Should Suppliers Be Doing More to Balance the Grid? - Kraken’s Solution for DER Aggregation

Net Zero Requires a Shift in Consumption Patterns

The quest to achieve net zero requires a fundamental shift in how energy is used by large industrial & commercial (I&C) energy users. As we transition to a decentralized energy system with a high penetration of distributed energy resources (DERs), the volume, shape and volatility of energy demand will grow. This volatility will increase pressure on energy systems and create numerous challenges for suppliers and their customers.

The Challenge of Balancing the Grid

As volatility drives pricing, increased volatility means higher baseload costs for energy suppliers. Increased costs harm not only the supplier, but customers, who often take on a share of this cost through higher rates. To avoid these costs, suppliers will need new tools for closing the space between energy supply and demand.

Historically, I&C consumers have addressed volatility by indirectly balancing the grid through rudimentary turn down actions driven by pricing incentives, manually turning down flexible loads when exposed to high price periods.

To help manage volatility, system operators are launching grid support services that aim to balance the grid, helping maintain frequency whilst ensuring supply matches demand. However, the entry requirements of these services are usually too large for assets at I&C  sites to enter individually.

This creates a unique opportunity for energy suppliers to aggregate, optimize, and dispatch DERs at customer sites, allowing them to act individually, or in unison, creating value through three key revenue streams: grid support services; commodity market participation; and non-commodity cost avoidance.

Kraken’s Optimization Solution

Kraken’s platform enables energy suppliers to remotely automate the scheduling and dispatch of customer DERs, from a centralized position, giving suppliers real-time control of customer loads, providing certainty of demand and supply patterns to help make accurate purchasing decisions and reduce exposure to imbalanced risk.

Using Kraken’s optimization engine, energy suppliers can intelligently dispatch DERs against financial forecasts and physical constraints in line with their customers’ aims and objectives. Our platform allows assets to act individually or be aggregated together as part of a wider portfolio, allowing them to enter grid service markets that would traditionally be inaccessible.

Kraken’s analytics layer allows suppliers the ability to create detailed reports to understand asset performance at any given period. By combining DER actions with historic prices, suppliers can use our software to create detailed P&L statements, allowing them to understand exactly how much value they are creating for their customers. These reports can be used for bill validation purposes and prove to customers where revenue and savings are being accumulated, helping build trust between the asset owner and energy supplier.

The Key Benefits for Suppliers

The Kraken solution can offer a range of benefits to energy suppliers and their customers.

Reduced Market Exposure

Through intelligent control of customers' assets and loads, suppliers can reduce their exposure to imbalance costs.

Broader Tariff Offerings

Suppliers can use Kraken to broaden their tariff offering and attract customers who have DERs or flexible loads by incentivizing them with specialized time-of-use tariffs or grid-balancing services. 

Informed Purchasing

By using the Kraken platform to better understand customer load patterns, suppliers can make more informed and accurate baseload purchasing decisions, reducing exposure to price fluctuations.

Bill Validation

Suppliers can use our solution to create detailed P&L statements to understand exactly how much value has been created through optimisation of their customers' assets. These reports can be used for bill validation purposes and prove to customers when and where revenue and savings are accumulated.

Customer Benefits

Customers of suppliers using Kraken can generate additional savings and revenues through non-commodity cost avoidance; participation in commodity markets; grid service revenues; and carbon savings through reducing carbon intensity of the grid.

About Kraken

Kraken offers a best-in-class end-to-end platform for energy supply, and is operating in the UK, Japan, US, New Zealand, Australia and most of mainland Europe. Kraken’s proprietary platform is contracted to serve over 40 million energy accounts across the globe through licensees and its partnership with Octopus Energy, where it is responsible for the acquisition and management of 4.9 million retail customers and over 25,000 business customers (the largest of which is Arsenal FC).

Based on advanced data and machine learning capabilities, Kraken automates much of the energy supply chain to allow outstanding service and efficiency as the world transitions to a decentralized, decarbonized energy system.

Kraken is part of energy technology B-corp Octopus Energy Group, and was developed to enable third parties to take advantage of the technologies developed by Octopus Energy. It has already been licensed by major global players including Origin Energy, E.ON, Tokyo Gas and EDF.

After multiple deals with renewable energy organisations, the company remains on track to reach 100 million energy accounts by 2027.


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