Tata Steel and Flexitricity will help the UK's National Grid to preserve generating margins by reducing electricity demand this winter.
Both companies have been awarded demand side balancing reserve (DSBR) contracts by National Grid following a pilot tender held by the transmission firm earlier this year.
In all it has contracted 319 MW of DSBR across 431 individual sites to help it balance the power grid this winter. Under the contracts, the firms will reduce their electricity demand during peak demand periods, if required, a service for which they will receive compensation.
Demand side response is widely used in North America to help utilities balance their grids during peak periods without the need for investment in new power generating facilities. National Grid has decided to pilot its use in the UK as part of a package of additional measures designed to secure electricity supplies over the next few winters ahead of the implementation of a capacity market in 2018.
"We are encouraged by this first tender round and we think that the extra security these contracts provide is good value for consumers," said Peter Bingham or National Grid. "We are keen to promote and stimulate demand side services and will continue to talk to the industry to make the DSBR product mutually beneficial.
"These contracts will add to the tools that National Grid has to balance supply and demand throughout the winter in its role as electricity system operator."
Unexpected outages at four nuclear reactors owned by EDF as well as at two other power stations - E.On's Ironbridge plant and SSE's Ferrybridge facility - have led at an "increased level of uncertainty" over the security of electricity supplies this winter, according to National Grid. Ofgem, the energy regulator, says the margin of spare capacity over peak demand could be as low as five per cent this winter.
The DSBR contracts will apply for short periods between 1600hrs and 2000hrs on weekday evenings between November 2014 and February 2015. National Grid is also planning to hold two further tenders for 2015/2016 DSBR winter requirements over the next six months.
Sian Crampsie
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