Business energy supplier SmartestEnergy has forecast that a government auction for subsidies to support demand-side response measures will result in a clearing price of around £25/kW.

The Transitional Arrangements (TA) auction, which begins today, is seeking to deliver 300MW of turn-down DSR capacity for 2017-18. It will offer payments to businesses for turning down non-essential energy use at times of high demand. National Grid has set a target of meeting 30%-50% of balancing services from DSR by 2020.

Robert Owens, Vice President of Asset Optimisation at Smartest Energy, said: “This level of pricing would be consistent with what we saw in last year’s TA auction, which would start to give aggregators and customers some confidence in the business case for DSR. We need a long-term price signal to encourage all types of businesses, from grocers to manufacturers, to change the way they behave to help all of us manage the energy system.”

However, SmartestEnergy warned that the growth of DSR could suffer further when it had to compete against fossil fuel power stations in the capacity market, and that steps needed to be taken in order to “level the playing field”.

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