Eamonn Bell, Head of Demand Side Response at Inspired Energy, writes to ICON about his observations following the launch of National Grid Electricity System Operator’s (ESO) newest frequency response service on 1 October.
Shape of the DC tender
The first full day of delivery was Friday 2 Oct, though the delivery days for the DC service run from 11pm on the previous day to 11pm of the main delivery day, rather than from midnight to midnight.
The DC delivery window aligns with NG ESO’s other Response and Reserve services, which is important as in time DC – and its as-yet-to-be-rolled-out sister services Dynamic Moderation and Dynamic Restoration – will replace the existing suite of frequency response products.
DC will be procured in a daily pay-as-bid tender, for blocks of 24h service delivery. NG ESO has made a commitment to move the procurement of Balancing Services closer and closer to real time, and the daily DC tenders are the next step.
Until recently, frequency response was secured up to 30 months in advance. The market then shifted to month ahead-only tenders, and then to weekly auctions. The DC market is the next logical step, with day ahead procurement.
Payments for the DC service are made for ‘availability’ rather than for the actual energy delivered in a response action. In other words, a provider may be awarded a 20MW contract for a given 24 hour window but if the system frequency remains well-behaved for the day then no actual response from the provider will be expected and full payment will be made on 20 MW.
Availability payments are like the salary paid to firefighters: the firefighters are paid their full salaries whether or not there are any fires so that when there is an actual emergency they are ready and able to response. Firefighters aren’t paid per fire, and neither are DC providers paid per frequency event.
Report on the market
NG ESO is targeting the procurement of 500 MW of DC in the first phase of the roll out, with the aim of securing a daily volume of up to 1,000 MW on an enduring basis. The tender in the first day of the DC market attracted six bids from four providers. Two of them were awarded contracts for a total of 90 MW of service at an average price of £14.52/MW/hour. This makes DC one of the most valuable of NG ESO’s suite of balancing services.
The tender on the second day secured 165 MW of service from 6 units with prices ranging from £11.44/MW/hour to £16.09/MW/hour.
Reason DC is needed
NG ESO’s need for a new product like DC is clear. The nature of the electricity network is evolving from a centrally dispatched service dominated by a handful of very large power stations to a new reality of many smaller distributed energy resources connected at all points on the network and across the country.
At the same time, we can see that, since 2010, peak demand on the system has been steadily falling. In conditions of lower demand and higher penetration of renewables the system becomes harder to keep under control.
NG ESO are mandated to keep the system frequency at 50 Hz, and to maintain it within a range of ±0.5 Hz. This target frequency means that the cycle of alternating current generated by the rotation of power plant turbines should oscillate exactly 50 times per second. If demand exactly matched supply, then this would be easy, but demand constantly changes. We’re entering a new world where supply is now also less constant.
Were supply output to be constant, then when demand goes up the generator turbines will slow down, much like a cyclist would as she approached a hill: it’s harder to push the turbines around against increasing demand.
Similarly, if demand falls away then the turbines speed up, like the cyclist who finds herself speeding up going down a hill: the turbines will speed up if there’s suddenly less demand to push back against them.
NG ESO can rapidly spot problems on the grid by observing the second-by-second change in system frequency around the 50 Hz target and doing so is one of their primary jobs. Accordingly, NG ESO set themselves a smaller ‘operational’ range of 50 ± 0.2 Hz and aim to maintain the frequency within this tighter band.
DC is a new frequency response service whereby providers will react only when the frequency goes outside of this ±0.2 Hz band.
If the frequency drops down below 49.8 Hz then providers will quickly supply more power to the system or turn off demand. If the frequency rises above 50.2 Hz then providers will turn down their supply to the grid or they will increase their demand to mop up excess supply on the grid.
Because of the evolving nature of the grid, these services must be provided very quickly. Providers of DC must be able to spot changes in system frequency and to react within one second.
Benefit to demand side customers or battery owners
The DC market will be suited to any customer who has assets able to respond to a request to turn on or off within 0.5-1 seconds. This might include on-site batteries, refrigeration plant, BMS systems, and other controllable loads.
The grid is annually experiencing roughly 650 breaches below 49.8 Hz with an average duration of 20 seconds, and roughly 850 breaches above 50.2Hz with an average duration of 25 seconds.
Customers who can rapidly switch on or off their assets for less than 30 seconds about four times per day should consider examining how to provide DC.
The day ahead schedule of the DC tender also favours demand-side assets.
Historically, demand-side providers of balancing services had to predict their availability to deliver – by predicting their consumption patterns – at least two months in advance, and in some cases up to two years in advance, which often led to wide margins of error.
Such predictions are clearly more difficult to make for demand-side providers than for, say, a battery or a generator.
This situation improved with the weekly auctions.
The DC day ahead tenders, however, mean that a provider need only commit 24 hours in advance to delivering a service which will give greater confidence to both the provider and to National Grid that service will be accurately delivered.