Electricity Market Reform - Demand-side (D3)

“We have a once-in-a-generation chance to rebuild our fragmented market, rebuild investor confidence and rebuild our power stations. Like privatisation, this will be a seismic shift.”
Chris Huhne, November 2010

A joint consultation response was submitted to the Government by the D3 members listed below on the 10th March:

• Doug Parr – Environmental scientist and policy specialist
• Graham Meeks – CHP and district heating advocate
• Mark Coyle - Energy data and process management expert
• Mark Ripley – Energy infrastructure expert
• Paul Gardiner – Energy policy advocate
• Prashant Vaze – Consumer rights advocate and environmentalist economist, Consumer Focus
• Robert Tudway – Local and regional authority expert
• Simon Skillings – Sustainable development advocate
• Stephen Andrews – Energy expert
• Steven Fawkes – Energy efficiency expert and investment banker

The D3 Consultation Response is available for download below:

Tomorrow’s power system needs massive investments in low carbon power-plant and lines. But there is also a significant opportunity for consumers to play their part. Electricity saving technologies, demand shifting and utilisation of waste heat from power production could greatly reduce the need for supply-side investment.

Such a ‘demand-side response’ is a valid way of security of the power system. But to realise this opportunity the historic neglect of energy management needs to change. A new focus on demand-side actions – ones starting with the consumer-end of the system - will be vital in controlling the costs and delivering the flexibility required in tomorrow’s electricity system.

In December 2010 the Government published its proposals for Electricity Market Reform. Chris Huhne has described it as a seismic shift. The proposals major upon the actions needed to secure investment in a new generation of low-carbon power stations. They recognise too that there is a growing urgency in mobilising the potential of the demand-side of the market which can deliver:

• Cost reduction - lower consumption reduces the need for new power stations, load management or electricity storage present a cost-effective alternative to peaking power plants and operation of decentralised generating capacity reduce the need for grid strengthening, and if combined with CHP could avoid the need for electrically based heat sources avoiding some of the projected growth in electricity demand.
• Enhanced competition - Consumers will stand to benefit, and not only through lower energy costs. Opening up the demand-side allows different forms of business to compete with the standard supply model, creating new opportunities for new technologies, new business models and new market entrants. These changes are set to enhance competition in energy supply and even help consumers to benefit directly from the services they can provide to the electricity system.

D3 is a stakeholder initiative promoting an expanded role for the demand-side in our reforming electricity market, with the aim of maximising the prospects of achieving energy policy goals, increasing competition and managing costs of transition in the interests of consumers, giving them new choices. It embraces three key elements:

• Consumer action to deliver demand reduction and demand response.
• Development and operation of flexible, decentralised generation.
• Active management of electricity distribution networks.

The immediate objective of D3 is to push the Government and regulatory bodies to create an electricity market reform that facilitates the competitive, commercial and cost-effective deployment of a diverse demand-side response.

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