Contracts to reduce London’s peak demand

UK Power Networks is trialling ground-breaking contracts which encourage industrial and commercial customers to help reduce electricity demand on its networks at peak times when called upon to do so, in return for payments
From press releases - 12 October 2012 09:00 AM

UK Power Networks is trialling ground-breaking contracts which encourage industrial and commercial customers to help reduce electricity demand on its networks at peak times when called upon to do so, in return for payments. 

The research – part of Low Carbon London (LCL) funded by Ofgem’s Low Carbon Networks Fund – aims to investigate and demonstrate reductions to the carbon footprint and cost of distributing electricity in London.

A number of major business customers, including: ExCel (signed up via Flexitricity), a major London department store (via EDF Energy) and a London visitor attraction (via EnerNOC), have signed contracts with aggregator partners. They form the agreements with the business customers to reduce their electricity use at times of peak demand or system constraint, in return for payments.

Customers participating in the programme agree to reduce their demand when called on to do so by a defined number of megawatts of electricity between times of estimated higher demand on the electricity network. Customers can also be called upon to reduce demand where UK Power Networks is managing a constraint on the network, such as a fault on a piece of equipment.

The contracts with the aggregators, to provide a service known as ‘demand response’, is an established way of helping to balance the national transmission system managed by National Grid. Now UK Power Networks is exploring its potential to balance electricity supply and demand locally on the electricity distribution network.

Chris Barnes, building services manager at ExCel, said: “Whilst it would be difficult to reduce the demand on the electrical network by reducing lighting and plant demand due to the nature of the exhibition industry, we do have the capability to employ generators to supplement that demand. We, in partnership with Flexitricity, have been operating on similar demand reduction strategies (STOR and TRIAD management) for a number of years so it was natural for us to enter into this agreement for Low Carbon London. This has been achieved with no impact on core business."

As part of the demand response trial, UK Power Networks pays industrial and commercial customers, via an aggregator, to take less electricity from the network at times of peak demand. Customers curtail their electricity demand from the network by either switching to back-up generation or increasing electricity output from installed combined cooling and heating power equipment, or simply by reducing their electricity usage.

The contracts have the potential to reduce peak demand on the electricity system while also reducing the need to keep oil and coal-fired power stations on standby, or run less efficient generation. The contracts also pave the way for more use of electricity generated from low carbon sources such as wind or local CHP plants.

Liam O'Sullivan, Low Carbon London programme director, said: “The trials will establish the amount of business interest in innovative responsive demand contracts. Energy-aware businesses can gain financial rewards from reducing their electricity demand where this helps UK Power Networks to operate our electricity system more efficiently. Crucially, this will never compromise security of supply, as each business will retain full control over how they defer or reduce their electricity consumption for short periods in response to requests from our system.

 “In these cost-conscious and environmentally-aware times, we are pleased that major organisations in our London test bed have welcomed the opportunity to generate new revenue in return for helping us to make better use of our network and low carbon electricity.”

Justine Brown, Low Carbon London programme manager at EDF Energy, said: “We were pleased to bring the first customer into the trial. We see the LCL trial as an important step towards shaping the future of demand management and low carbon networks.

“It’s a fantastic opportunity for our customers to earn additional revenues whilst gaining greater ability to manage their energy demand.” 

Kelly Lorincz, director, EnerNOC UK, said: “Low Carbon London represents an innovative approach to meeting the City’s energy demands. For customers, it is a win-win situation: they are proud to help London work towards a clean energy future while at the same time driving value for their businesses.”

Systems are installed within the customers’ premises to enable demand response to happen by remotely starting generators or curtailing demand. This is preferable but the customer can choose to remain in control of their generating equipment. The customers can opt out at any time, ensuring that any participation does not have an adverse effect on their core operations.

The research will also be looking at whether businesses that can be flexible with their electricity use can also adjust their demand in response to intermittent wind generation.

As part of the trials, customers may also be called upon to use their standby or Combined Heat and Power generation when a fault temporarily increases the strain on the electricity network. The research will test whether customers can reduce their demand following a fault at a substation or on a cable as part of the management of the incident, to maintain security of supply.

Low Carbon London is looking to a future where demand response will be an important tool in managing the electricity network. Long term, the contracts might reduce the level of investment needed in equipment such as new transformers and cables to serve growing demand. The contracts could also reduce reliance on carbon-intensive power stations.

Initial findings from the trial were shared with the industry during the summer to help shape further testing of the demand response concept as part of the Low Carbon London programme.


For further information please contact Niamh Arnett, in the UK Power Networks press office, on 0845 302 7292.

Notes to editors: 1. UK Power Networks distributes power to a quarter of Britain’s population through its electricity networks serving London, the South East and the East of England. The company's 5,000 employees are dedicated to delivering a safe, secure electricity supply to about eight million homes and businesses via its networks of substations, overhead lines and underground cables. 
UK Power Networks distributed the electricity at many venues for this summer’s international sporting events. This year we are investing £360million in our electricity networks and around £1.8billion in the five years to 2015. We are also undertaking trials to ensure our electricity networks support the transition to a low carbon future.
Customers pay their bills to supply companies but UK Power Networks delivers the power across our three areas. The industry regulator Ofgem sets an allowed revenue to distribution companies so that they can maintain safe and reliable electricity supplies. If customers are unfortunate enough to be affected by a power cut or have another issue with the electricity supply to their property, they should contact UK Power Networks.

2. Low Carbon London, led by UK Power Networks, is a £30million pioneering learning programme funded by customers through Ofgem’s Low Carbon Networks Fund and the electricity network operator. Its aim is to use London as a test bed to develop a smarter electricity network that can manage the demands of a low carbon economy and deliver reliable, sustainable low carbon electricity to businesses, residents and communities. The programme will explore how to combine new technology and commercial innovation – such as localised generation, electric vehicles, heat pumps, smart meters, time of use tariffs and responsive demand services – to support a low carbon energy economy. UK Power Networks’ partners on the Low Carbon London programme are Siemens, Logica, EDF Energy, Greater London Authority, Transport for London, National Grid, Institute for Sustainability, Flexitricity, EnerNOC, Smarter Grid Solutions and Imperial College London. More information on Ofgem’s Low Carbon Networks Fund is available here: