NGESO wants to nearly triple procurement of frequency response in its new Dynamic Containment product, up to 1400 MW in 2021, but so far providers have fallen short of meeting the system operator’s current 500MW target.

In its annual ‘Power Responsive’ review the system operator said volumes had grown to 300MW in December, significantly higher than in the launch auction in October, but it said ‘undersupply’ had limited competition, so prices remained around the £17/MW/hr implied price cap.

Batteries are currently the only assets that have qualified to offer the service, which needs very fast response. In the launch auction in October 90MW of batteries won contracts.

However, more may participate in future because a rule change on 27 January allows them to participate in both Dynamic Containment and the Balancing Market, instead of having to choose. NGESO described this as a “potential gamechanger for storage”.

“It is a potential gamechanger for storage”

In addition, NGESO will this year use Dynamic Containment to  provide ‘negative response’, which means  they will be asked to import power (eg to charge batteries), as well as the current ‘positive response’ where they are asked to export power. That will introduce interesting battery usage challenges for operators, who bid into the DC auction on a daily basis. They will have to manage the level of battery charge according to whether they expect to export or import power.

NGESO said that two new frequency response services, Dynamic Regulation and Dynamic Moderation are due to be launched by Q1 2022, which will ultimately replace other ancillary services designed to control system frequency, including the so-called ‘fast frequency response’. Both should be able to call on demand side response as well as storage and distributed generation, and

•  Dynamic Regulation is a symmetrical, bidirectional service designed to provide regulation of frequency when it is close to 50 Hz. Response is required within 2 seconds, ramping to full output within 8 seconds. The service is continuous, with no limit on duration of response. 
• Dynamic Moderation is also symmetrical and bidirectional, but providers will respond to occasional moderate deviations in frequency. A full response is required within 0.5 seconds and duration is limited to 20 minutes. 

Discussing recent experience during Covid, when the System Operator had to manage the system with much lower demand a high proportion of renewables, NGESO said, “Renewables are often cited as the cause of system operation headaches. The price-inelasticity of renewable (and nuclear) generation does brings some new challenges, but ODFM has shown that renewables possess the inherent flexibility to be the solutions to these problems, and need only the right market incentives to do so.”

NGESO introduced ODFM as a negative reserve or ‘foot room’ option, rewarding providers for increasing consumption or reducing generation, to allow it to bring on other plant that provided necessary stability to the system.

Renewables possess the inherent flexibility to be the solutions to these problems, and need only the right market incentives to do so

 

Transparency is needed

The System Operator admitted that it had to provide more transparency over how it decided which assets to contract,  because new entrants into the market complained that more economic bids or offers from new technologies were being overlooked in favour of traditional generation assets.

NGESO admitted that, “as more flexible assets have entered the BM it has become apparent that greater clarity is required to explain why certain actions are taken,” especially  for new entrants.

It has committed to greater clarity in their operational decision making. The ESO has built a tool to analyse and publish all BM actions taken each day and will be publishing this data, complete with justifications of why each action was taken.

Greater clarity is required to explain why certain actions are taken

This should also give demand -side providers confidence in BM-focussed business cases by giving them a consistent track record of equitable dispatch. NGESO said , “In return, batteries and other technologies will bring down the cost of the balancing mechanism as a whole, bringing a positive benefit to end consumers.”

 

Distribution flexibility is growing fast

NGESO said the market for supplying flexibility to distribution network operators (DNOs) – ie the low voltage network – had quadrupled in a year. In 2020 1GW of contracts were signed by the six DNOs, up from just over 250 MW in 2019.

That had allowed a significant proportion of the contracts to be awarded to novel forms of response, including aggregated domestic portfolios.

It noted the low barriers to entry – even before recent developments, under the ENA’s Open Networks initiative, that resulted in standard evaluation methodologies and contracts, as well as single points of contact to offer services across all the DNOs.

DNOs have also published a standardised register for distributed energy resources of sites larger than 1MW.

Read the full Power Responsive report here