Arenko is lauding its position as the only company to have been successful in winning each of the daily auctions of National Grid ESO’s new Dynamic Containment service.
Dynamic Containment was introduced on 1 October with an intention of bringing the frequency response market closer to real time, with tenders running daily from 11pm to 11pm.
Arenko – which was one of the first companies alongside Flexitricity to provide the service – has now released analysis of the service, praising it as “one of the most advanced frequency response services in the world”.
It outlined how the daily auction winning prices have consolidated on a price of £17/MW/h, representing a net income of nearly £150,000 per MW per year. This is 2-3 times the price of other frequency response services, the company said, and is “interesting” for battery owners as it values fast and precision control with high-resolution data provision over the alternative trading strategy where value is driven by optimisation of trading strategies.
However, it expects these high prices to reduce as new providers enter the market and the ESO’s demand for the service is satisfied. This is currently not happening, with less than 300MW bidding when National Grid ESO’s initial requirement stands at 500MW. This is set to increase to 1GW from next year. The reason behind the low levels of participation is the service being challenging to qualify for and deliver, Arenko said.
This echoes what Modo Energy's lead data scientist and market analyst Alex Done told Current± in October, stating that the high prices were resulting in a "strong market incentive for assets" to switch to Dynamic Containment but that the 500MW requirement wasn't yet being filled.
Once qualified, assets in Dynamic Containment aren’t called upon frequently due to grid frequency deviations being low most of the time, Arenko said. The company itself is seeing an average of 0.23 cycles per day, which it said is gentle on the battery.
However, since the start of the service there have been three major system events in which grid frequency rapidly moved to outside the 0.2Hz range - National Grid ESO's normal operating target - which Arenko said shows the service has "already proven its worth".
It also outlined how there is a large amount of data involved in Dynamic Containment, with operational metering data containing critical parameters such as measured frequency and delivered power at the meter provided to National Grid ESO every second to allow for a live view of what the assets are doing.
Performance reporting data is also provided and is batched up and submitted every hour of the service delivery.
Roger Hollies, chief technology officer at Arenko said there is “huge value to the ESO” in facilitating the participation of assets providing Dynamic Containment into other existing markets such as the Balancing Mechanism “in addition to future markets such as voltage support and thermal load management”.
“This stacking has compound benefits of diversifying and increasing revenue streams for battery asset owners and in reducing total costs of balancing services for the ESO, ultimately reducing the cost to the end consumer,” he said.
Current± caught up with Hollies last month to talk in depth about the need for Dynamic Containment and how the service was going.