National Grid ESO has chosen Piclo to run a Local Constraint Market (LCM) around the B6 boundary to ease grid constraints.
The LCM is designed to reduce curtailment of wind in particular, given the growth of renewables in Scotland. The Anglo-Scottish B6 boundary has the highest constraint cost across the GB network, and these are expected to continue to increase given the forecasted growth of renewable generation in the area.
As wind generation in Britain has surged, the grid has struggled to keep pace, leading to costly curtailment of the green energy. This reached a record high in 2021, costing Britain £507 million, up from £299 million in 2020 according to research from Lane Clark & Peacock (LCP), commissioned by Drax earlier this year.
By establishing a LCM in the region, National Grid ESO hopes to bring down the operating of the grid by reducing the need for balancing actions. This would both enable more renewables to come online, helping to decarbonise the system, and reduce costs for customers, a particular focus given the current energy crisis.
“We cannot address the energy crisis or reach net zero if we continue turning off wind power at a time when power prices are soaring,” said James Johnston, CEO at Piclo.
“Currently it must be done because there is simply no mechanism to divert that power. Now with the Local Constraint Market we can work with National Grid ESO to give local businesses, consumers, and industry the opportunity to absorb that power that would otherwise be wasted, while reducing costs in the process.”
Piclo’s software platform – Piclo Flex – will manage the end-to-end flexibility process for the new LCM. This will include operating the day-ahead marketing and managing dispatch, settlement and payment for flexibility services.
By using this software, smaller assets – those which would generally fall below the usual 1MW minimum requirement threshold for Balancing Mechanism participation – will be able to participate.
The LCM is expected to ramp up in early 2023, with Piclo calling for flexibility service providers with assets located around the B4-B6 border in particular to sign up.
The introduction of LCMs form part of National Grid ESO’s 5-Point plan, which is designed to ease transmission constraints and help tackle the rising costs for both consumers and transmission network operators of balancing the grid.
As part of this plan, the ESO also awarded 15 contracts to ten companies to provide new ‘post fault’ services as part of its Constraint Management Pathfinder earlier this year.
“As we continue to invest in line with our Markets Roadmap in the long-term management of network constraint costs and increased flexibility, services like Local Constraints Markets help us to unlock savings at pace,” said Claire Dykta, head of Markets at the ESO.
“We were glad to see competitive bids from 3rd party platform providers to support the delivery of this initial Local Constraint Market. Piclo promises a fast-start solution and we look forward to this helping ESO target rising costs and unlock further provision of flexibility services from distributed assets.”
National Grid ESO is the latest operator to adopt Piclo’s software for managing flexibility markets, joining the likes of UK’s UK Power Networks, SP Energy Networks, Electricity North West, the United States’ National Grid, Portugal’s E-REDES and Lithuania’s Energijos Skirstymo Operatorius.
