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Round Table: Water companies and demand-side response

The attractiveness of demand-side response as an additional income stream for water companies is clear, but utilities need to overcome practical and cultural challenges before realising its potential

Participants at the round table discuss DSR opportunitiesParticipants at the round table discuss DSR opportunities

Round Table Participants

Mike Woolgar, Water Strategy Director – Water, Energy & Industry, WSP (Chair)
Kirsten Abbott, DSR Lead, Southern Water
Robert Barker, Business Development Manager, Centrica
Matthew Burton, Energy Advisor / EICA Supervisor, South West Water
Steven Clarke, Global Product Development – Demand Side Response, Centrica
Matthew Crowhurst, Programme Manager, Wessex Water
Darren Hewerdine, MEI Chartered Energy Manager
Edward Knox, Energy Supply & Demand Specialist, Anglian Water
Julie McKinney, Energy Strategy, Policy and Regulation Specialist, Scottish Water
David Rose, Energy & Carbon Manager, South West Water
Bob Stear, Head of Innovation, Severn Trent
Rob Wild, Demand Side Response Manager, Severn Trent

by Katey Pigden

Water and wastewater companies are some of the largest consumers of energy in the UK, and with Ofwat increasing the pressure on firms to deliver more for customers with less, it is little wonder that water companies are keen to investigate demand-side response (DSR) as an additional revenue stream.

DSR – which sees large energy users amend their consumption or switch to their own generation in response to real-time demand - is about being flexible and intelligent with energy use, helping the grid strike the right balance and receiving payment in return. As a large consumer of energy with a great deal of its operational requirements not being time sensitive, the water sector is a particularly suitable contender for DSR technology.

Representatives from water companies across the UK gathered to discuss the topic at WWT’s roundtable in London on November 23, which was held in association with Centrica Business Solutions.

While some companies have been embracing DSR for quite some time, others had only “dabbled” in it and some were still exploring options.

As well as the financial incentives, companies agreed that the benefits of DSR included boosting resilience – for their own operations and for the overall resilience of the grid – and helping to sharpen the focus on energy use data throughout their businesses.

But although companies recognise there are opportunities associated with DSR, they are also aware it can present several challenges for them.

Third-party aggregators have been the route several of the water companies have decided to take, especially for Firm Frequency Response (FFR) which, it was noted, is most suited to wastewater sites. The advancement of technology in this area means that water companies no longer have to manually turn off or down an asset, as equipment such as pumps or blowers are able to respond automatically.

Some companies admitted they “didn’t know much” about the process around 18 months ago and despite there being a “lot of enthusiasm” surrounding the concept, people have needed reassurance and to “feel comfortable” as it involves operational data. Some participants said they had been selective with the sites they have introduced DSR at, typically concentrating on larger sites, to help the organisation learn about the process and make the highest proportionate gain.

Another popular scheme was the short-term operating reserve (STOR) where water companies offer an energy turndown or a switch to self-generation, in return for a price set through the capacity market. However participants mentioned two specific concerns about the scheme – first, that emissions regulations would soon mean switching to diesel generation would no longer be an option; and second, the onerous metering requirements involved.

One company won a capacity market contract with National Grid, only later to struggle with the metering requirements and it ended up transferring to an aggregator. Metering requirements also caused issues for a different water company, before it managed to complete the required upgrade in the nick of time.

Other challenges discussed included a lack of grid connection in rural areas, risks with contract lengths and potential political risks, IT security, as well as limited resources and site sizes. Cultural challenges were highlighted: some people within operational teams could be “sticklers” for how something has always been done, it was noted.

Many liked the idea of the savings to be had through DSR but had concerns about “messing around” with their current processes. However, being able to determine pre-set limits for the energy fluctuation of various assets has given peace of mind to several water companies on this point.

Others said that involvement in DSR schemes had helped their broader energy policy by building a relationship with the network operator.

One key theme which came up was the importance of understanding and the fear of the unknown. As with anything new, DSR can be a daunting prospect until you have sufficient understanding of how it works.
Participants questioned whether the benefits of DSR would be limited to larger operational sites. Companies admitted the smaller sites are being “left to last” as larger sites offered more immediate profitability; those with many small sites expressed concern about there being a lack of suitable products suitable to meet their needs.

One participant suggested that an aggregator for smaller sites could be the solution. Getting small sites engaged in DSR was seen as important to realise the full potential of DSR in the sector: there are not many industries which cover the whole of the UK and so the water industry is in a good position to take advantage.
Steven Clarke, global product development, demand side response at Centrica, said that technology is advancing quickly in this area and that water companies could gain considerably - and not just in financial terms - by getting on board.

“The revenue is certainly interesting for companies, and it’s mainly why people do it. But the next stage is the data and the insights you can get from it,” said Clarke. “So often you don’t know what you don’t know. It’s not until you shine a light on the energy that you are using across your business that you can realise the benefits.”

SPEAKER QUOTES

“The business case at first for demand-side response was to make money out of existing assets. But the financial side is just the tip of the iceberg; there are more opportunities to unlock.”
Robert Wild, demand side response manager, Severn Trent

“I can see us going straight to battery and skipping diesel generation, but we will need to find one to meet our resilience requirements.” Julie McKinney, energy strategy, policy and regulation specialist, Scottish Water

“We have only dabbled in DSR so far. At Bournemouth Water we used an aggregator because of the size of the portfolio we run.” David Rose, energy and carbon manager, South West Water

“It’s important to understand the whole process to know what you can and can’t do; that means having the right people in place.” Bob Stear, head of innovation, Severn Trent

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