Session 4
Simplifying The Offering
Adam Sims – National Grid
Currently Available Products and Markets
Energy
Balancing
Margin
Response
EFR
FFR
Dynamic
Mandatory
Static
FFR
Bridging
STOR
Committed
Flexible
Reserve
Fast Start
Fast
Reserve
Demand
Turn-Up
BM Startup / Hot
Standby
Max Gen
Whole
System
Voltage
Low SEL /
Footroom
Reactive
Power
Constraint
s
Mandatory
Thermal
Enhanced
Stability
Black Start
Trip to
House
Load
Intertrips
Operationa
l
Commerci
al
Voltage
Premium
Flexible
STOR
Runway
Service
Product
Aspiration for Future Markets
Stakeholder Feedback
• Question: What commercial
changes to Balancing
Services/Products would you like to
see to better enable you to
commence participation?
Recognising the
value of each
service, 8
Higher/stable
pricing, 8
Increased
flexibility, 17
Level playing field, 6
Simplified
information, 15
• Data = % of respondents who identified
this topic (possible for responses to
pick more than one|)
Source: NG Flexibility Questionnaire, Oct 16, Question 4
Summary of all respondents
More
communication /
NG proactivity, 4
Increased
tender
frequency /
more liquid
market, 42
Longer term
contracts, 37
Transparency
and
accessibility, 39
Requirement for Flexibility
• What do we mean by “flexibility”?
• Why do we need more flexible
plant?
Flexibility Workstream
Four areas of delivery
Information
Provision
Optimising
the use of
DERs
Simplify
product
Structural
market
change
System Needs & Product Strategy report
• New approach to communicating system needs
• Providing information in a more timely and accessible manner
• Includes consultation on future product strategy
• To be published in June 2017
• http://www2.nationalgrid.com/UK/Services/Balancing-
services/Future-of-balancing-services
Requirement for Flexibility
20
18
16
14
12
10
8
6
4
2
0
Time
Tendered Services
Network, trades, BM Actions
0
10
20
30
40
50
60
70
80
90
100
• System needs are
increasing
Certainty %
Volume
Illustrative Balancing Service Trend
• Greater range required
• Increased volatility
• Traditional sources of BM
flexibility are reducing
Emerging Insights – System Inertia
• Lack of system inertia is an immediate issue for rate of change of
frequency reasons
• Desensitising RoCoF relays will allow the system to operate at lower
levels of inertia
• Increasing the levels of inertia on the system is less effective than
reducing largest loss, therefore we will not create a specific inertia
product
Emerging Insights – Frequency Response
• The volume procured through the FFR market is set to remain
stable, however the volume procured through the Mandatory market
for short-term volatile conditions will increase
• The number of providers in the Mandatory market are set to
decrease
• Faster-acting response can reduce the overall volume requirements
• A new response product is required which provides route to market
for fast acting response and the flexibility that we need closer to real
time
Emerging Insights – Reserve
• Positive and negative reserve requirements generally stable,
although volatility increases
• The variable need only becomes clear closer to real time, and
increases in line with response requirements
• Access to flexible plant in the BM is limited at low demands
• New reserve services must be developed to ensure
• Flexibility is available near real time
• Market access for both BM and non-BM providers
• Compatibility with pan-European reserve products
Emerging Insights – Reactive
• Need is increasing substantially as a result of changing generation
mix
• Existing markets do not properly value reactive capability
• There is no route to market for Distributed Energy Resources
• Markets will be designed to be more regional, potentially short term
and with greater transparency of requirements
• We will trial access to the reactive capability of distribution-
connected assets through Power Potential innovation project
Emerging Insights – Black Start
• Requirement for providers remains constant
• Current provider base is dwindling
• Opportunities for new parties from 2018
• We will review our strategy to better suit future generation
backgrounds
• In the longer term, investigate new restoration strategy to allow
Distributed Energy Resource participation
Simplification of Products – Staged Approach
Stage 1
Rationalise existing
product suite through
removal of obsolete
products
Stage 2
Increase transparency
of remaining services
through
standardisation of
T&Cs, procurement
windows and
assessment methods
Stage 3
Develop improved
services in
conjunction with
industry
Stage 1 - Rationalisation
• Too many products – some not used at all
• Removal of obsolete products
• Grandfather existing contracts
• Offer moving to more market-based alternatives where possible
Stage 2 - Standardisation
• The value of variable parameters in the assessment of existing markets are
not always apparent to industry
• More definition will enhance transparency of market signals:
• Diurnal availability windows, e.g. 24-hour, 24 Hour Triad Avoidance, Overnight, Evening Peak
• Contract terms, e.g. 1 month, 6 months, 1 year, 2 years
• Speed of delivery of reserve energy, e.g. 2 minutes, 5 minutes, 10 minutes, 20 minutes
Standardisation will increase market transparency
Stage 3 - Improvement
Frequency
Response
Whole
System
Security
Voltage
Reserve
Energy
Standby &
Margin
Stage 3 - Improvement
• Where should ancillary services sit on this spectrum?
Standardisation
Multiple markets
Single variable
Single market
Single market
Multiple variables
Stage 3 - Improvement
Markets
Long Term
Contracts
Short Term
Price Signal
Bilaterals
Future Vision for Ancillary Services
• New Procurement Approaches
• More real time markets in line with EU aspirations
• Trial of procurement approaches such as pay-as-clear auctions
• Wider Markets
• Investigate access to the Balancing Mechanism for non-BM parties
• Support changes which may be needed to both wholesale and capacity
markets to strengthen investment signals
Flexibility Programme - Timeline
2017 – H1
2017 – H2
Simplification
of product
strategy
Start Review
contracting
structures
Review DER
System Needs testing and
and Product
compliance
Strategy &
Options for nonconsultation BM access to BM
Optimising use of
DERs: demand
turn up with
WPD
Commercial
principles
Paper
(WS and Flex)
2018
Market options to
bring new
technologies to
markets
2019
2020
In progress
Simplified set
of products
are BAU
Optimising use of
DERs: trial
New frequency
models with
response market
suppliers & DNOs
Power Potential
(finalised
Revised website
commercial
framework)
Procurement
Potential use of
trial: auction
auctions as part
Regional market
of BAU
structures trial
To be started
21
Simplification of Products - Timetable
Product Strategy
Jun
System Needs and Product Strategy document published which includes consultation chapter on product
strategy
Engage with industry through forums and webinars
Review product suite
Identify market parameters
Jun/Jul
Review responses and continued engagement on future product strategy
Remove obsolete products
Value function analysis and thinking on assessment processes progressed
Engage on standardisation of existing products
Sep/Oct
Potential outline Change Proposals in relation to standardisation of existing products
Start implementation of changes to existing products
Publish product strategy recommendations based on feedback received and analysis
Q3 - Q4 2017
Develop response and reactive power products
Prepare for auction trial
Q1 – Q2 2018
Rollout improved Frequency Response products