Ofgem has decided that system operator NGESO should be able to require so-called embedded generators to disconnect without compensation in the event of an emergency.

The ‘enduring solution’ (Grid Code modification GC0147) follows temporary arrangements put in place during last year’s heavily depressed demand due to Covid, when supply exceeded demand and the system operator had to switch off large-scale renewable generation for system management reasons.

The option applies as a ‘last resort’ in the event of an emergency and both NGESO and distribution network operators (DNOs) are expected to use commercial arrangements to manage the situation in preference – as happened last year, when NGESO used a new commercial product and did not use its emergency power.

In its decision Ofgem noted that embedded generators do not have ‘firm’ access rights to the transmission system and do not receive compensation if the DNO has to disconnect the generator. The regulator also noted that it is now easier for embedded generation to take part in NGESO’s Balancing Market, either directly or with the help of an aggregator or ‘virtual lead party’.

The decision signals a continuing trend for embedded generation to participate directly in managing the national system, which offers opportunities but raises costs.

In March, BEIS set out new proposals that would require embedded generation to be registered for the Balancing Market in order to take part in the Capacity Market. They would have to notify the system operator of plant ‘market position’ in every half-hour dispatch period. BEIS acknowledged that this could present a barrier to such small plant entering the Capacity Market,

NGESO regards the BM as GB’s core flexibility market, says BEIS. CM plant are nominally expected to be a BM unit (and a party to the Balancing and Settlement Code) but a “significant portion” of distribution connected capacity is exempt. “This can create serious issues for NGESO in understanding the true amount of capacity available to it to manage the electricity system,” said BEIS at the time, and “potentially results in inefficient scheduling and dispatch of units” raising prices.