In October, energy tech company GridBeyond announced it had laid down the work to became the first company to enable industrial and commercial (I&C) access to the lucrative Dynamic Containment mechanism. This was the latest in moves by the company in what has been a busy year.
Back in January, the company clinched £9 million in a funding round, with investments from the likes of ESB and Total allowing it to continue to grow and expand throughout the following months.
As 2020 comes to an end, Current± caught up with GridBeyond CEO Michael Phelan to discuss Dynamic Containment, flexibility and what’s next.
How big is the opportunity in demand side response for companies like yourself?
It's quite large. If you look at the UK, there's probably 6GW of flexibility in existence behind the meter, on the energy user’s side. Of course we have the constant evolution of the grid towards renewable energy and storage, which continues to open up new opportunities for companies with the ability to develop technology at the same rate, if not ahead of the curve, such as GridBeyond.
I suppose a lot of the specifications that the regulators have written – in particular National Grid – are prepared with batteries in mind. So this actually makes it more difficult for load assets to enter the flexibility market. Whereas in most other countries, regulations are written not so much around batteries. Outside of the UK, you tend to have DSR playing a bigger role in making sure that the lights stay on. This approach tends to be more cost effective than the sole focus on batteries.
Is it predominantly how the specifications are written that is a challenge?
The current specifications are pretty much written around batteries, right down to detailing their state of charge. Consequently, it is difficult for other assets, such as load assets and generators to enter new flexibility programmes like Dynamic Containment (DC).
Another thing is that the solvers - mathematical algorithms used by the grid operators to create the optimal specifications for energy storage assets, including their size, response time and overall performance - are all the same for each battery. This means that if there is an error that affects the response (discharge or charge) from one battery, it might very easily spread across the whole of the network.
This is exactly what happened in PJM Interconnection, one of the regional transmission operators in the US, that mainly used batteries to provide grid services. Ultimately, the services became unreliable because the batteries were failing in the same way and at the same time. However, this could have been prevented had there have been greater diversity across the units that participated in the response. Ideally, one should connect I&C demand assets with the batteries to create hybridised units that can deliver sophisticated sub-second response, whilst being more resilient to the failure than storage-only units.
Could you tell me a little about GridBeyond entering the Dynamic Containment auctions?
We are interested in combining batteries with behind-the-meter generators and load assets to create fast acting, hybridised units. Generally, for dynamic containment, you need a one second reaction. So, for instance, generators by themselves can't really perform that fast, but hybridised units can.
Since 2018, we have been using our hybrid technology to enable even seemingly inflexible load assets to access the fastest frequency response programmes, and, currently, we are testing how this can be applied to dynamic containment. The hybrid technology is managed by our intelligent energy technology platform, Point, that to controls and combines batteries, generation, and load assets rotating their deployment within the portfolio in real-time, to meet the system security needs of the grid.
What are the biggest benefits of using I&C flexibility through a platform?
If you put in batteries together with various inertia elements onto the grid, you are going to have to charge the customer for all of those new elements. But, if the customer’s energy flexibility is used to support grid balancing in the first place, the overall cost of maintaining grid stability and the charges for customers would go down. All that is needed are technology providers such as ourselves and National Grid allowing that to happen.
The UK industry has been under a lot of pressure, in terms of the impact of COVID-19, Brexit and generally high operational costs. If you keep adding new charges to the cost of electricity, then it will eventually become completely uncompetitive for many businesses. Whereas if you allow them to partake in the solution, you are driving down their costs and making them more competitive. I think that is a really important approach, but unfortunately, it is sometimes lost or underestimated.
Do you think we have hit a tipping point where people are identifying this opportunity?
To be honest, I think more could be done. Obviously, COVID-19 is hard on everybody, but it is particularly hard on manufacturing. Businesses need to be encouraged to participate in balancing services to generate additional revenue, rather than all of them going towards the investment houses. The latter will, undoubtfully, lead to an increase in the cost of electricity.
A couple of months ago, GridBeyond launched the Energy Opportunity Calculator. How does it work?
The Energy Opportunity Calculator is a tool that gives industrial and commercial businesses an understanding of the levels of flexibility on their sites, and what kind of revenue they can get from participating in flexibility services.
We are also working with suppliers on providing their customers with the most advanced day-ahead and intraday trading, the Balancing Mechanism, and the various other services including participation in Fast Reserve, Frequency Response, and Capacity Market.
Our calculator is a way of trying to help businesses figure out the maximum financial reward for their industry from energy market opportunities. All they need to provide is their industry and typical consumption.
The benefits can be really high. As we mentioned earlier, in the UK, there's about 6GW of flexibility behind the meter that we could make use of before putting any batteries on the ground.
And what's next for GridBeyond?
In terms of our expansion in the US beyond ERCOT, we are looking at numerous regional markets and opportunities to grow with our large I&C clients, by working directly with them as multi-sites that tend to span across the whole of the US. In Europe, we are investigating very similar scenarios.
I suppose one of the reasons that companies that offer ‘platforms as a service’ have probably failed to date is the fact that, on average, utilities do not have much knowledge of the types of assets used by their clients. But then, neither does the vast majority of the platform players.
Usually, if you are a software engineering company or even have software knowledge of the customer assets, you probably do not understand how a furnace works, how a cement mill works, how a water company works, or you might not even know which assets are flexible. If there is lack of in-depth knowledge about assets and operational processes, there is lack of success.
At GridBeyond, we have developed that knowledge alongside our advanced platform and hybridisation technology. We have all the elements needed to allow various assets to enter the market and participate in the most financially rewarding programmes.
And I suppose that is why our approach and offering can be summarised as ‘energy as a service’, especially the flexibility aspect of it. I am confident that GridBeyond has a far better chance of being successful than any of the providers that have tried to scale up their platform. There has been quite a few of them, but not many have been successful.