Our Smart Energy Guide January 2016

What is Demand Side Management?

Demand side management sees energy users changing their patterns of electricity usage in order to help balance supply and demand on the power system.

Download our guide to Demand Side Management

Topics in this edition:

• Background
• How demand side response is provided
• Policy landscape
• Incentives for Businesses
• Future developments
• The role of energy efficiency

Background

Preserving the stability of the power system requires that electricity demand and supply always remains in balance. Historically, this has been achieved through generating plants delivering more or less power onto the system as required.

However, owing to increasingly challenging market conditions and stringent environmental policies, a number of the UK’s thermal power stations have closed in recent years, with more set to follow. At the same time, there has been a marked increase in the installed capacity of renewable energy generation, including the likes of wind and solar power.

This combination – the closure of reliable generation and the volatility caused by more renewables coming on stream – makes it likely that demand-side management will take on greater importance in the UK energy system over the coming years.

Incentives for Businesses

The financial incentives offered through various governmental programmes, such as remain the most substantial benefit to businesses of DSR. Research for the government, undertaken by Frontier Economics, said that such payments were essential to providing businesses with the encouragement to look more closely at the potential of demand-side management.

But there are other, non-financial incentives for businesses for becoming involved in demand-response
schemes. They can, for example, receive a reputational boost through their improved green credentials
and reduced carbon footprint.

We hope you find our Smart Energy Guides useful. Your opinion is valuable: let us know what important topics you would like us to cover in our market guides, news, insights and blog articles.

We post up-to-date energy market news and insights also on our Twitter account @MonarchPship.

Suggested further reading:

Demand Side Response – Bringing Businesses into Balancing by The Energyst (requires registration).