THE BALANCE OF POWER
4
M any in the milling and grain sector may be unaware that there is a significant new revenue stream available to progressive and forward- thinking mills. It focuses on the use of energy, and how by turning the power down for a relatively short period each year in line with National Grid’s and EirGrid’s requirements, companies can enjoy considerable and long-term financial rewards. High Energy Consumption The milling and grain industry is by its very nature an intensive user of energy. In flour mills, energy-using equipment as such roller mills, purifiers, sifters, fans and conditioning kit is commonplace. The equipment found in animal feed mills – such as pellet presses, steam boilers, grinders and fans is equally as energy-intensive. Unfortunately this level of intensive energy use across industry represents a problem in the power sector, where only the most oblivious will be unaware that there exists a somewhat precarious electricity supply situation. According to a Guardian newspaper report earlier in 2016, UK electricity demand is expected to outstrip supply by over 40% within 10 years. Financial opportunities for energy-intensive businesses Many thought renewables would deliver the answer, but in reality the inflexibility of renewable energy sources in conjunction with the difficulty of controlling grid stability in real- time, represents a major challenge for grid operators. In simple terms, when generation and energy demand are imbalanced, a change of frequency in the grid system occurs, which is made worse by the intermittent nature of wind and solar sources. The requirement for quicker grid balancing and frequency is why the system operators (National Grid (in the UK) and EirGrid and SONI in Ireland) now offer a number of opportunities for energy-intensive businesses, with very lucrative rewards for those able to offer real-time response. Ofgem, the industry regulator, is also on-board, recently laying out five priority areas of focus, central to which is a pledge to make the UK energy system more flexible. With this in mind, Ofgem is actively encouraging businesses to engage in demand- side response. Demand-side response Firm frequency response (FFR) and the new Dynamic FFR, as well as the forthcoming (2017) Enhanced FFR, are schemes that all form part of the system operators’ broad DSR (Demand Side Response) suite of solutions. In essence, these schemes involve removing sufficient load from the grid to stabilise frequency. To help boost uptake, the National Grid and EirGrid are offering those that participate the potential to earn extra income from assets by adjusting power consumption in real-time. As a result, grid operators can reduce the requirement for coal and gas-fired reserves to be ready to supply power at short notice. Earn up to £90,000 per megawatt This is where the milling and grain industry can accrue significant financial rewards. To provide an indication, in the UK sums of up to £90,000 are currently achievable for every megawatt (MW) of average onsite energy consumption turn down. In Ireland, the latest scheme – DS3 System Services – also offers very significant sums per megawatt. Any mill expecting to endure weeks if not months of blackouts to see financial savings on such levels would be wrong. In the first instance, the requirement is for ‘turn-down’ not ‘turn-off’, and secondly, the sums stated are in return for around 10 (on average) ‘turn-down’ events per year, lasting for a maximum of just 30 minutes each. In total, this adds up to – on average - around 5 hours a year. For those thinking there must be a catch, there isn’t. The grid operators are prepared to pay such high rewards as it is obliged to control frequency within the limits specified in the ‘Electricity Supply Regulations’, i.e. ±1% of nominal system frequency (50.00Hz) except in abnormal or exceptional circumstances. It must therefore ensure that sufficient generation and/or demand is reserved in automatic readiness to manage all credible eventualities that might produce frequency variations. Virtual power plant As every milling and grain facility will have its own array of assets and requirements, comprehending and choosing the Lucrative ‘power balancing’ schemes can help the milling and grain industry unlock long-term revenues of £90,000 per Megawatt from National Grid or EirGrid by Michael Phelan, CEO at National Grid and EirGrid Aggregator, Endeco Technologies THE BALANCE OF POWER 52 | October 2016 - Milling and Grain F
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Transcript of THE BALANCE OF POWER
Many in the milling and grain sector may be unaware that there is a significant new revenue stream available to progressive and forward-thinking mills. It focuses on the use of energy, and how by turning the power down for a relatively short
period each year in line with National Grid’s and EirGrid’s requirements, companies can enjoy considerable and long-term financial rewards.
High Energy ConsumptionThe milling and grain industry is by its very nature an intensive
user of energy. In flour mills, energy-using equipment as such roller mills, purifiers, sifters, fans and conditioning kit is commonplace. The equipment found in animal feed mills – such as pellet presses, steam boilers, grinders and fans is equally as energy-intensive.
Unfortunately this level of intensive energy use across industry represents a problem in the power sector, where only the most oblivious will be unaware that there exists a somewhat precarious electricity supply situation. According to a Guardian newspaper report earlier in 2016, UK electricity demand is expected to outstrip supply by over 40% within 10 years.
Financial opportunities for energy-intensive businessesMany thought renewables would deliver the answer, but
in reality the inflexibility of renewable energy sources in conjunction with the difficulty of controlling grid stability in real-time, represents a major challenge for grid operators. In simple terms, when generation and energy demand are imbalanced, a change of frequency in the grid system occurs, which is made worse by the intermittent nature of wind and solar sources.
The requirement for quicker grid balancing and frequency is why the system operators (National Grid (in the UK) and EirGrid and SONI in Ireland) now offer a number of opportunities for energy-intensive businesses, with very lucrative rewards for those able to offer real-time response.
Ofgem, the industry regulator, is also on-board, recently laying out five priority areas of focus, central to which is a pledge to
make the UK energy system more flexible. With this in mind, Ofgem is actively encouraging businesses to engage in demand-side response.
