Großbritannien : August 06, 2010

Over recent years, volatility in commodity prices and increased pressure to reduce carbon emissions has brought energy efficiency to the forefront of budgeting concerns for all sectors. Whilst it is generally accepted that reductions in energy usage leads to overall cost reductions, few are aware that considering how and when energy is used will have an equally significant bearing. What is known as Demand-Side Management (DSM) could pave the way to achieve affordable energy costs for consumers, without high capital cost investment.

In April 2010 UK industry regulator Ofgem introduced changes to the way in which distribution charges are applied to consumers, re-allocating costs from standing charges and into unit rates, thus making the level of these increases being specific to usage patterns. Therefore, consumers that use a large proportion of energy through a daily peak banding period, traditionally between 5pm and 7pm, will experience higher utility costs because of this. DSM can be used to counteract these changes by shifting consumption load patterns into less expensive pricing bands. Whilst radical changes to the way energy is used may be unachievable, a shift of only 5 per cent of peak usage into lower price bands would lead to significant reductions in cost. The true value of these savings can easily be disregarded at present as the majority of supplier tariffs offer little transparency in the breakdown of banding periods. However, suppliers currently carry a huge amount of risk when pricing a single rate tariff or day/night tariff, as future usage for contracted supplies is unclear. To minimise the risk this creates, it is expected that complicated tariffs with 6 or more rates will be introduced in future to ensure that usage during particular bands is charged appropriately. Once these tariffs are in place, there will be more of a requirement for DSM products to be utilized.

DSM may be viewed as only relevant to high consuming industrial users, but with the introduction of Smart Metering and AMR technology (to be installed as a mandatory requirement by 2014) the industry is moving towards all supplies being affected by load usage. Ofgem has already invested £500 million into the Low Carbon Network Fund, which will aim to innovate the role of demand side technology. With the energy regulator committed to the implementation of these products, it won’t be long before management of load usage becomes as necessary to cost control as effective procurement purchasing.