UK firms could cut electricity bills by £20,000 with demand side response

Businesses in the UK could save thousands of pounds by adjusting their power use at peak times, according to a new analysis.

Energy provider SmartestEnergy has calculated that around 10,000 UK companies have the potential to save £20,000 or more each year by adopting demand side response (DSR). This allows them to make money from the capacity market and energy trading by turning turn down or turning off non-essential energy use at times of high demand.

For example, supermarkets can reduce power to cold stores, fridges and freezers for short periods; manufacturers can shift some production outside peak hours; and data centres can switch to back-up generation.

For every £1,000 businesses earn in capacity market payments they can save a further £5,000 by avoiding peak energy charges, SmartestEnergy said. Firms buy electricity in advance at £40-£50 per megawatt-hour, and once they have identified flexibility in their electricity consumption they can also make money by selling this back to the market at premium prices instead of consuming it themselves.

“Matching demand to supply is key to a cost-effective and reliable energy system, and businesses which can help do this stand to gain by tens of thousands of pounds a year,” commented Robert Groves, chief executive of SmartestEnergy. “The average business can shift 10% of its energy usage with little impact on operations.”

The CBI recently called on the Government to make DSR more widely available.

In its response to the Department for Business, Energy & Industrial Strategy’s call for evidence on energy system flexibility, the business group said: “A smart, flexible system could better facilitate the uptake of the full range of demand side response measures, but more must be done to make it more accessible to both domestic and business consumers.”

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