Award-winning district heating project uses Capacity Market revenue to support their mission of alleviating fuel poverty
Aberdeen Heat & Power Ltd (AH&P) was formed as an independent not-for-profit company in 2002 to develop and operate district heating systems, with a primary aim of alleviating fuel poverty and reducing carbon footprint. Progress through the years has resulted in over 3000 homes and public buildings being supplied with affordable and controllable heat.
AH&P and Flexitricity
Ian Booth, CEO of AH&P, admits that he had some initial doubts about the benefits of providing demand response services: “At first we were not convinced that this was worth our while progressing and indeed if we would be able to qualify.” The turning point came after the visit to Flexitricity’s head office.
As Ian notes: “The highlight for us was to visit the Edinburgh operation and understand better the type of work that is involved in this industry. After some further discussions we were convinced that we were following the correct path in engaging with Flexitricity.”
AH&P partnered with Flexitricity in 2016 and has been earning Capacity Market (CM) revenue from October 2017. Ian felt that the whole process has been easy to manage and he’s enjoyed working with Flexitricity. “They have been patient and understanding of our needs and have taken keen interest in learning about our business and how we operate. All staff that we have dealt with have been professional and understanding.”
“Any additional income we can secure through demand response and other measures will help to build working capital within the business to help sustain our affordable heat price and assist with expansion of our networks to more areas.”
The Capacity Market is the UK Government’s flagship policy for security of electricity supply. In the CM, industrial and commercial energy users, and generator owners like Aberdeen Heat & Power, can receive payments in return for offering to help the electricity system during times of stress – either by generating electricity, or reducing consumption when needed. All non-renewable sites are permitted to participate in the CM in addition to energy trading and/or ancillary services.
Receiving a Capacity Market contract is by no means a given and involves a complex application process. Many have missed out in the past or not maximised their revenue. That’s why working with the right aggregator is the key. Flexitricity has the longest sequence of CM contracts in the industry, running from 2016 to 2036.
Flexitricity’s Capacity Market team worked closely with AH&P throughout the CM process – from ensuring their sites were ready and connected, entering the Early Auctions and T-4 auction, to metering and delivery.
Flexitricity’s aim is always to make life as easy as possible for our Energy Partners whilst ensuring they retain complete control. As Ian Booth recounts: “Operationally, this has had no effect for us other than business as usual to maintain and maximise operations. The positive financial impact is starting to happen now and this is expected to increase in subsequent years, which is pleasing to note.”
“Operationally, this has had no effect for us other than business as usual to maintain and maximise operations.”
Aberdeen Heat & Power is looking to expand but securing the funding is a major challenge. They’re planning on exploring a wide range of options to maximise their income, including working with Flexitricity to add more services to their revenue stack.
Ian noted: “The biggest challenge facing our industry, particularly in the not-for-profit sector, is that of funding for system expansion. Any additional income we can secure through demand response and other measures will help to build working capital within the business to help sustain our affordable heat price and assist with expansion of our networks to more areas.”
The pace of change in the industry is an exciting challenge, and one that compels whole industry collaboration. As we transition into a low carbon and digitised world, demand side flexibility has an increasingly important role. Electricity system needs are evolving, at both a transmission and distribution level, and we need additional sources of flexibility to meet these needs – from an increasingly diverse range of technologies.
Power Responsive was launched in 2015 by National Grid, with the ambition of supporting the growth of demand side participation in GB electricity markets. Now in its fourth year, priorities for the programme include continued awareness raising among
I&C customers, building confidence in flexibility opportunities, and supporting the evolution of flexibility markets.
If your business has the flexibility to increase, decrease, or shift its electricity use, then the power is in your hands to take full advantage.