Swarm has responded to a call for input on the future of flexibility markets from National Grid ESO, Britain’s electricity system operator. National Grid ESO requested input to help them develop their first Flexibility Markets Strategy, which is due to be published in the autumn. The Flexibility Markets Strategy will set out the activities National Grid ESO will undertake over the next five years to enable flexibility, such as that Swarm provides by aggregating domestic batteries, to better access ancillary services markets.
The call for input can be accessed here: https://www.nationalgrideso.com/research-and-publications/markets-roadmap/flexibility-markets-strategy-call-input
Do you have any comments or feedback regarding our Flexibility Markets Strategy map, our vision, outcomes and principles?
We agree with the ESO’s case for change and the initial focus on DER and CER. Demand response can provide low-cost flexibility in areas where it is needed the most. There is evidence that although demand flexibility can participate in ESO markets, they are dispatched less frequently than more traditional service providers.
Removing these barriers to participation in ESO markets will allow a zero-carbon electricity system to be delivered at the lowest cost to consumers.
Do you have any comments or feedback on our success measures and milestones?
The timeline outlined does not account for the fact that many devices which could provide demand response in 2035 will be installed soon. The electric vehicles and heat pumps which are being installed now have a 15-year life. The Smart Charging Regulations have gone some way to ensure that EV chargers can provide demand response. However, the Regulations do not cover vehicle-to-grid capability. There are currently no similar regulations for heat pumps.
Making ESO markets more accessible to DERs will allow flexibility providers like Swarm to create attractive offerings which will make consumers want to purchase devices with the right hardware to provide demand response. Changes which can quickly open up ESO markets will therefore have a compounding effect on the amount of flexibility available in 2035.
We believe that the roadmap in the call for input does not put enough focus on ambitious short-term changes which can be made to open up ESO markets to DER and CER.
Have you identified any gaps within any of the six workstream summaries, or do you have any general feedback regarding these summaries?
The background and rationale section of workstream 1 lays out two reasons flexibility providers cannot forecast revenue. We agree with these two reasons but believe there is a third: Flexibility providers are dispatched relatively infrequently in the balancing mechanism when compared to traditional participants. It is difficult for flexibility providers to understand the conditions under which they will and will not be dispatched, making it hard to forecast revenues from the balancing mechanism.
Workstream 2 is a valuable piece of work. We encourage the ESO to consider metering requirements when looking at barriers to participation. Setting clear requirements soon, which do not change over time, will allow device manufacturers to design equipment which will be able to provide demand response over its entire life. The ESO should also consider ways of making metering and control requirements as loose as possible to maximise the amount of demand which can participate in its markets.
We hope that workstream 3 will encompass the work required to give the control room visibility of DER resources. Greater visibility should give them confidence in the services DERs can provide and increase their dispatch rate. As discussed in the response to question 2, anything which can be done to expedite this work will help avoid technology lock-in for heat pumps and EVs which do not have the correct control and metering hardware.
We believe that the standardisation and coordination work proposed in workstreams 4 and 5 is important. Being able to stack the value of ESO and DSO flexibility and the capacity market it vital to providing meaningful compensation to the households which sign up to flexibility provider services.
In workstream 6, we believe the ESO should consider whether their non-delivery risk appetite is appropriate. The ESO market penalty mechanisms were designed with high reliability assets in mind. Demand response will have a higher non-delivery risk. If non-delivery penalties remain high, flexibility providers are likely to be conservative in how they bid into ESO markets.
This might reduce the amount of flexibility which can be provided by DERs and CERs. A two-tier system for high-cost, high-reliability assets with a high non-delivery penalty and a different penalty for low-cost, low-reliability assets might give flexibility providers more confidence.
Although not directly covered in this call for input, we do not believe that the proposed DFS penalty mechanisms which could penalise assets under certain circumstances are not appropriate for DERs.
Do you have any general feedback or further suggestions for areas of improvement?
It seems like there is an assumption that DERs will only be able to contribute to within day flexibility and not frequency response. DERs are capable of providing frequency response. The barrier is dispatch and metering. For some DERs, sub-30-minute responses might be preferable, e.g. heat pumps in poorly insulated homes and EVs plugged in for short durations.
From the point of view of an aggregator, dispatch is automated. Responses can be achieved quickly. If the ESO can provide API or other automated frequency response signals, DERs can respond at the required speeds.
Swarm also responded to a linked call for input on business model archetypes for demand side response. This call for input can be found here: https://www.nationalgrideso.com/research-and-publications/markets-roadmap/flexibility-markets-strategy-call-input#Routes-to-Market-Review-for-Demand-Side-Flexibility
Do you believe we are capturing a sufficient level of information in the archetypes?
Yes, the level of detail is good.
Are there any categories of assumptions missing?
The level of predictability of an asset might be important. For example, flexibility provided by behind the meter batteries is likely to be more certain than that provided by electric vehicles.
Do you have any more specific information you can provide in relation to specific archetypes and assumptions? e.g. updated or inaccurate assumptions, new or revised archetype suggestions etc
With EVs, there might be a proportion of V2G which doesn’t seem to be captured here. It is included in the notes, but the power direction column only shows demand turn up/down which to me doesn’t mean export. It is important to note that probably only a small portion of EVs will have V2G capability in the medium term because we are creating technology lock-in with non-V2G EVs and chargers which will have a 15-year life.
It is not clear what ramping rates/capabilities are as described here (the values and units do not match what we would understand as ramping rates).
Do you agree with our initially captured barriers?
We believe you’ve captured the major barriers. It is worth noting that metering is a cross-cutting barrier for all devices in most markets for domestic. If metering requirements can be loosened, or area metering can be used to supplement boundary metering to get the information required, it would be beneficial in most markets.
Do you have additional barriers you would like to add in relation to specific archetypes?
No
Do you agree with our daft RAG assessment of service accessibility?
Yes
Do you have any recommendations on the criteria we should use to prioritise barriers?
Some measure of the amount of additional flex volume per market which would be added by removing the barrier seems appropriate. For example, if removing a barrier would allow EVs to participate in SFFR that could open up >100 MW of capacity in 2030. Summing these give a quantitative comparable benefit of removing each barrier.
AUTHOR
Tim is a data scientist with a PhD in low carbon electricity markets. He has previously worked in energy policy and as an engineer in the energy industry.
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