Reforms could help manufacturers deliver a more flexible power system

Major power users such as manufacturers have a key role to play in creating a more flexible and secure electricity system, according to a new study.

Upgrading power: delivering a flexible electricity system, published by EEF, the manufacturers’ organisation, says that increased industrial energy efficiency and demand side response can help secure the UK’s electricity supply.

EEF’s research shows that an estimated 14% in electricity efficiency is still remaining through cost-effective measures within the manufacturing sector. On average, these measures have a 20-month payback period and a significant proportion require no capital investment at all.

If this potential was realised it could lead to a 12 TWh reduction in annual electricity consumption, equivalent to 4% of the UK’s current annual total, the report says.

Yet EEF’s survey suggests that under the current policy framework much of this potential will remain untapped. Just 34% of manufacturers felt that Energy Savings Opportunity Scheme (ESOS) audits had provided them with new information, indicating that most companies are already aware of many energy saving opportunities but for various reasons they are not taking them. Moreover, just 13% felt ESOS had helped develop the business case for energy efficiency investment.

“Accessing these potential efficiencies in the short term is entirely possible but reform is necessary to deliver on it,” EEF said.

Manufacturers can also contribute to security of supply through demand side response (DSR), which helps balance out the fluctuations in supply and demand for electricity.

“DSR is far from a last resort and should increasingly be one of the first options we look to in achieving electricity security,” the report said.

In EEF’s survey, just 9% of respondents currently take part in some form of DSR activity, with the most cited reason for this low level of engagement being the complexity of the system and a lack of understanding within companies. There are also regulatory barriers which urgently need addressing in order to deliver the full potential of DSR, EEF argued.

Discussing the barriers to DSR, Open-Energi’s director of public policy, Lucy Symonds, said that with more than 20 different DSR schemes and products for firms to navigate, “it is no wonder they feel bewildered”.

She added: “Simpler markets and a level playing field which lets DSR compete on the same terms as power generators will save energy, reduce costs for consumers and reward businesses for taking positive action. The challenge rests with policy makers to make regulation fit for purpose in a modern age of energy innovation.”

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