Does Great Britain need more frequency response reserve?

An investigation into this month's power outage will examine questions many are asking: did the operator procure enough reserve, and should consumers be paying more to ensure security of supply?
Published: Wed 21 Aug 2019

This month’s major power outage in Great Britain was a stark reminder of the need for frequency response services and an efficient way for the system operator to be able to call on them quickly, and yet market signals for batteries and other flexibility resources have weakened recently. 

The blackout was caused by two large generators tripping at the same time after being struck by lightning, according to the system operator, rather than too many renewables on the system or inadequate reserve capacity overall. National Grid ESO said in a report sent to regulator Ofgem last Friday that automatic frequency response services worked correctly but the loss was too large to prevent under frequency load shedding. But many questions will be asked during the ongoing investigation into the events of Friday 9th August, including whether or not it made efficient use of the resources at its disposal and whether it had procured enough frequency response reserve. 

“If power cuts can happen when just two power generators drop off, then something fundamental has gone wrong," says Professor Dieter Helm in a paper published on his website entitled ‘Power cuts and how to avoid them.'  

Flexibility markets are in their infancy and both regulators and market participants are still getting to grips with them. Just as the capacity and frequency markets in the UK looked set to support flexible resources, regulatory challenges and tumbling prices caused by plentiful supplies have given pause for thought. National Grid’s first enhanced frequency response auction in 2016 surprised observers with prices as low as £7/MWh.  

 

“There is a trade-off between the amount of frequency procured and the cost to consumers. As part of the ongoing debate around this incident there may be a call for more balancing services to be provided and Ofgem will need to sign off on the cost of this extra capacity if they deem it necessary,” says Phil Hewitt, founder and executive director of consultancy EnAppSys. 

Energy suppliers are rising to the challenge of balancing supply and demand themselves amid an ever-increasingly intermittent generation mix, using the newly available suite of digital technologies. But if the National Grid procures only enough resources in frequency response auctions to cover one large plant tripping offline at a time, prices for these fast-responding flexible resources might remain low.  

“Over the last couple of years the investment case has changed, and revenues from frequency response are materially diminished,” says Mark Meyrick, trading and smart grids manager at Ecotricity.  

The ‘green’ energy supplier is adapting its strategy to accommodate some regulatory uncertainties, for example it was waiting to apply for the new Wider Balancing Market access until Project TERRE was implemented but with it now looking like being delayed, it has decided to go ahead with an application via the traditional route, Meyrick tells Engerati. He says they are aiming to bid into the balancing mechanism, although revenues are highly uncertain as it does not work purely on merit, because of the vagaries of that market due to constraints on the grid.  

Ecotricity wind farms are connected to a virtual power plant designed by German power trading company Next Kraftwerke, which operates the NEMOCS platform, one of the largest in Europe with 7GW and 8,000 assets under management. Meyrick says Ecotricity is discussing adding third parties to its platform, but determining what flexibility can be provided is a complex process as each asset has different capabilities. “Every flexibility asset has a different use case and different revenue opportunities,” he says. When the frequency response markets go from monthly to weekly that will help wind and other intermittent sources to be able to participate, as short-term forecasts are more reliable.  

Battery storage systems will help short-term balancing, and Ecotricity will launch a lithium-ion battery trial later this year, Meyrick says. The Ecotricity team is also working on demand-side response from commercial and industrial customers, and has been working on projects with government department for energy, business and strategy BEIS and Innovate UK. 

Next Kraftwerke is rolling out its VPP software to other countries such as Japan, South Korea, Slovakia and some other Eastern European countries, says Tobias Weghorn, international business development manager. The company developed its own platform, first for its own VPP operation, but now also for partners worldwide, he says.  It involves different kinds of monitoring and control functions, such as visualizing operational asset data, grid frequency or also imported external information as well as dispatching assets based on manual instructions or imported schedules. On one side there is a single signal from the system operator, which needs to be translated into hundreds or even thousands of signals to find the right resource to respond. 

The result is a scaleable pool of flexible resources, which will benefit the system operator and ultimately the consumer because, as witnessed already in the UK, as these markets mature the price of flexibility comes down.  

The UK’s Energy Networks Association has an open consultation on its flexibility commitments and future developments, which closes on 23rd August.  

Engerati is hosting a webinar with Habitat Energy on how to make money from battery storage: https://www.engerati.com/energy-management/webinars/energy-advisory/how-...  

 

The ENA Open Networks Project. How electricity markets can enable local flexibility markets