31.03.2022

The DSR service as an opportunity to increase the cost effectiveness of enterprises

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Author

Adam Wlizło

Member of the Board

Purchase of electricity based on a well-prepared strategy, investments in own energy generation sources, optimization of distribution parameters or implementation of solutions increasing energy efficiency of enterprises are gaining popularity in the face of breaking new records in energy prices. Entrepreneurs are also more and more willing to use the DSR service, under which companies receive remuneration for their readiness to voluntary and temporary power reduction. This is a good solution as for most companies it does not involve any additional investment outlays, and also does not require significant organizational changes.

The essence of the DSR (Demand Side Response) service is the reduction of electricity demand by consumers during peak demand hours, at the request of the transmission system operator, which in Poland is Polskie Sieci Elektroenergetyczne. DSR is one of many remedial measures used by the grid operator to maintain the stability of the National Energy System.

Why is it worth using a DSR service? First of all, in order to obtain additional remuneration. Recipients who have reported the possibility of reducing their capacity by 1 MW receive annual remuneration in excess of PLN 100,000. Due to the fact that the remuneration obtained in most cases does not involve any additional costs, its attractiveness is high. It is worth mentioning that entrepreneurs participating in the DSR program, in addition to rationalizing individual electricity costs, contribute to the development of innovative products on the electricity market serving the entire economy.

The service can be used by any positively verified entity with the ability to reduce power consumption. In practice, however, aggregators (companies involved in the acquisition of entities that can reduce power consumption) are interested in cooperation with customers with a reduction capacity of at least 0.3MW.

Energy consumers who use the service participate in system tests (this way their real readiness to lower the power in a critical situation is verified). Currently, on average, once a quarter, they receive a call to reduce power for one hour. Information about the planned test is provided electronically (and sometimes by phone) at least 8 hours in advance. Consumers therefore have time to prepare for the power reduction. It happens that not everyone will manage to reduce the declared level, and the possible consequences are agreed individually with aggregators. The undoubted incentive to use the service, however, is that in the case of well-negotiated contracts, these consequences may be minimal (such recipients will not receive remuneration at most or may be removed from the list of service beneficiaries without financial penalties).

How to use the DSR service? The first step is to verify whether the company meets the conditions for joining the DSR program - this verification is carried out together with the aggregator. In the next step, which is the most important stage of the entire operation, we select the appropriate aggregator. When considering the offers of various companies, attention should be paid not only to financial aspects (expected level of remuneration), but also to the operational conditions of cooperation. The key is to understand the entire process and address all the accompanying risks: who is responsible for what actions, what the power reduction procedure looks like, what is the reliability of IT systems, and finally, what are the possible consequences of failure to meet the terms of the contract. We devote our time and special attention to these elements while looking for optimal solutions on the market from the point of view of the characteristics of the companies cooperating with us. In a crisis situation, the terms of cooperation agreed with the selected aggregator may decide about the energy security of our enterprises. After joining the DSR program, we are only faced with operational participation in tests, power reduction at the request of the network operator and of course… receiving remuneration.

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