Implementing Demand-Side Energy Solutions

Implementing Demand-Side Energy Solutions

Michelle Horsfield

25 years: Sustainable Finance

In this video, Michelle explains how we can tackle the energy transition challenge by changing the way we use energy. In doing so, she will cover how this can contribute to energy security and also reduce emissions.

In this video, Michelle explains how we can tackle the energy transition challenge by changing the way we use energy. In doing so, she will cover how this can contribute to energy security and also reduce emissions.

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Implementing Demand-Side Energy Solutions

15 mins 46 secs

Key learning objectives:

  • Understand how we can improve domestic energy efficiency

  • Understand how we can improve industrial energy efficiency

  • Understand what is demand-side management (DSM) and how we can change ‘when’ we use energy

Overview:

Regarding the energy transition, there has been a lot more focus on changing our energy supply and sources of energy in order to achieve all of our net zero targets and achieve emissions reductions. But this alone is not enough and we need a lot more to be done from the demand-side (or energy use). This can be done through improved energy efficiency and demand-side management.

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Summary
Why do we need to focus more on demand-side or changing the way we use energy?

The supply-side solutions we need in order to be delivering on our climate targets will take time to implement, especially at the scale and commercial level needed. So in the short term we need to have a good hard look at delivering those emissions reductions from the demand-side. The energy transition should not just be about changing energy supply and how we produce it, but more importantly it's about how and when we use it, and that's what this video explores. 

There are 2 elements of energy use:
  • How we can use energy more efficiently
  • Choosing when to use it

What are the ways we can improve domestic energy efficiency?

Unless a person is already fully reliant on renewable sources of energy, most people will already have a keen eye for how much electricity they use. This includes appliances such as thermostats, air conditioners etc as the season requires. Simple efficiency measures include switching lights off and insulating property. If a fridge is more than 10 years old it’s probably really inefficient and we need to replace these with a newer top energy efficiency rating. However, with other appliances like old washing machines, vacuum cleaners or hairdryers – it's best not to purchase new ones as much of the environmental impact is in the manufacturing stage. 

What are the ways we can improve industrial energy efficiency

Typically this is done through an energy audit, here are some steps that this process involves:
  1. Engineers generate a list of ideas
  2. Run through ideas with the operators who run the plant
  3. Operators suggest improvements and execution tips
  4. Get process started on simple and feasible ideas and get support from management and write up the other ideas as actions, with an owner to make sure they were put into people’s schedules, or business plans
  5. Bigger ideas were looked at by a small project team that worked through planning them into longer term business plans over several years. Often these bigger jobs require capital, but it’s worth running the numbers to see what the payback on these are

How effective can efficiency measures be in bringing down emissions?

The International Energy Agency (IEA) did modelling a few years ago that concluded that if the world was to implement all of the cost effective energy efficiency measures that use existing technology, we’d reduce annual energy-related emissions by 3.5GT CO2e. Energy efficiencies could deliver 40% of what we need to deliver the goals of the Paris Agreement and limit global climate change. 

What is demand-side management and how can we change ‘when’ we use electricity?

Over the course of a day, there are times of peak generation and peak demand that don’t necessarily happen at the same time. Managing the periods when they’re out of sync is tricky. It wasn’t always possible to do much about this. But now a few things have changed so that we are now in a position to look at energy in a more sophisticated, nuanced way:

  • Governments have got out of the job of running electricity grids - Competitive electricity wholesale market
  • Increased renewable energy generation resulting in a greater mismatch between supply and demand so prices can be pretty volatile
  • Information technology enables ‘smart grids’ where we have the feedback tools to make informed decisions

These changes means that electricity grid operators can use the DSM mechanism called (choosing when to use power). 

How does DSM work?
The concept of demand-side management involves electricity from areas that don’t really need it and distributing it to those that do. During the time of peak demand (6AM– 8AM or 7PM– 9PM), grid operators can offer consumers a financial benefit to avoid or reduce their use. In return for reducing use, the consumer could be offered a cheaper tariff for that period, or they could receive a payment for NOT using electricity during those periods of peak demand. 

DSM is the tool to smooth the peaks in the demand profile: it’s known as peak shaving and is vital to running a flexible grid. It gives you a more stable, reliable grid and it might also reduce the points of very high demand, and in doing so avoid having to build a new base load power station. 

This ability to be flexible on demand timing shows that electricity consumption could be shifted to when more renewable energy is available, which in turn could reduce reliance on high-emitting fossil-fuel power plants and thus reduce emissions from the energy sector overall. 

How can we change ‘when’ we use electricity in an industrial setting?

  • Stagger the break schedule of employees to spread out the start-up times of machines 
  • Turn off machines that are non-crucial or when the industrial site is nearing the max power level
  • Do test runs outside of main production hours
  • During summer, decrease power demand of other machines to mitigate the higher demand required by the cooling installations.

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Michelle Horsfield

Michelle Horsfield

Michelle Horsfield, an environmental scientist with a climate change specialisation, transitioned into the financial sector four years ago to apply her knowledge to the largest reallocation of capital in history, as the economy moves towards a lower carbon future.

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