Local flexibility is one of the most active innovation areas in the electricity system. The first of our series of five blogs looks at the emerging lessons as to how these differ from national balancing.
These extensive trials are focused on developing flexibility market platforms and market facilitator capabilities. Open Utility have, for example, partnered with UK Power Networks to test out their online marketplace for local flexibility.
These new capabilities are at the heart of the shift from DNO to Distribution System Operator (DSO). The Energy Network Association’s (ENA) states that DSOs will be:
“A neutral facilitator of an open and accessible market that will enable competitive access to markets and the optimal use of Distributed Energy Resources on distribution networks to deliver security, sustainability and affordability in the support of whole system optimisation.”
Reviewing these trials, one lesson that becomes clear is the need for flexibility at the local/distribution network level is very different to national system balancing services that many market players have become familiar with.
The national system operator (TSO) will call on assets to respond to deviations in system frequency through the EFR/FFR mechanism or to provide supplementary capacity or energy reserve through STOR or the Capacity Market. The location of these assets is largely irrelevant.
For local flexibility on the other hand the key is in the name, with DNOs calling on flexible assets, whether that be generation, demand or storage, to respond to local constraints at specific areas of the network, or even individual substations. These local network constraints are also often only present for a short period of the year at times of peak demand or generation.
DNOs will be weighing the cost of procuring flexibility against investing in the network. There will, therefore, be a limit to the value they are willing to pay that is likely to be significantly lower than TSO balancing services.
The entry level for assets/providers also tends to be much smaller at a local level. TSO balancing services such as FFR have a minimum capacity threshold of 1MW, but examples from the recent Electricity North West (ENW) expression of interest for flexibility services[1] have a minimum size for directly contracted resources of 100kW.
The importance of the locality of the asset responding to a local flexibility demand and the short periods of time for which that asset could be required suggests that existing assets will be most likely to respond. It seems unlikely local flexibility needs coming out of current trials will be sufficient to underpin the investment case for a new asset such as a community owned battery.
The smaller scale of lower flexibility and its infrequent use is informing Open Utility’s development of a local flex platform. What is already clear is that such a platform will need to simplify and reduce the costs of specifying and procuring flexibility at a local level to make it attractive to potential providers.
In the second of our five blogs next week we will be exploring what the specific problems DNOs are looking to use local flexibility to address.
[1] See ENW Flexible Services EOI, April 2018: https://www.enwl.co.uk/globalassets/innovation/flexible-services/flexible-services-documents/flexible-services-expression-of-interest-3-april-2018.pdf