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20 September 2019

KiWi Power making DR aggregation hay, scalability is still the bottleneck

Persuading a business to let a third-party control its equipment is almost always a no-go, until, that is, you whip out the dollars. To this end, KiWi Power explained how it made a success of this task, monetizing its customers’ existing assets in DR aggregation projects, since its inception in 2009. However, this remains an intensive process, which is good news for companies like KiWi but remains an obstacle to mass adoption.

Head of Account Management Jack Christie explained that KiWi had grown to over 50 staff, and now manages over 800 sites in ten countries. Starting in the UK, with a focus on ancillary services, KiWi now provides the hardware and software needed, as well as a licensing business too. Christie said that the firm was now one of the largest storage operators in the UK too.

Christie noted that this gets quite complicated, and so a lot of work has been put into simplifying the pitch as much as possible, and partnering with other aggregators to help here. In the past few years, the focus of the Industrial and Commercial (I&C) DR has shifted from being exclusively for use in Transmission to now being explored closer to the edge in the localized Distribution networks. Some of these aggregator partners are now also exploring how they can use their pooled assets in energy trading markets too.

In the UK, KiWi splits the DR offerings into four tranches – balancing services (including both static and dynamic frequency response), peak avoidance (including triad, DUoS, and red zone avoidance), and the reserve markets (both Short Term Operating Reserve [STOR] and the regular capacity market). As you can see, explaining all this to prospective customers can get tricky.

The sorts of assets that KiWi is interested in are found in many industrial processes, as well as enterprise operations. Christie pointed to mining and quarries, commercial properties, foundries and metal processing, commercial refrigeration, IT installations, telecoms operations, manufacturing, and universities.

The trick is convincing the customer that you can earn them money without damaging their equipment or depriving them of their use at a key time. To this end, the first step in the process is a site visit, because KiWi needs to get to know the business and its processes. A team of engineers is dispatched to investigate, as well a commercial specialist who will learn how the business operates. The second step involves collecting all the available operational data from these assets, ranging from live data if it is available all the way through to the data sheets supplied by the manufacturer.

Collectively, this lets KiWi draw up a plan that can be implemented, and if the customer likes the sound of this offer, KiWi can start installing its KiWi Fruit devices on the assets. Before the installation, the customer can select which assets will be used, the duration for their usage, and the speed of their reaction, which should translate into a forecast for the expected revenue.

Crucially, the customer doesn’t have to pay KiWi anything, and it also gets access to all the metering data generated by the KiWi app, which is apparently quite useful in and of itself. With the Fruit devices attached, the in-field software configured, and the SaaS elements running, KiWi can start using these assets in DR programs – returning a slice of the revenue to these customers. The asset owners can adjust their participation parameters as needed, to perform maintenance or meet an internal deadline for instance.

In terms of case studies, Christie pointed to Bournemouth Water, a longstanding STOR customer that has three aggregated sites that account for 2MW of energy, as well as a newer 400 KW frequency response project. With annual revenue of over £100,000, the system makes use of the water pumps used at its reservoirs, firing them up to meet the DR programs.

Marriott Hotels is another customer, in both the UK and France. The firm has an ambitious carbon reduction project, and is using KiWi to enroll its HVAC systems into DR projects. Notably, the HVAC is being used in peak avoidance and reserve, rather than in frequency response, as most HVAC equipment normally is. For the hospitality market, the ability to decline participation is key, as a conference room needs to be able to opt out and keep itself at a comfortable temperature. With STOR, Christie says Marriott gets about twenty minutes to make a decision.

Christie said that the DR market is changing, with energy storage in particular driving this revolution. New technology is moving people away from monthly tenders and long-term procurement into a much more rapid environment. National Grid is consequently introducing new programs with faster reaction time requirements, signaling an eventual shift towards real-time DR procurement. The pan-European Project TERRE is another exciting DR development.

We asked if there were ballpark prices that Christie could provide, based on the Bournemouth example, and he said that the simple answer was that there was not. The variation in program participation means that customer with much smaller pools of assets could earn more than much larger aggregations.

Christie answered in a similar fashion to our enquiry about the installation time frame. Depending on the asset, it can take as little as three weeks from start to finish, which is the current record. Gas generators can take a couple of months, and broadly, fewer larger devices are easier to tie together. Lots of small devices take more time to link up.

Again, there isn’t a simple answer to the question of the minimum sized asset or daisy chain of assets that could be viable in these programs. As a standalone asset, Christie said about 1MW of flexibility would work, but if you have enough smaller assets in a pool that could be controlled in unison, you could aggregate at lower scales – however, the tradeoff is that you would need to install more KiWi Fruit hardware, which could hamper the business case.