National Grid expects to invest to £400 million by 2020 in an initiative aimed at balancing the grid .

Called demand side response (DSR) it provides incentives to businesses to adjust the amount of power they use at particular times in response to a signal.

Speaking to ELN after the Demand Side Response Conference in London last week, Duncan Burt, Head of Commercial Operations at National Grid said around £850 million is spent every year to manage the energy system in the UK.

He added: “We already buy quite a good chunk from that demand side sources but we know we can buy a lot more, particularly as this technology comes in and people have the control and monitoring options available to them.

“So what we are saying to guys is ‘We want to open a really big conversation. We think in the short term we can get value by paying you to respond and provide services to us’… We’d like to be buying 30 to 50% by 2020.”

“To put that in numbers, that would mean we would be spending £200 million to £400 million a year on demand side services in Great Britain. That’s an enormous amount. That’s a huge market.”

Maxine Frerk, Interim Senior Partner for Smarter Grids Governance at Ofgem believes this is an opportunity for businesses to be more efficient.

Ms Frerk told ELN: “The advantages to them is that they can reduce their costs or in some cases there are positives revenue opportunities if they’ve got back up generation, for example it’s sitting there unused, they can make some money from it.”

• DSR, electricity, National Grid, Ofgem, UK