“Too good to be true” – an aphorisms that has had businessmen looking for ‘the catch’ since time immemorial. But the prospect of the demand management payments such as those offered by KiWi Power brings another trite saying to mind: “don’t look a gift horse in the mouth”.
Because any firm that has considered and dismissed the idea of energy demand management clearly has eyes for nothing but horse lips.
Effectively, KiWi and other companies in the same space will offer your firm money to turn off lights in unused rooms or bump the thermostat down on your heating during periods of peak energy demand – a service energy firms are willing to pay big money to utilise.
Six reductions of non-essential systems for no more than two hours at a time, can earn an office building £5,000 a year, a warehouse £10,000 a year, and a large shopping centre up to £50,000, says KiWi co-founder Ziko Abram.
And this does not mean that the lights will suddenly go out above your head or the monitor you’re staring at will switch off. KiWi conducts an energy audit to identify the systems organisations can afford to turn down and then alerts them when to power down. If for some reason you can’t be without those systems at a given time you simply choose to keep them on without incurring any form of penalty.
As Abram puts it, this is essentially free money for a small change of habit. It is an opportunity to earn an additional revenue stream and boost your environmental credentials without changing your operations. What financial director would turn that down?
Well, a suspicious one, it seems. Abram has lost count of the times he’s been asked if he’s a scammer by potential customers who cannot grasp how the company makes money.
Again, it’s a simple proposition. At times of peak electricity demand, the National Grid traditionally turned on additional power stations. Anyone who watched the BBC’s rather excellent documentary on the history of the grid will be familiar with the sight of grid managers bringing power stations online to the sound of Coronation Street’s closing credits, when the nation collectively turns the kettle on.
These peaking stations can be pumped hydro-storage plants, but are more commonly fossil-fuel stations, some of which are barely active for more than a few hours a year. The Grid has found peaking plants so expensive and polluting it saves money by paying companies to reduce power use voluntarily avoiding the need for them to switch on these additional plants.
What KiWi does is gather together a portfolio of systems that can be switched off and takes a commission on the payments the grid doles out.
This has the dual effect of using available electricity production more efficiently, reducing the need to build extra capacity, and balancing out more unpredictable wind power on the grid, should there be an unexpected lull.
Strangely enough, the only thing that can really undermine the business model is if companies become so energy efficient they are unable to lose any systems. I’ll leave it to you to ponder the likelihood of the UK finding itself in that utopian situation anytime soon.
So, to recap – demand management is good for the environment in that it makes it easier to bring more renewable energy online and reduces the need for emissions-happy power stations. It’s good for the country, as we save the cost of building new power stations, boost energy security, and move closer to our mandated green targets. But most importantly, its great for companies, who get a free energy audit identifying areas of waste, are handed free energy management software, cut their electricity bills, boost their green credentials and – I can’t stress this enough – get paid to do it. Oh, and if companies can’t turn systems off, they don’t lose any money either.
So what are you waiting for? Back away from that gift horse and get cracking.
Will Nichols is Financial Director’s sustainability reporter and works for BusinessGreen.com
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