This week once again saw tight margins in Britain’s electricity network, as winds dropped off and temperatures remained low, causing day ahead prices to hit a high of £499.92/MWh in N2EX.
While this didn’t lead to events quite as dramatic as seen through in January – when day ahead prices jumped to a high of almost £1,500/MWh – the event is becoming increasingly common as the grid transitions to net zero.
“This is what progress looks like, our new normal, and is a welcome development as it shows we are moving towards net zero,” said Kiwi Power's head of optimisation, Thomas Jennings.
Speaking to Current±, he discussed the need for more flexibility to “wean us off large centralised high-emission assets” and whether there should be any concerns about the security of supply.
What’s driving the tight margins this time and just how tight have they gotten?
A lack of wind is driving the tight margin. Although we don’t have data to quantify exactly how tight it got, the fact that STOR was used to tap into reserve services to manage the tightness is a good thing, as it shows how these types of services can be relied upon to step up in situations like this.
How has Kiwi reacted to the margins?
This is business as usual for Kiwi Power, our energy flexibility platform is built to make flexible assets available to grid during these times and we're doing exactly that.
How important is battery storage during this time?
Battery storage is an incredibly important resource if large assets suddenly stop. However, the tight margins we are currently seeing as a result of low wind actually highlight the importance of reserve services. Batteries are great for tiding us over for short-term issues but can’t replace renewables for any more than a few hours at a time.
What are the limitations of batteries and VPP to cope with tight margins?
The main limitation is if the VPP is too focused on one asset type e.g. batteries. The best VPPs are agnostic to the underlying asset, instead providing the right service at the right time e.g. a fast response if a sudden short fall in generation occurs, or a long term reserve service if there is a prolonged short fall in generation.
Could we see them fully take over from gas and coal peakers over the next year or two?
What we want to see is the flexibility across the network being used to pick up these occasional short falls, rather than keeping coal as back up as this will provide the option of running it and slowing our progression to net zero.
How has National Grid ESO changed its systems over the past few years to cope with tight margins?
Previously, tight margins would have been managed by running large, centralised generation. Whilst this is still the case, the buffer of units sitting idle isn't what it was, due to all the coal stations being decommissioned. This is why this particular tightness is of interest.
What we are witnessing is a further evolution of the grid, and a further re-enforcement that we have the capability to move to net zero with the support of decentralised flexibility.
What more needs to be done?
The big thing for me is to accept that this is the new normal; this is what progress looks like and we need to become comfortable with the fact that we have the tools, such as Kiwi Core, available to manage these situations. The future is about how we use the flexibility embedded in our network to manage these types of events as and when they materialise.
With tight margins a seemingly increasing problem, are there any concerns that it could lead to blackouts?
There shouldn't be a concern over blackouts given the amount of embedded generation (DUKES put this at around 11GW in 2019), the question is whether National Grid is accessing this resource and using it for these occasions. We've seen STOR running as part of their response over the last few days, do we need more reserves to cover these eventualities?