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Rise of renewables provides opportunity for 'flexible' energy service providers, says expert

Out-Law News | 13 Jun 2017 | 4:42 pm | 1 min. read

Energy service providers that embrace energy storage and demand-side response technologies will be best placed to benefit from the increasingly central role renewables are playing in powering UK homes and businesses, an expert has said.

Nick Shenken, expert in energy law at Pinsent Masons, the law firm behind Out-Law.com, was commenting after the Electricity National Control Centre at National Grid reported last midweek that the majority of the UK's demand for electricity had been met by wind, solar, biomass and hydro power sources for the first time.

The ENCC, which balances electricity generation and demand in real-time across Britain, said those renewable energy sources provided 18.7GW of power at 1pm on Wednesday 7 June, which accounted for 50.7% of demand.

Shenken said: "Record contributions from renewables, particularly in summer months, are unsurprising when you consider that, in terms of solar alone, we have moved from under 100MW installed to over 12GW in around seven years. When you combine that with the UK’s wind farm development – both onshore and offshore – you have a very different generation mix now from that to which we were historically accustomed."

"As some media reports have already highlighted, this can have a depressive effect on wholesale pricing. Indeed the day-ahead baseload power price dropped to a near eight-month low at one point last month. However, it also draws criticism for the potential disruption to the existing system caused by the intermittent volumes generated," he said.

"The intermittency issue needs to be viewed in context however," said Shenken. "The levers available to National Grid have thus far been able to cope. That’s not to say that these shouldn’t develop further to provide options at lowest possible cost to the consumer, but this – at least in my view – represents an opportunity in a market where electricity storage and associated demand side management/response looks set to play an increasingly large role. The stage is therefore set for an ever increasing role for flexible service providers to respond to the needs of the system."

"That said, National Grid has an equally important role to play in ensuring those providers are incentivised to participate and innovate. A good example of this is its current 'System Needs and Product Strategy' (SNaPS) consultation, one of the aims of which is to make frequency services that National Grid buys from the market more simple and transparent," Shenken said.

Demand-side response, or DSR, is where energy users moderate their energy consumption at times of the day when there is additional strain on supply.