With many businesses shut and employees working from home, demand on the grid is down 20%, with the UK setting a new record for low demand on 15th April. NGESO have described this as ‘unprecedented’ and it has caused many difficulties when balancing the system and ensuring we all have access to power at all times.
This problem of low demand is exacerbated further at times of high wind and solar generation. Renewable generation is harder to manage compared to traditional static sources, such as gas or coal plants, as their generation cannot be scaled down easily. Several renewable generation records have been broken this year and more high generation is expected. As a result, generation exceeding demand is likely to become more frequent and has been flagged as a potential security of supply issue, with options available to the grid in the existing Balancing Mechanism (BM) no longer sufficient.
In order to address these newfound challenges, NGESO has fast-tracked two new measures to help balance the system in the coming weeks and months: the introduction of Optional Downward Flexibility Management (ODFM) and an urgent amendment to the Grid Code, GC143. The key differences between these schemes are that ODFM is voluntary and offers monetary rewards for participation, whereas GC143 offers neither. GC143 allows the emergency disconnection of embedded generators without compensation, but only once commercial measures have been exhausted, such as ODFM. This provision is designed to alleviate the risk that commercial measures do not receive required levels of uptake from the market.
Optional Downward Flexibility Management (ODFM)
ODFM is an opt-in service, offering payment to small-scale renewable generators and larger users to reduce or stop energy production or in the case of users to increase their demand, for short specific windows. Approximately a third of energy currently produced in the UK is renewable so its incorporation into the BM offers significant additional flexibility for the grid. It’s not possible to see renewable generation in real time like with other types of generation, but it can be predicted to a relative degree of accuracy with the assistance of weather forecasting. As such, by incorporating renewables into the BM when they were previously missing, ODFM offers greater scope to proactively plan for system balancing in expected times of low demand and high generation.
The scheme is due to run until at least 31st August 2020, with the possibility of extension to 30th September 2020. Participants will be asked to shut down for minimum three-hour periods and current predictions indicate this will be utilised on 35% days between May and August. So far, 170 generators totalling 2.4GW of capacity have agreed to participate but new applications are still being accepted. The minimum capacity per participant is 1MW, this must be from a single supply point. Only generators not currently involved in the BM are able to partake.
Key points to remember before agreeing to participate:
- Each event is minimum 3 hours, likely to be 3-6 hours
- Primary delivery times 23:00 – 07:00, Saturday to Monday
- Scheme runs until 31th August
- Instruction to be communicated by email for next day delivery
Volume requirement will vary but current estimates suggest that up to 3,000MW will be required at any one time. There may also be requests outside of primary delivery times if low demand and high renewable generation are anticipated. NGESO will pay for each successful event at the price agreed.
GC143: Last Resort Disconnection of Embedded Generation
The Grid Code exists to establish a detailed set of guidelines to ensure future system operation and maintenance. The latest amendment means NGESO has the power to disconnect embedded generators. As the name suggests, this is only to be used as a last resort and is designed to ensure security of supply if all other balancing options have been exhausted. If required, emergency disconnection will be triggered via the Distribution Service Operator. The amendment came into effect on 8th May with a ‘sunset clause’, meaning it will only remain in place until 25th October unless further amendments are passed. This amendment only applies to embedded generation that does not currently participate in the BM (which NGESO already have control over). Notably, operators will not receive compensation if they are disconnected, which is cause for concern for those potentially affected. However, NGESO successfully argued that without such contingency measures, consumer supply was at risk of disruption. Regulator Ofgem have made it clear they expect NGESO to pursue alternatives and this will only be used once all commercial routes have been exhausted. The need for such emergency plans highlights how much the energy market has changed in such a short space of time and the challenging decisions NGESO are making behind the scenes.
How LGE can help?
As any emergency interruptions under GC143 will not be compensated, there is a strong incentive for any eligible generators to join the ODFM scheme, LGE strongly recommends that anybody able to take advantage of ODFM do so.
If you fit the required criteria and would like to take advantage of ODFM, LGE can help facilitate this. Together, we will agree a ‘strike price’ that will then be offered to NGESO on your behalf. This price is calculated using a number of factors, including:
- Lost PPA value
- Costs of restarting generation
- Lost non-commodity benefits
- Additional maintenance and staffing costs incurred
Once agreed, they will then respond to requests from NGESO and offer your generation capacity for downturn at the agreed strike price. If successful, you will be notified by email at 17:00 for delivery the following day. Payment will be received at the end of the following month, using the same self-billing method used by existing BM participants.
In order to participate, specific information regarding supply needs to be provided, including:
- Technology Type
- Min and Max Ramp Down (MW/Min)
- Min and Max Ramp Up (MW/Min)
- Delivery method (demand turn up / generation turn down)
- Asset name for unit allocation
- Loss of Mains Protection Type
- Loss of Mains ROCOF setting
- Loss of Mains Time Delay
- Loss of Mains VS setting
- Loss of Mains Measurement Window
- Voltage Connection
LGE are able to assist in compiling all information required for application.
If you have any further questions on anything contained above, please do not hesitate to contact your LGE Account Manager. These are unusual times and we are here, as always, to offer support and guidance.