National Grid has just announced 201MW of winning bids of its first-ever tender for “enhanced frequency response.”Out of a list of some 64 pre-qualified bidders, National Grid selected eight vendors with a combined 201MW of projects, varying between 10MW and 49MW apiece, totalling £66 million ($86.4 million).
Winning energy storage bids
EDF Energy Renewables was the biggest winner with a £12 million ($15.7 million) tender for a 49MW project at its West Burton natural-gas-fired power plant -- just under National Grid’s 50MW cap for the programme.
Vattenfall won a £5.75 million ($7.5 million) tender for a 22MW project at the Welsh Pen y Cymoedd wind farm, and E.ON U.K. won a £3.89 million ($5.1 million) tender for a 10MW battery at its Blackburn Meadow combined heat and power plant.
Other winners included Low Carbon Storage Investment with a combined £15.35 million ($20.1 million) tender for two separate projects of 10MW and 40MW each; Element Power with a £10.1 million ($13.2 million), 25MW project; Belectric with a £4.2 million ($5.5 million), 10MW project; and Renewable Energy Systems (RES) with a £14.65 million ($19.2 million) 35MW project. RES has already won a 20MW project early this year. [Storage, the vital ingredient for unlocking UK’s low-carbon power system]
Big step forward for energy storage
The energy storage procurements represent a big step forward for the UK storage market. To date, the country’s biggest battery deployment has been UK Power Networks’ 6MW/10MWh lithium-ion system to help support a local substation. Like the other grid batteries deployed in the UK, it’s been centred on testing storage as a distribution grid improvement, as part of Ofgem’s Low Carbon Networks Fund.
The recent awards are the first step in what could become a much larger market for battery vendors and storage project developers. According to the research carried out by the UK’s now disbanded Department of Energy and Climate Change (DECC) (now merged with the Department for Business, Innovation and Skills to form the Department for Business, Energy and Industrial Strategy), the energy storage market is set to reach $17 billion in 2020.
UK’s frequency regulation
National Grid’s announcement represents the end result of a process launched last year September to procure a specialty grid service needed to keep grid frequencies as close as possible to UK normal operating range, that is 50Hz. In the past, power plants always carried out this job but over the last 10 years, grid batteries, flywheels and other energy storage systems have become strong competitors in the field.
Frequency regulation has driven the growth of grid batteries in the U.S., with mid-Atlantic grid operator PJM’s frequency regulation market now being served by hundreds of megawatts of lithium-ion systems, capable of responding within 4 seconds to grid-balancing orders.
The UK requires about 2GW of frequency response for a system with nationwide peak demand of about 45GW. National Grid spends between £160 million and £170 million ($212 million to $225 million) per year to manage this demand and has in the past relied on slower-reacting assets for frequency response -- either 10s primary services, or 30s secondary services, which can react to correct frequency excursions after they’re wandered outside their boundaries.
But assets that can respond in less than a second can step in to “improve management of the system frequency pre-fault,” or before frequencies go out of range, according to National Grid’s findings. This is critical for a grid operator that’s having to deal with increasing volatility due to a growing share of intermittent wind and solar power, and could help save National Grid about £200 million ($262 million) over the four years of the contracts it’s awarded.
There were a few non-battery projects bidding for this procurement, including aggregated thermal energy storage from Open Energi and generators from Drax Power Ltd. But 61 of the 64 projects chosen are battery-based systems. This highlights that batteries are well-suited to sub-second responses.
National Grid’s open tender provided valuable data on what it’s paying for each project, in terms of the costs per hour of enhanced frequency regulation -- a measurement that allows an apples-to-apples comparison for projects of different size. The winning bids’ prices ranged from £7 ($9.16) to £11.97 ($15.67) per MWh of enhanced frequency response.
The projects are expected to come online between April 2017 and March 2018, and their contracts are for four years of service. While it’s the first procurement of its kind, it likely won’t be the last. National Grid intends to run regular tender events.
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