National Grid is seeking views on how best to facilitate the evolution of future balancing services markets.
A key driver for change is the changing energy mix, with an increasing proportion of the UK's demand for energy being met by wind, solar, biomass and hydro power sources. In addition, the requirement for cost-effective flexibility in delivery means that the current position cannot continue.
The National Grid has invited the energy storage market to comment on its 'systems needs and product strategy' consultation, before it announces its new balancing services strategy in September 2017.
Last year's National Grid tender for EFR was significantly oversubscribed with more the 1GW of capacity involved in the bidding. The tender results only saw 200MW of contracts awarded to large-scale battery storage projects.
The market has been anticipating that a second EFR tender would be launched later this year, however it now looks as though this will be rolled into a wider frequency response market.
In a bold step which could herald the simplification of the revenue streams derived from providing balancing services, National Grid is proposing to combine the Enhanced Frequency Response (EFR) and Fast Frequency Response (FFR) tenders into a new frequency response product, which it will look to launch in March 2018.
They are also proposing to remove obsolete products, standardise the way in which contracts work, improve market information and trial new procurement methods.
Other proposals in the consultation include:
The consultation document recognises the need for change within the National Grid's current balancing services. A number of concerns around accessibility, future proofing, the complicated nature of services and investor confidence in long terms plans, have prevented many involved in the sector from making informed decisions. The consultation aims to positively address these issues.
Maria Connolly, Head of Energy & Renewables and Real Estate at TLT, said: "The recent National Grid, EFR and Capacity Market auctions demonstrate the key role there is for energy storage to play in balancing the country's power needs and positively reducing the impact renewables technologies can have on the grid. The proposals certainly have the potential to drive the uptake of energy storage, and will be welcomed by battery storage developers as a positive move to simplify a market which has become increasingly complicated over the years."
Responses to the consultation should be provided by 18 July. A further paper will be published in July, in which National Grid will be putting forward its thoughts on whole system optimisation and the creation of new markets for constraint management. We will report on that when it comes out.
Contributor: Alexandra Holsgrove Jones
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