National Grid employs a number of tools to keep balance, ensuring there is always enough supply to satisfy demand. A key part of this is its use of the Balancing Mechanism (BM), which allows the operator to hold reserve to meet upwards or downwards trends in demand.
While there is no clear calculation for the exact amount of reserve needed, it is typically between 1-2,000MW up and down, and can be up to 3,000MW each way. Currently this is largely met by combined cycles gas turbines (CCGTs), which are ‘positioned’ ready for when they are needed. This means they are often kept on for hours at a time, even if they are only needed for a short time, at a cost, as Andy Hadland, chief product officer at Arenko Group explained.
“This is odd when you think about it. Why pay for the part of a service you don’t need, and then pay to get rid of it again… rather than just pay for the bit you do need? Nevertheless, it has been the only option available to the ESO and is a consequence of the current market arrangement and the limitations of a technology that must be halfway ‘on’ to provide flexibility.”
However, in order to keep CCGT reserve ready to jump in when needed, low carbon nuclear and renewables have had to be turned down. This system led BM costs to grow exponentially during the COVID-19 lockdown, as demand fell and the sun shone.
The use of the BM doubled between April and May 2020, with 7.1TWh of actions accepted on the BM over those two months, more than double the 3.3TWh in April and May 2019. Ofgem has now launched an evaluation into the BM, as costs grew 39% this year. Between March and July 2020, Britain’s grid balancing costs rose to £718 million, as consumer behaviour changed due to the nationwide lockdown.
As such, there is much to question in the country’s flexibility mechanisms currently, given the high price and the reliance on gas over greener alternatives.
“None of this is consistent with net zero and clearly we need better options to be available to the ESO, particularly when better options are available today through batteries,” added Hadland.
The state of play: running the reserve trial
In an effort to tackle these challenges, Arenko and National Grid ESO launched a ‘first of its kind’ flexibility trial in May, designed to use batteries to meet the need for reserve and provide an alternative to CCGTs.
According to Hadland, the principle is simple. Batteries don't have a need to be kept ‘on’ in the same way as CCGT – which must be to avoid high start-up costs – and that inherently makes them more competitive as well as being greener.
“The more difficult practical challenge was proving that batteries could be relied upon to provide sustained reserve,” he continued. “If we could prove this, then batteries could be legitimately planned and paid for ahead of time. This could increase effective competition for CCGTs, and in turn, help drive down emissions and balancing costs for the end consumer.”
The trial took advantage of Arenko’s 41MW Bloxwich battery – which it has subsequently sold to Gresham House although it continues to operate and optimise the asset – to provide reserve automatically when National Grid ESO calls on it.
There are four distinct ways in which this can go:
- State A: when the battery is completely empty, a 1 hour battery has approximately 1 hour and 10 minutes of negative reserve available at 41MW. If this isn’t used it will provide that same level of negative reserve indefinitely.
- State B: when the battery is completely full, generally an operator would aim to position the battery before it reached capacity, using state C.
- State C: when the battery is fully charged and discharging, and as such can still provide 41MW of negative reserve for an hour before returning to state A.
A Hadland explains: “These 'states' demonstrate sustained negative reserve, no matter the state of charge. However, in practice, the aim would be to move between these states and maintain the asset in the middle SOC range and to provide even more reserve as per State D.
“State D (Boost): Ahead of utilisation, ‘Positioning instructions’ can be used to effectively double our negative reserve during times of particularly high requirements (a 41MW discharge gives 82MW negative reserve). This can be over an hour, or for a short duration of a couple of minutes as the system needs it. To quote Laura Sandys – this would help us ‘manage the peak’ not simply ‘meet the peak’.”
Using a battery as such would mean National Grid ESO can plan the requirement of positive or negative reserve for specific times, and as such undercut the ‘positioning costs’ of CCGTs. To do so would provide dynamic reserve, and – Hadland argues – flip batteries duration weakness and turn it to a strength.
A cost-competitive CCGT alternative?
The trial – which has now undergone its second stage – has been hailed as a success by Arenko, delivering 1GWh in a week during its second stage. During a single morning, the battery provided 5.5 hours of power continuously from a 1-hour duration asset. Of this, 100% of the instructions sent to the batteries were dispatched currently, and autonomously.
Additionally it proved cost-effective across 106 hours out of 160 hours during normal market conditions, working out at the equivalent of £15/MWh.
With batteries already dominating the frequency markets, and the stability pathfinder, distributed black start, and reactive power tenders emerging in the UK this is “truly an exciting time for batteries” finished Hadland.
“What we need now is a level playing field and a clear price signal to help stimulate the much-anticipated investment in batteries, really scale the industry and offer further benefits to the ESO and consumers in the future.
"Initially, paying for and accessing reserve from batteries will provide a much more flexible and cost effective tool for the ESO to manage this increasing volatility. This trial is helping to open up the reserve market to increased competition. This will help batteries, especially longer duration batteries, to truly compete with CCGT commitments in the mid-merit of the electricity market.”
A third part of Arenko’s work with National Grid will start in September, bringing together more asset owners or software providers to test the scale of the technology.