British companies, factories and hospitals are bidding to be paid by the national power provider to reduce demand at short notice if the country faces an electricity shortage in the peak winter period next year – as the Institution of Mechanical Engineers set out a stark warning for electricity shortfalls within a decade

David Hunter, energy analyst at Schneider Electric comments:

“The demand response auction is just one of a number of options being introduced to boost spare capacity, and schemes such as this are great to balance short term reserves and leverage the ‘negawatt’ – the power stations that we don’t have to build. 

“The UK energy system is facing unprecedented challenges as dirty fossil fuel stations are shut and ageing nuclear stations come to the end of their lives.  The lack of investment in replacement generation means that capacity margins are already uncomfortably tight and, as we move into the 2020s this challenge only increases.  New centralised power plants alone will not be enough – even if they can be built in time.  We will have to leverage energy efficiency, decentralised power generation, energy storage, interconnection with Europe and smart demand-side technology to build a secure and decarbonised supply in future.

“Energy consumption behaviour can and must be changed, not only to help avoid blackouts during tight peak demand periods, but to help reduce carbon emissions. For every unit of electricity consumed by a business, three units of energy must be generated. This 1:3 ratio is the result of the electricity manufacturing processes combined with the transportation and conversion of that energy from the national grid. The best thing businesses can do is make the most of every electricity unit, and identify the energy units that they do not need to consume.

“By focusing on the ‘negawatt’, driving efficiency to curb usage and balancing load with demand-response technology we can shift from playing catch-up to the ever-increasing demand to a more steady, secure supply.”