Blog: Demand Side Response – it’s a no-brainer!

Reproduced from an article originally published in i-FM magazine February 2021

Scott Petersen, the CEO of OakTree Power, has worked in the energy sector for over 15 years, with senior roles at both Dalkia and Honeywell. In all that time, he cannot recall when climate change, sustainability, and energy were such hot topics of discussion.

“Everyone has finally got the message on the implications of climate change and the need for decarbonisation!” he says, evidencing the massive swing to renewable energy production and the burgeoning electric car market, in the last couple of years.

“However, with over 40% of UK emissions still coming from commercial buildings, the property and FM sector faces a bigger challenge and has further to travel than many other sectors, if we are to achieve our Net Zero target by 2050. Right now, responsible FMs needs to be exploring every possible avenue for lowering carbon, reducing costs for occupiers, and taking innovative routes to the sustainable operation of buildings.

“There are some amazing technological solutions out there and some extremely knowledgeable people, but capital outlay and long ROIs are frequently the stumbling block on many carbon-reduction projects. Often, engineers are trying complicated solutions while ignoring the basic, simple ideas that can often provide the biggest and fastest impact.

“We created OakTree Power a year ago with just such an idea. We realised the potential for CO2 savings that could be derived from harnessing the power of existing Building Management Systems (BMS) when run in conjunction with our own technology. This technology plus our knowledge of the energy balancing markets, allows us to manage and deliver something called Demand Side Response (DSR) on behalf of clients. It’s a simple and innovative solution, that drives down CO2 emissions in buildings from Day 1, whilst simultaneously delivering other financial benefits.

DSR has been around for some time, but until now has been the domain of local electricity generators and large energy consumers, like smelting works and large manufacturers. Now for the first time, OakTree Power, acting as an “aggregator”, can unlock the same benefits for hundreds of organisations with medium to large commercial buildings. It’s all done by tapping into a building’s ability to adjust its electricity demand at Peak Times and triggering a DSR event that fine-tunes electricity consumption down a small amount, for a short period of time, when critical power fluctuations occur on the grid.

“Taking all the buildings across London with a footprint of greater than a 50,000 sq. ft., we estimate DSR could work successfully for over 1,500 organisations and save around 26,000 tonnes of CO2 per annum. That’s the equivalent of taking a small, gas-fired power station offline, or removing 7,500 commuter cars from our roads. It would also means removing the need for dozens of dirty diesel generators that fire up when the output from renewables is low and National Grid ESO (NGESO) calls on local generators to create extra capacity to meet the shortfall.

“If you hadn’t noticed, that’s what’s already happened on at least five separate occasions during December and January. Our switch to renewable energy production has a down-side and it’s called intermittent supply. When the weather conditions are unfavourable, output drops from wind turbines and solar panels, and the UK is forced on to fossil-fuel back-ups to bridge the gap and avoid power cuts. It’s slightly confusing and ironic that this solution is also referred to as Demand Side Response, but unfortunately this kind of DSR is dirty, noisy, and produces large quantities of particulates and CO2. Even worse, our friends at NGESO are walking a tightrope at these critical times and are often forced to pay these operators outrageous prices at several times the normal rate, to bail us out and maintain normal service across the grid.

“Our role as a DSR aggregator is to address the imbalance from the demand side of the equation and offer up reductions in building consumption that negate the need for additional generation. The great news is that the National Grid ESO is incredibly grateful for any help it can get at these critical, peak times and is prepared to pay for any savings that can be offered up through DSR. And that in a nutshell, is the basis of the financial model around which we operate, because this income revenue provides the funding that makes the whole DSR proposition viable.

“For most organisations, the typical cost for participating in DSR is absolutely zero because OakTree Power installs the DSR “box-on-the-wall” at our cost and recoups the investment through the revenue stream that DSR generates from NGESO. We share the proceeds of DSR with the host client organisations, so not only do they achieve significant CO2 reductions, but they also get paid all the while for doing it – and with no capital outlay. A typical building could generate an income of £75,000, with CO2 reductions of 140 tonnes, over a five-year period through this passive involvement.

“This is why we frequently describe DSR as a complete no-brainer for most organisations! What’s not to like?

“Even during lockdown, when many offices have been running at reduced occupancy following the switch to home working, you’d be surprised how DSR can still deliver effectively. The majority of businesses have continued to keep their plant operational, even though occupancy rates have been way below normal levels. HVAC, AHUs, extractor fans, compressors and chillers are all still on and consuming power, albeit at a reduced rate, so the opportunity still exists to apply DSR. In some ways, the opportunity is even greater because there’s more headroom to play with.

“DSR is not only a solution applicable to offices. So long as the building has sufficient non-critical plant to tap into, we can trigger the DSR events and drive the benefits. This means distribution centres, chilled storage, warehouses, university campuses, and small-scale manufacturing units are also all possible candidates for a DSR solution.”

OakTree Power believes that DSR is a technology that can work successfully for both owner-occupiers and property companies with portfolios of multi-tenanted sites. They have developed a simple online calculator that allows organisations to estimate the potential CO2 savings and income stream, based on a typical monthly electricity charge.