Potential investors in the Irish market often ask us about the likely scope for future volumes of renewables and flexible assets. Indeed, much of the discussion in the run-up to the go-live of the new market was fairly generator-focused. However, there is also an active cadre of players seeking to develop more decentralised business models such as smart demand response, behind the meter or demand aggregation. For such models to thrive, one enabler may be the long-gestating National Smart Metering Programme (NSMP), another may be how demand response is compensated.
EirGrid operates a number of regimes to compensate for demand response. The majority of that response is provided by Demand Side Units (DSUs). Providers of demand reduction can access some wholesale revenues by registering as DSUs. A DSU under the Trading and Settlement Code (TSC) may be a number of demand sites (e.g. an energy user) that can reduce their usage in response to dispatch instructions from EirGrid.
We have previously considered the impact of derating curves for a DSU considering bidding in the forthcoming capacity auction. This week’s blog considers the change in volumes of DSUs in the market since I-SEM go live and highlights a potential commercial risk for those players.