Marshall on Policy : Energy Briefing : 1

Flexible Demand: The Missing Half of the System

Flexible Demand: The Missing Half of the System

Ireland is not short of electricity.

Ireland still generates around 40% of its electricity using gas and imports a further share, approximately 16%, from neighbouring systems. These figures feature prominently in discussions about energy security, sustainability and decarbonisation.

So demand is being met.

Supply follows demand

That fact, that demand is being met, matters because it changes the nature of the challenge facing the electricity system. For more than a century, electricity systems were designed around a straightforward proposition. Consumers used electricity whenever they wished and generators adjusted their output accordingly. If demand increased, additional generation was brought online. If demand fell, generation was reduced. Supply followed demand.

Much of Ireland’s electricity system still operates this way. Gas-fired generation in particular plays a critical balancing role, increasing or decreasing output as conditions require. During periods of low wind, gas can provide a very large proportion of total generation. At times it has supplied more than 90% of the electricity on the system.

Changes to the nature of the system.

Renewable generation behaves differently. Wind turbines generate electricity when the wind blows. Solar panels generate electricity when the sun shines. Neither has any regard for consumer schedules, industrial shifts or evening demand peaks. This changes the nature of the system

The question is no longer simply whether enough electricity can be generated. The question is whether electricity is available when it is needed. As we saw in the introduction to this “Energy Briefing Series”, Ireland is already encountering this reality. There are times when renewable electricity cannot be fully used. Wind generation is constrained. Renewable output is curtailed. Electricity that could have been used is effectively discarded because supply and demand fail to coincide.

Future capability & flexibility

At first glance, this might appear to be little more than an operational inconvenience. No system is perfectly efficient. Some degree of waste may seem inevitable. Closer examination reveals something more significant.

What appears to be a question of wasted electricity is, on closer inspection, a question about the future capability of the entire system. Every unit of renewable electricity that cannot be used reduces the value that can be obtained from the system. The more frequently renewable output is constrained, the harder it becomes to maximise the benefit of existing investment. The problem therefore extends beyond today’s spilled electricity. It reaches into questions about future deployment, future economics and future system design.

Ireland’s energy transition is increasingly becoming a question of flexibility.

What the challenges hold

We need a system capable of responding to large swings in renewable output. At one moment renewable generation may exceed demand. A few hours later wind output may have fallen sharply, leaving gas generation to carry a substantial share of the load. The challenge is not simply replacing one source of electricity with another. The challenge is building a system capable of operating efficiently across these very different conditions. If additional renewable generation does not, on its own, solve this problem, what does?

There are several possible responses.

Electricity can be stored for later use. It can be transmitted to locations where demand exists. Conventional generation can continue to bridge gaps when renewable output falls. Surplus generation can be curtailed when no other solution is available. Each of these approaches has a role to play.

Can demand become more responsive ?

Yet before considering any of them, there is a more fundamental question. Can demand itself become more responsive to the availability of electricity? For more than a century electricity systems have largely treated demand as fixed. Consumers wanted electricity at a particular moment and generators worked to provide it. The burden of adjustment rested almost entirely with the supply side of the system. Flexible demand challenges that assumption.

Rather than expecting supply always to follow demand, it asks whether some demand might follow supply.

This is a subtle but profound change. Imagine an electric vehicle that needs to be fully charged by 7am. It does not necessarily matter whether charging takes place at 6pm, midnight or 3am. What matters is that the vehicle is ready when required. The same principle applies to many other activities. Water can be heated before it is needed. Buildings can pre-heat or pre-cool when electricity is abundant. Some industrial processes can be scheduled with greater flexibility. Certain computing tasks can be shifted away from periods of system stress. Refrigeration systems can increase cooling when electricity is plentiful and reduce consumption later.

In each case, the service remains largely unchanged. Only the timing changes. That distinction is important. Flexible demand is not about consuming less electricity. It is about consuming electricity differently. The objective is not austerity. The objective is alignment.

When renewable electricity is abundant, more demand is encouraged. When electricity is scarce, some demand can be delayed without affecting the service ultimately delivered. From a system perspective, this creates a powerful new source of flexibility.

Storage moves electricity. Flexible demand moves consumption. Both can help reconcile renewable generation with demand. But flexible demand asks the first and simplest question. Before we store electricity, before we build additional transmission, before we invest in more complex solutions, can we use more of the electricity that is already available when it is available? In many cases, the answer seems to be yes.

Technology is making this increasingly possible.

Smart meters allow electricity usage to be measured over different periods of the day. Smart tariffs allow prices to change according to system conditions. Smart appliances can respond automatically to those signals. Electric vehicles can charge when renewable generation is plentiful. Heat pumps can operate when electricity is abundant and store thermal energy for later use. Much of the required technology already exists. The challenge is not invention. The challenge is deployment.

Demand as structure

It is also a question of incentives. Consumers have little reason to alter behaviour unless clear benefits exist. Businesses will only invest in new approaches if economic rewards justify the effort. Technology alone cannot create a flexible system. Market structures, tariffs and regulations must also encourage flexibility.

When these elements work together, something important happens. Demand itself becomes part of the infrastructure.

Traditionally, infrastructure has been understood in physical terms. Power stations generate electricity. Transmission lines move it. Substations distribute it. Storage facilities preserve it. Flexible demand adds another layer. The ability of households, businesses and industries to alter the timing of electricity consumption becomes a system capability in its own right. This capability becomes increasingly valuable as renewable penetration rises. Without flexibility, the system experiences larger periods of surplus and larger periods of scarcity. More electricity is spilled. More balancing resources are required. Greater costs are imposed elsewhere on the system.

Evolution of the electricity system

With flexibility, more renewable generation can be absorbed productively. Existing assets achieve higher utilisation. The overall system becomes more capable of handling variable renewable output. The significance of flexible demand therefore extends well beyond individual consumers responding to electricity prices. This is not primarily a story about cheaper night-time tariffs or scheduling a dishwasher after midnight. It is about the evolution of the electricity system itself.

Can we make better use of what we already have ?

The traditional electricity system was built on the assumption that supply should follow demand.

Ireland’s emerging renewable electricity system increasingly requires demand to play its part as well. Flexible demand is not the only response to this challenge. Storage will have an important role. Transmission and interconnection will have important roles. Infrastructure investment will remain essential. But flexible demand is the first response because it asks the most basic question. Can we make better use of the electricity we already have?

As Ireland’s experience with renewable generation continues to grow, that question is likely to become increasingly important. The future of the electricity system may depend not only on how we generate electricity, but also on how intelligently we choose to use it.

David Marshall
Dublin

Marshall on Policy : Policy Briefings
policy.marshall.ie

An ambition for a more informed conversation.