This year has seen large volumes of investment activity in the smart grid sector, and not wanting to buck this trend, British utility Centrica has acquired Belgium demand- response (DR) startup REstore for $81m. The acquisition suggests that Centrica will increasingly push DR technologies as an option for customers across its networks, and can increase the speed at which consumers can access the efficiency benefits enabled by DR contracts in Europe.
DR contracts are distributed on capacity markets, where a utility anticipating a surge in the supply of electricity on its network (that could potentially damage its infrastructure), can place a contract for energy consumption to be reduced on some parts of the network – balancing the grid, often through remote control of appliances in a home or building. These DR contracts are often fulfilled by turning devices off in synchronization with the surge in energy supply, or potentially having the surplus electricity charge a battery.
The number of demand response contracts has grown dramatically in Europe, in line with increases in renewable and intermittent sources of energy such as solar and wind. When these resources peak, which often happens in an unpredictable manner, the excess energy needs to be diverted somewhere – and battery storage is a great candidate for this purpose. The opposite is true too, so when these sources dip, a grid needs to quickly balance the difference between supply and demand, or it might suffer outages.
Any vendor can take part in the capacity markets if they can meet the minimum requirements, which are normally defined as being able to respond to the contracts in defined time frames. Typically, participation in these markets is limited to companies using their own assets directly partaking in the market, or large industrialists working with thirds-parties to access them. However, with this acquisition, Centrica is now signaling that it would like all of its customers to access these capacity markets, even at a consumer level.
REstore currently has a DR portfolio of 1.7 gigawatts across Europe, partaking in capacity markets in Germany, Belgium, the UK, and France. Many of its competitors in Europe are only operating in a single market. Since its founding in 2010, REstore has grown from a few megawatts of industrial load to more than 150 industrial and commercial customers including ArcelorMittal, Praxair, Sappi and Barclays.
Centrica will move REstore into its Distributed Energy & Power unit. The group has acquired building sensor startup Panoramic Power for $60m in 2015, and Danish energy trading platform Neas Energy for $249m, to expand its smart grid goals. In a statement Centrica outlined how with the REstore acquisition, “demand response aggregation will become a core part of the offer to customers and is expected to represent a significant growth opportunity for Centrica as global electricity markets evolve.”
The DR market is fundamentally different in Europe from the US. In the US, DR has typically meant turning down or off large energy-using loads and industrial processes, to help reduce demand during summer days when air conditioner energy use is peaking, or perhaps, doing the same thing in winter to deal with heating energy use.
In Europe, the term more usually refers to demand-side peak load management, necessary thanks to the system-wide effects of intermittent wind and solar power. Renewable penetration is more mature in the EU than in the States, thanks to more aggressive national targets for penetration of renewables on the continent.
REstore has a software suite, called FlexPond, for both big industrial and commercial customers, and the utilities that are controlling them. In short, it’s a system of on-site sensors and controls and a cloud-based software stack to manage their capabilities, used to manage demand response applications in real time.
REstore’s system approach differs from most of its competitors because it puts its sensor and computer systems centrally and locally, allowing it to participate not only in capacity markets, but also in high-value reserve markets requiring fast response times. REstore claims that it can provide sub-second response times, due to this architecture.
Most of REstore’s customers have been either commercial or industrial. The startup has recently been trying to branch out its efforts to the residential sector, and this has been assisted by a partnership with a heat pump and boiler manufacturer that is installing REstore’s control chip in its products. Centrica, as a large energy player, will have the resources to explore the potential of consumer access to capacity storage more widely, directly as well as through channel partners.
In other smart grid news, Schneider Electric has partnered with Dynamic Energy Networks (DEN) and the Carlyle Group, a large institutional investor in the energy market. DEN is an energy infrastructure platform that owns and operates a microgrid network. DEN’s mission statement is to lead the energy industry to shift from one-way static power grids to two-way dynamic power, where every site on a network is both sending and receiving – as opposed to a continued reliance on centralized generation. DEN has deigned over 60 microgrids, accounting for over 200MW of capacity – and focused on shifting energy generation and management out to the end-user.