Aggregators: The Ubers of energy financing?

In this week’s edition of Smart Energy’s Power Playbook, Yusuf Latief discusses with Azad Camyab of Pearlstone Energy the role of energy aggregators, liaising between businesses and operators as the Ubers or Airbnbs of flexible asset monetisation.

Demand side response (DSR) has without a doubt become one of the most interesting use cases to alleviate congestion on the power grid.

This is especially the case in the UK where, during the onset of the Russia-sparked energy crisis, National Grid trialled its demand flexibility services (DFS), developing a package of winter contingency options during the winter of ‘22 into ‘23 to ensure a secure electricity system.

The service was so successful that in June this year, I was pleased to see that National Grid announced it would expand the service to pay households at any time of the year, not only during the winter months.

This service is not limited to the household level, but is also available to businesses and large consumers, leveraging their consumption as an asset to the grid.

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Energy Ubers at the interface

It is in the interface between the operator and the consumer that we find the aggregator, managing and monetising flexible power loads.

During a discussion with Camyab, the founder of Pearlstone Energy, one such demand response aggregator working with National Grid, it became clear how revenue streams open up when you place the aggregator in the mix.

To illustrate, Camyab called aggregators the ‘Ubers’ or ‘Airbnbs’ of the energy and DSR equation.

“If you're a big financial institution, a large commercial building or if you're in manufacturing…DSR is not your core business…,” says Camyab.

Rather, it is here where aggregators shine, providing the education, coordination and technology to handle DSR.

“The reason our customers get involved in DSR initiatives is aligned with the concept of Airbnb and Uber. We as an aggregator have access to the capacity [of the consumer] but don't have ownership of the power base we provide to National Grid.

“Airbnb has access to the room and Uber access to the taxi. But they don't have ownership of it.”

When it comes to Camyab’s company, Pearlstone, flexible load from buildings is monetised via DSR technology integrating smart building systems with the grid, aiming to open new revenue streams and create value for their customers.

The company develops what they describe as a real-time energy-balancing platform that provides a flexible approach for creating controllable and dispatchable energy resources from flexible loads, energy storage and renewable energy sources.

Through this, in the words of Camyab, they “provide the technology and connect the capacity to National Grid.”

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A minefield of balancing services

Founded in 2015, Pearlstone’s services have been emerging in the market at a time when DSR is clearly on the rise as a viable solution to ensure energy security, assisting grid operators to maintain stability while also generating revenues for businesses that might want to get involved.

According to Camyab, however, the market can be a ‘minefield’ to navigate.

“The whole balancing market and associated services is an absolute minefield. There are about 12 to 15 of [these services]."

“So, at any given time within this virtual power plant of avoided capacity through access to multiple [monetised] customer sites…we assist with determining which flexibility markets to sell to.

“That kind of thinking and decision making is not part of normal businesses’ thought processes. So that's where the aggregator comes in to help smooth the process.”

Specifically, with their aggregated pool of contracted buildings, the company sells their acquired DSR flexibility to National Grid and shares the revenues with its connected customers.

And it has been paying off.

According to Camyab, between the end of the COVID-19 pandemic and now, their prospects have grown from 10 large buildings to more than 70.

“The important thing for them to be incentivised is to have the right price point. The environmental issues are of course important, but businesses don’t necessarily see them as a significant benefit.”

Regulation too, is spurring this participation.

“From next year, all big companies and financial institutions and businesses need to lay out a very concrete plan to say how they're going to reach the 2030 and 2050 net zero targets,” says Camyab.

Rather than simply switching off the lights for energy efficiency, detailed plans need to lay out how companies are decarbonising. And DSR could be one of them.

“It is here that people come to us, saying, ‘I need to plan [for net zero] and I understand demand side response could be an integral part of that plan. What is you can do for me?’

“This drive for net zero is pushing a lot of large companies to tick the box and do it in a meaningful way.”

As an energy aggregator, what has been your experience with businesses looking to get involved in net zero?

Reach out so that we can feature you in Smart Energy’s Power Playbook.

Cheers,
Yusuf Latief
Content Producer
Smart Energy International

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