National Grid ESO outlines its plans to deliver a cleaner energy system in this sponsored post.
National Grid ESO’s ambitions
With climate change high on the Government’s agenda and National Grid ESO’s ambition to be able to operate a zero carbon system by 2025, it’s important we manage our network in a cleaner and more flexible way. This means breaking down barriers to entry for new market entrants, creating liquidity to realise consumer value, and ensuring security of supply whilst embracing new types of generation and ever-changing needs.
Our analysis shows that by 2050, a decarbonised energy system could add 19 million jobs and £44 trillion gross domestic product (GDP) to the global economy, as well as generating a 15% increase in global welfare and a 60% reduction in health effects caused by local air pollution.
Having published our Towards 2030[1] ambition in April 2019, National Grid ESO sees success by 2025 as:
- An electricity system that can operate carbon free
- A strategy for clean heat, and progress against that plan
- Competition everywhere
- The System Operator is a trusted partner
Progress against this plan is already taking place having operated the grid coal free for two consecutive weeks in May 2019, for the first time, and we estimate that delivering our Business Plans[2] net zero ambition, could achieve benefits of around £2.3 billion over the RIIO-2 period.
In the near-term, our recently published Forward Plan[3] lays out our intentions from April 2019 to March 2021 and beyond. The top five priorities are continuing to improve safety and reliability, improving quality of service by listening to stakeholders and acting on feedback, lowering bills for the end consumer, reducing environmental damage, and creating greater benefits for society as a whole.
Achieving the ESO’s ambitions
One of the most significant barriers we face in order to achieve our goal of carbon free operation is to enable all technologies to participate in our ancillary service markets. Traditionally, renewable sources of generation have struggled to participate due to their intermittent nature and variable output. To allow these technologies to operate on an even playing field we are currently looking to understand how short-term markets can reduce barriers to entry for such technology types who cannot guarantee output months in advance.
There is a question over whether the existing pay-as-bid tenders are the appropriate approach for procuring balancing services. Pay-as-bid tenders are useful when there is a market with a small number of participants and where there are highly standardised products, however a pay-as-clear auction approach may incentivise bidding at marginal price and increase transparency of pricing signals in a market with standard products.
As a result, we are looking to openly engage, redesign and implement new ancillary service opportunities. Some of the measures being taken to reform the Firm Frequency Response (FFR) market are: moving from monthly pay as bid tenders to trialling weekly pay-as-clear auctions; holding periodic long-term tenders; developing day ahead auction designs; and implementing a single platform for all ancillary service participation.
FFR Weekly Auction Trial
As part of our move towards closer to real time procurement, on 13th June 2019 we held the first Phase 1 weekly frequency response auction to procure a low frequency static service. Four parties entered the first auction, to secure a contract for the coming week, with service delivery to commence the following day at 23:00.
Since then, more participants have joined the Phase 1 auction. We have also carried out additional work on the detail of Phase 2 and will seek to procure dynamic response through a platform being implemented in partnership with EpexSpot.
For more information on the FFR Weekly Auction Trial please visit: www.nationalgrideso.com/balancing-services/frequency-response-services/firm-frequency-response-ffr
Reform of Reserve Services
In time, we will also be looking at reforms to Reserve Services, including STOR and Fast Reserve, potentially moving to monthly ‘EFA block’ pay-as-clear auctions, whilst implementing measures to increase market transparency and facilitate competition.
New Areas of Focus
Demand Side Flexibility has a vital role to play in the evolution of electricity markets which will shape how we all behave as consumers and providers. The UK’s focus is firmly on the facilitation of new up and coming technologies such as EVs and smart devices in our homes. For example, in our recent Future Energy Scenarios report we estimated that, by 2050, there will be over 35 million electric vehicles on the road. These and other demand side changes increase the need for the grid as a whole to be more dynamic and flexible.
Power Responsive is looking to expand its focus to include domestic consumers and community-based energy projects, and we are actively involved in multiple innovation projects looking at vehicle to grid (V2G) technologies, domestic DSR, a system-wide DER asset register, and whole-system approaches to the flexibility procurement.
We are going through a period of unprecedented change, which will improve the way the energy industry adapts and operates, ultimately delivering greater value for consumers. However, we cannot do this alone. We need to work together across the energy industry to ensure that we are ready to facilitate the energy system of tomorrow.
Contacts us
If you would like to learn more about Power Responsive or find out about the opportunities that exist by using energy or generation assets more flexibly, as well as hear stories from businesses that are taking part and enjoying the rewards of the balancing markets right now, go to: www.powerresponsive.com or sign up to our mailing list on the homepage.
Contact us at powerresponsive@nationalgrideso.com
[1] Towards 2030 – https://www.nationalgrideso.com/news/towards-2030-system-operator-gbs-energy-future
[2] ESO RIIO-2 draft business plan – https://www.nationalgrideso.com/about-us/business-plans
[3] Forward Plan April 2019 to March 2021 – https://www.nationalgrideso.com/about-us/business-plans/forward-plans-2021
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National Grid and Epex Spot to collaborate on weekly FFR auction
National Grid models big DSR and storage increases
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