The January 2016 transitional capacity auction could be lucrative for British businesses as it is specifically focused on the area of demand-side response (DSR) and small distribution network connected generation. This allows all companies, and not just major generators, to unlock hidden flexibility in existing equipment and earn income through providing energy at times of high national demand.
Despite this, only 46% of retailers who are eligible to participate in the auction said they would be taking part. With the auction just weeks away, 42% of respondents who were eligible said they were unsure whether they’d be participating, suggesting a lack of knowledge about the auction and how businesses can get involved.
Of those surveyed, only 26% used demand-side-response to manage their business energy spend, with 43% saying they did not use it even though they would like to. Three quarters of retailers (75%) said they were not using demand side response simply because they did not know enough about it in order to make an informed decision.
Most businesses thought governments should provide more incentives and information around DSR; with 64% supporting increased government assistance. Of those who do use DSR, a majority (57%) do so in order to reduce energy costs, with the same percentage saying they use the revenues to offset their energy spending.
Wayne Mitchell, Director of Markets & Innovation for npower Business Solutions, said: “The first ever DSR capacity auction represents a landmark moment for the Government to create a more varied and resilient energy network. However, given this strong opportunity it is very disappointing that there appears to be a lack of knowledge about the capacity auction and DSR more generally. Many businesses told us they would like to take part but felt they lacked the knowledge to do so.
“With many companies doing everything they can to save money, DSR presents a potential opportunity for businesses to positively impact their bottom-line. The Government and the energy industry share an equal responsibility to make sure businesses possess the information they need to take advantage of DSR in the future.
“By taking part in DSR, firms can potentially reduce their energy costs and receive payments for any excess energy exported back into the Grid. They can also benefit from the flexibility of supply around costly periods such as winter Triads.”