours. In the last two years, when households and businesses saved those 3.7 GWh, the Octopus and British Gas got richer by 3.7 million pounds since, unless Google is lying, 1 GWh is equal to one million of those kilowatt-hours we guzzle while we cook dinner, bake bread, do the laundry, and, I don’t know, heat our houses with heat pumps. But I’m sure they passed some of that on to the consumers. Maybe even all of it.

Those were trial runs, however. They comprised, per Energy UK, the industry lobby group, “either one of twelve one-hour tests or a slightly longer ‘live’ event (when the service has been called to support the grid).” The length of the “slightly longer” ‘live’ event” has not been specified but I imagine it would depend on wind speeds and volumes. The less wind generation there is, after all, the greater the demand response, lest power suppliers are forced to resort to the use of gas-fired generation, which is obviously unacceptable.

Initially, the so-called Demand Flexibility Service, because flexibility sounds so much better than energy rationing, only ran during the winter months. Now, the National Energy System Operator has gone and made it a year-round affair. Because NESO believes that “businesses and households need to play a far greater role than currently in balancing the electricity system.” Cue sinister music.

Whatever might this “far greater role than currently” involve, you may well wonder. Well, per the FT and please do be so kind as to refrain from laughing out loud to avoid spilling beverages over your screens, “This could involve factories ramping up output during windy periods when wind farms were at higher capacity, or households unplugging electric cars when renewables output is low.”

Okay, if a picture is worth a thousand words, then the sentence above is a masterpiece. It depicts a country whose factories can ramp operations up and down depending on wind speeds and volumes, and whose citizens are all happy EV owners who can with little to no trouble switch the charging chore from early evenings to overnight. That’s it. Oh, and also maybe switch from oven to microwave, according to the nice helpful people from Energy UK.

But let’s talk factories first. I have only been in a factory once, when I was little and the school made it its mission to introduce children to various industries. It was a factory manufacturing wood veneers and the only thing I remember from that visit more than 30 years ago was the noise. The place was full of machines and they were all running.

It was much later that I learned a fundamental and fascinating fact about machinery: running a machine at a steady, constant rate is much more energy efficient than switching it off and on again for whatever reason. That’s how I learned to schedule my baking engagements so that once I turn on the oven I can keep it running for the duration instead of turning it on for the bread, then off until it was time to make dinner, and then on again for said dinner.

That’s how I also learned that I’d save more fuel by letting my car’s engine idle for 30 seconds while I checked if I was perfectly aligned in the parking space instead of turning it off as if someone’s holding a gun to my head and then on again to correct my position. We do live and learn, don’t we?

Factory operators have learned that running their machines at a steady, constant rate saves them more money than alternative approaches to the manufacturing process. Now, they are being told they’d have to implement one of these alternative approaches: because energy supply is no longer reliable.

The situation strikes a familiar chord and that chord was played by Germany’s economy minister and former children’s books author Robert Habeck who said in the winter of 2022 that the gas price crisis didn’t mean the death of factories. Factories would just have to stop work for a few months and then go back to normal.

Then, earlier this year, Habeck went a step further, suggesting German industries needed to adapt their operations to weather patterns. You know, you assemble cars while the sun shines and the wind blows, and when that stops, you stop, too. It’s an obscene version of Gabriel Iglesias’ “When the sun goes down, you go down.” And some people believe this obscene version of a joke is the best blueprint for the future of industrial production.

So, what about households? Well, in addition to recharging all those EVs at night, people would have to learn to do their other energy-involving chores at times of slow demand, which of course would in no way shift demand patterns, leading to new peaks, which would in turn never lead to more demand response adjustments in order to shift peak demand again, which would totally not turn into a vicious circle of catch-up.

By 2030, according to those FT sources close to NESO, “demand flexibility” would need to rise from the current 3 GW to between 11 and 12 GW. A lot more households would need to get smart meters that their supplier could access at will and a lot more factories would need to start ramping their operations up and down — throughout the year. But hey, they’ll be saving money and using “homegrown clean energy”, as repeatedly described by that wonder of a man Ed Miliband. And electricity suppliers will keep getting more money to supply less electricity to those blessed millions of savers. It’s going to be a wonderful world.