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Internet of Energy: potential to deliver equivalent of 1,000 pump-storage power stations by 2025

The need for demand management is growing as we decarbonise transport and heating.  Chief Strategy Officer, Simon Anderson explores our options. 

Pump-storage power stations are designed to deliver electricity to the grid at very short notice to manage short duration peak demand, known as Short-Term Operating Reserve (STOR).  The Dinorwig Power Station in Wales is possibly the best-known example.  It was commissioned in 1984 cost an estimated £425m and has a capacity of 1,728MW. Another STOR power station, Snowdonia Pumped Hydro’s 99.9MW Glyn Rhonwy scheme near Llanberis in North Wales, was recently given the green light at an estimated price of £120m.

An alternative to such expensive resources for managing short-term peak demand issues is demand management.  Instead of adding more supply, demand management reduces non-essential demand for a short period.  This is already being conducted in the industrial sector: in 2016 Ofgem estimated that around 350 MW of flexibility in reducing load and 85 MW in increasing load was currently being provided by survey respondents.  This is equivalent to more than 3 Glyn Rhonwy power stations, an investment of £360m which would need to be recovered in energy prices

The need for demand management is growing as we decarbonise transport and heating.  Currently 50% of peak demand, which occurs between 6 and 9 in the evening, comes from homes, with another 30% from small businesses. Charging electric vehicles and operating electric heating systems being promoted by the Renewable Heat Incentive will exacerbate the peaks and the residential proportion of these peaks.

Does this mean we need to build more pump-storage power stations or is there an alternative?  Well, there is, and it is residential and SME demand management that mimics what is currently done in industry creating “active buildings” that dynamically interface with the grid. They will use technology to vary their demand to balance the local grid without the need for user input.

To do this we first need resources that can be managed and the means to do it.

The resources needed are large loads that can be shifted:  loads such as electric storage heaters, hot water heating, electric vehicle charging and in-home batteries.  The price of these items is reducing significantly whilst their availability and sophistication is increasing steadily.  For example, a survey we conducted last month at EUW 2017 showed that 72% of respondents say their next car will be an electric vehicle.


The means to control them is the “Internet of Energy”.  This is a specialist area of IoT that has three main differentiating characteristics:

  • As IoE devices are part of the strategic resource that is the grid their cybersecurity credentials need to be higher than standard IoT devices
  • IoE devices are building fixtures and fittings and therefore have to be supported over a longer lifecycle, typically three times that of a normal IoT device
  • IoE devices will be installed in one building and have many users over their life whereas IoT devices will have one user and possibly be used in multiple premises

So back to the “1,000 pump storage power stations”…

We recently commissioned IDC, a premier global provider of market intelligence, to validate the IoE proposition. The resulting White Paper, which can be requested here, concluded that IoE is indeed valid and has the potential to deliver 102GW of electricity demand flexibility across Europe by 2025.  This is the equivalent of 60 pump storage power stations like Dinorwig in Wales – or 1,000 Glyn Rhonwy schemes at a cost of £120bn…

We would love to hear from you, either to get involved or simply share your thoughts and opinions, you can get in touch by:


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Twitter: @geomonitors


The Dinorwig Power Station in Wales was commissioned in 1984 cost an estimated £425m and has a capacity of 1,728MW

Simon Anderson, Chief Strategy Officer

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