New market place leads to flexibility breakthrough in a world-first trial

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STEP towards a more flexible and responsive electricity grid has been taken in Cornwall as part of Centrica’s Local Energy Market trial.

For the first time anywhere in the world, the local Distribution System Operator (Western Power Distribution) and the Transmission System Operator (National Grid ESO) are both procuring flexibility simultaneously via a single third-party platform – Centrica’s ‘pioneering’ auction-based marketplace.

The LEM programme, part funded by the European Regional Development Fund, and delivered by Centrica Business Solutions, has been operating since 2017, and has seen solar and battery systems installed into 100 homes across Cornwall.

Pieter-Jan Mermans, Director of Optimisation at Centrica Business Solutions, said: “This is a milestone moment for the energy network and comes as the result of several years of hard work by the team at Centrica and as well as our partners at National Grid ESO, WPD, N-SIDE, Exeter University and Imperial College London.

“Improving grid flexibility benefits everyone from generators to consumers, and these trials represent a major step forward. We are hugely grateful to the householders and businesses across Cornwall who have embraced this trial with open arms, and we look forward to providing a full update after the trials conclude in spring 2020.”

In addition, more than 125 Cornish businesses, including Carbis Bay Hotel and Goonhilly Earth Station, have had a range of flexible, low carbon energy technologies and monitoring equipment installed.

The LEM platform seeks to benefit each of these participants, and the grid more widely, by providing a mechanism for the system operators to indicate when they will need an increase or decrease in generation or consumption to balance the grid or manage a local network constraint.

These needs can then be met by the homes and businesses on the LEM, in return for a financial reward – creating significant opportunities for energy users who are able to be flexible with their usage or call upon smart energy storage solutions.

Centrica’s LEM platform allows buyers (Western Power Distribution and National Grid ESO) to place bids for flexibility services, which are then matched with offers by sellers (homes and businesses) through auctions that run from months ahead all the way to intraday.

Jenny Woodruff, Project Manager at Western Power Distribution added: “This phase enables Distribution Network Operators and National Grid ESO to purchase flexibility services from the same pool of resources but also introduces checks to make sure our respective services don’t counteract or interfere with each other.

“This is expected to be increasingly important as we plan to make increasing use of flexibility services, which in turn raises the chances of conflicts occurring. It’s potentially a significant problem, so this trial is an exciting step to find a solution.

“It also allows us to find out how flexibility providers behave in marketplaces that have different rules and processes. We’re keen to encourage new players to join the market so finding out what they like and dislike will be useful in shaping future markets.”

The platform manages the process for both sides from contract creation all the way to baselining and settlement, making it easy to trade flexibility.

At the heart of these auctions is a clearing engine built by N-SIDE, a Belgian advanced analytics company that provides the matching algorithm for the European Day-Ahead power markets.

The engine takes bids and offers and finds the optimal clearing solution, taking into account grid and asset constraints to ensure feasible contracts.

The portal and clearing engine also enable the transmission and distribution (T/D) networks to co-ordinate their procurement to avoid conflicting signals.

According to Centrica, this combination of T/D co-ordination and grid-secure contracts will be ‘key to unlocking flexibility from Distributed Energy Resources in the future’.

As LEM auctions also result in geographically located clearing prices, price signals for flexibility can emerge at various points in the Cornish grid.

This fully automated end-to-end solution delivers ‘optimal value’ for the whole energy system.

By reducing grid constraint and offering a means to dynamically manage the network, the LEM is helping to make energy markets more efficient and reduce the costs of accommodating further distributed renewable generation across the network.

Colm Murphy, Electricity Market Change Development Manager, National Grid ESO, commented: “Exploring the provision of flexibility through a local energy market is a first for us and even though we’re in the early stages of the trial, we’re looking forward to evaluating the results.

“In particular we’re keen to understand how flexibility can be procured efficiently and cost-effectively between different markets. The potential is really exciting as we look to unlock more flexible energy resources in the market, and greater cost benefits to consumers.”