A new approach to assessing the value of demand side management and storage in reducing costs for electricity system operation and investment

Abstract:

<p>This document is a project report for the project 'A new approach to assessing the value of demand side management and storage in reducing costs for electricity system operation and investment.'</p> <p>The UK is committed to responding to the climate change challenge and the energy sector, and in particular electricity, is expected to make a significant contribution to achieving this goal. Wind power, both on and offshore is presently the principal commercially available and scalable renewable energy technology and it is expected to deliver the majority of the required growth in renewable energy. However, the amount of electricity generated by wind is highly variable and therefore difficult to predict. One of the key challenges of this development is to ensure cost effective integration of these resources in the operation and development of the UK systems without compromising supply security.</p> <p>The unpredictability of wind power makes it difficult to maintain the equilibrium between demand and generation. This increases the need for the use of technologies which help manage and control the level of demand, known as Demand Side Management. Demand Side Management, or DSM, works by shifting demand from peak to off-peak periods in order to reduce its variability. </p> <p>This project investigated a new approach to assessing the benefits DSM could have to the UK. In this context, the proposed project will investigate a new approach to valuing DSM for alternative future development scenarios of the UK system. The methodology used was based on a radically new approach mixing modern financial modelling coupled with sophisticated mathematical and computational techniques. This investigation developed a novel mathematical framework aimed at valuing applications of DSM in increasing the utilisation and improving the efficiency of the operation of future UK electricity system. The project showed that it is possible to save around 30% of the generation cost to warm a typical household in winter using DSM.</p>

Author(s):

Duck, P.