Written evidence submitted by the KiWi Power (REV0109)

Submitter

 

"Which innovations have the greatest potential to revolutionise energy markets, and why?"

 

The KiWi Power Demand Side Response (DSR) software and accompanying PiP represents the single greatest capacity to revolutionise energy markets. According to the National Infrastructure Commission (NIC), successfully deployed on a level playing field, it will reduce total energy costs by £8bn a year from 2030. However, long term growth is under serious threat as the main energy policy tool, the Capacity Market, is not delivering the level playing field required to develop DSR past 2020.

 

KiWi Power has currently developed three areas of DSR Technology. The first is entry level DSR technology, which is now slowly being employed in the UK’s national grid system. In addition KiWi has been involved in developing new products, which integrate entry level DSR technology with an onsite battery for industrial and commercial use. This is very new. The other area in which KiWi Power has begun to develop DSR Technology is an advanced app that will allow groups of residential home owners to engage widely with smart appliances in their homes. However, it is worth noting that this area of the market is not currently commercially viable. The right market/policy instruments are not yet in place.

 

Entry Level DSR

 

Demand Side Response (DSR) is a method for reducing electricity consumption at times of peak demand. This allows system operators such as National Grid to avoid using expensive polluting peaking power stations. DSR is widespread in North America and now has growing commercial use in the UK, Ireland, France and Germany. The application is attractive to businesses as they can use it to generate revenue from assets that were previously revenue neutral.  When properly managed DSR, is a low carbon, subsidy free approach to managing a transition to a low carbon economy. Aggregators, like KiWi Power, are key to packaging up smaller commercial enterprises and providing the skills required for them to engage a grid operator’s DSR product range.

 

 

KiWi Power builds, in the UK, the hardware and software technology required to aggregate sites into blocks of deliverable demand side response. KiWi also installs DSR applications on behalf of companies managing the relationships between client sites and KiWi Power’s customer, in the UK, National Grid. KiWi has developed a business model that means the client is given the equipment needed for DSR free of charge, and also provides a risk management package that prevents the client from being exposed to non-delivery penalties.  KiWi Power is deploying its technology and business model on a global basis.

 

DSR and Battery Integration

 

KiWi is working alongside some of the world’s leading lithium ion battery makers to develop the software they need to integrate with the UK grid. KiWi Power is deploying its DSR technology offering to work with batteries which, in themselves, do not have the capacity to act in the smart grid without specially developed supplementary technical hardware and software.  This is because they have to be fully integrated into a developing smart system. Some of the learning that has made this breakthrough possible was developed in conjunction with the UK Power Networks Leighton Buzzard project[1].

 

Fully Residential DSR

 

KiWi Power also believes that DSR will in the future have a role to play in the domestic home. In conjunction with the current Mayor of London KiWi have developed an app that can be applied in the home to control power use. However, KiWi Power has developed this on the basis that it will be aggregated. This is in sharp contrast to existing technologies which focus on individual home owners deciding to take decisions on a random basis, perhaps in response to a price signal. These processes also focus on the heating and hot water, but have limited integration with home appliances. In addition KiWi Power has developed a benchmark function, within the app, that allows home owners to compete and compare with each other.

 

Delivering DSR in the UK  

As alluded to above, KiWi Power would also like to take this opportunity to explain why DSR requires better policy support. Aggregated DSR technology, in the UK, is under pressure because government attempts to develop a level playing field in the Capacity Market are not working for DSR. There are a few key areas that need amending.

 

In the T-4 auctions DSR aggregators can only gain a 1 year contract, however new build power stations can have 15 year contracts. Aggregators are also forced to put up a bid bond but incumbent power stations do not have to, when bidding for the same 1 year contracts. To participate in this year’s auction, KiWi would have to post a bid bond in the region of £5 million to £10 million.

 

In addition aggregators were planning to make use of the T-1 auctions, previously considered by the government to be a core design feature of the capacity market, but these have now been severely limited. Aggregators feel that they are now likely to be so small that one power station could out bid all the potential DSR. This decision removes the primary route to market for DSR.

DSR is a very low cost technology for consumers. However, the unfair contracts length and bid bond requirements imposed by DECC significantly challenge the growth of DSR in the UK. This stifles innovation supplied by startup companies, meaning that the capacity market will remain an un-level playing field and the preserve of large incumbent power generation companies. This will be bad for competition, and the consumers. In this case British industrial and commercial premises.

 

Therefore the government needs to take the following action:

 

 

 

April 2016

[1] Leighton Buzzard http://innovation.ukpowernetworks.co.uk/innovation/en/partners/