Demand-side response Firm frequency response (FFR) and the new Dynamic FFR, as
well as the forthcoming (2017) Enhanced FFR, are schemes that all form part of the system operators’ broad DSR (Demand Side Response) suite of solutions. In essence, these schemes involve removing sufficient load from the grid to stabilise frequency.
To help boost uptake, the National Grid and EirGrid are offering those that participate the potential to earn extra income from assets by adjusting power consumption in real-time. As a result, grid operators can reduce the requirement for coal and gas-fired reserves to be ready to supply power at short notice.
Earn up to £90,000 per megawatt This is where the milling and grain industry can accrue
significant financial rewards. To provide an indication, in the UK sums of up to £90,000 are currently achievable for every megawatt (MW) of average onsite energy consumption turn down. In Ireland, the latest scheme – DS3 System Services – also offers very significant sums per megawatt.
Any mill expecting to endure weeks if not months of blackouts to see financial savings on such levels would be wrong. In the first instance, the requirement is for ‘turn-down’ not ‘turn-off’, and secondly, the sums stated are in return for around 10 (on average) ‘turn-down’ events per year, lasting for a maximum of just 30 minutes each. In total, this adds up to – on average - around 5 hours a year.
For those thinking there must be a catch, there isn’t. The grid operators are prepared to pay such high rewards as it is obliged to control frequency within the limits specified in the ‘Electricity Supply Regulations’, i.e. ±1% of nominal system frequency (50.00Hz) except in abnormal or exceptional circumstances. It must therefore ensure that sufficient generation and/or demand is reserved in automatic readiness to manage all credible eventualities that might produce frequency variations.
Virtual power plantAs every milling and grain facility will have its own array
of assets and requirements, comprehending and choosing the
Lucrative ‘power balancing’ schemes can help the milling and grain industry unlock long-term revenues of £90,000 per Megawatt from National Grid or EirGrid
by Michael Phelan, CEO at National Grid and EirGrid Aggregator, Endeco Technologies
THE BALANCE OF POWER
52 | October 2016 - Milling and Grain
F
optimum DSR scheme is vital. With this in mind, partner companies known as aggregators provide the critical elements that enable participating companies to make the best selection and optimise returns.
Aggregators take a central role in this new power-balancing arena. In essence, they act as intermediaries between the Grid operators and large energy users. They create a ‘virtual power plant’ where the assets of hundreds of companies are aggregated. This provides a grid-balancing mechanism helps the system operators to deliver on their vision for a more sustainable, flexible power infrastructure.
All of this combines to help National Grid (UK) and EirGrid (Ireland) to minimise the operational costs of making the grid ‘smart’ because the aggregators deliver a technical solution to the challenge of grid balancing.
Essential partnershipFrom the point of view of the end user, an aggregator – such as Endeco
Technologies - is an essential partner for any feed or grain mill that wishes to take advantage of the long-term lucrative opportunities. They take care of the necessary hardware and software installation, as well as the online monitoring and reaction systems, and the day-to-day running of the system.
All of this is offered without any capex requirement, with the aggregator instead taking a percentage of the scheme pay-out. As a point of note, the aforementioned sum per megawatt is the amount payable after the aggregator has taken payment.
Participating companies are in prime position to benefit from this offer. In this first instance, energy consumption is reduced on selected equipment after an audit of the plant, before energy strategies to reduce cost are adapted and agreed with the plant’s operations team.
The chosen aggregator will connect the manufacturer’s principal assets to its proprietary on-site optimisation platform, which enables the automated control of energy consumption via wireless smart sensors and actuators. One part of the aggregator’s job is to ensure mills are ready and able to turn down their energy use when the grid operators require it, and check that the response works correctly. Facilities employing an aggregator simply relax and concentrate on day-to-day business.
Aggregate to accumulateThe answer to the question of which aggregator is best depends on
many factors. However, companies should be mindful to only work with one that has a solid portfolio of successful existing sites under its belt.
A further vital factor is to choose an aggregator, such as Endeco Technologies that offers a technology platform that can future-proof against better schemes being introduced.
Response schemes are always likely to change over time and plants participating in the scheme must be technology-ready to access more financially attractive tariffs.
Ultimately, DSR schemes represent a no-risk route to generous additional income for mills willing to help the UK better manage its challenging electricity requirements.
HOW TO EARN MONEY FROM YOUR ENERGY-USING ASSETS
IDENTIFY: An approved National Grid or EirGrid aggregator will assess your available assets and calculate revenue potential:In flourmills, assets are likely to include: roller mills, purifiers, sifters, fans and conditioning kit. In animal feed mills, assets may include: pellet presses, steam boilers, grinders and fans.
DEFINE: Your aggregator will work with you to establish parameters for response (including generator / battery back-up), define constraints and operational priorities. This ensures that there will be no impact on your operations and processes as a result of turn-down.
IMPLEMENTATION: Your aggregator will install and configure its technology platform to connect your energy intensive assets with no capital outlay *.
RESPOND: Once you’re connected, you’re ready to respond when required, without risk or impact on your productivity.
EARN: You start receiving monthly payments from the Grid Operators within one month.
*Endeco Technologies doesn’t ask for any capital outlay for the implementation of the technology platform. Other aggregators might take a different approach.
More information: www.endeco-technologies.comOr drop us line:[email protected] [email protected]
54 | October 2016 - Milling and Grain
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