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Demand response facing de-rating in Irish capacity market

Grid

Demand side response in the Irish Capacity Remuneration Mechanism (CRM) is to face de-rating factors already applied to storage duration limits under new rules confirmed by the country’s electricity market authority.

For the forthcoming T-1 auction for capacity year 2019/20 the Single Electricity Market (SEM) Committee has ruled that Demand Side Units (DSUs) with a limited duration for their demand reduction of less than or equal to 6 hours will be hit with the same de-rating factors used for energy storage.

This ‘Maximum Down Time’ has been judged to be equivalent to a storage unit’s hours of storage as like short duration batteries, a DSU with limited demand reduction capabilities “does not deliver the same benefit to adequacy as a unit that does not limit its dispatch”, according to the SEM Committee.

These units will therefore have the same de-rating curves applied as those used for non-pumped storage assets

De Rating Curves For Other Storage Units By Initial Capacity And Duration Of Storage At Full Output
De-rating curves for other storage units by initial capacity and duration of storage at full output.

Out of the 15 responses to the CRM T-1 CY 2019/20 consultation, the SEM Committee says most agreed with the proposals, although some raised ‘material concerns’ with the use of other storage de-rating factors being applied to DSUs given they are totally different technologies.

Others claimed the plans also discouraged demand side response providers from participating with I-SEM and the capacity market by reducing the revenues which encourage businesses to contribute their capability to the stability of the system.

The plans have moved ahead of the proposal put forward in Britain’s capacity market by Scottish Power, which would see DSR bids using storage as part of its capacity placed in a new technology class and subject to de-rating factors recently applied to battery storage.

In response to the Irish decision Tom Palmer, principal consultant at Cornwall Insight, said: “The Irish Capacity Remuneration Mechanism for 2019/20 just became a lot more challenging for demand-side response providers.

“This is a step further than the proposal put forward in GB Capacity Market by Scottish Power for a Demand Side Response (DSR) Technology Classes with different minimum durations as that covered just storage.”

Further planning for the future

The SEM Committee has also looked further in planning for auctions taking place after the T-1 CY2019/20 auction, opting to change the methodology used to determine de-rating factors for energy storage.

These will be calculated as a function of both generation sizes and storage volumes in MW, or duration, given as the maximum number of hours all units sharing the energy storage (e.g. reservoir) can run simultaneously at their generation size before recharging.

Storage de-rating factors will be specified in 30 minute interval up to an energy storage duration of 6.5 hours and kept under periodic review, while a linear curve will apply to those units with a storage duration that is not a multiple of 30 minutes, applied between the nearest half-hour above and below a unit’s storage size.

To this end, an additional technology class is to be created on an enduring basis for “Other Storage” – not pumped hydro - and will apply the system wide outage statistics until there is sufficient SEM historical data.

The SEM Committee has also proposed to allow storage units a voluntary ‘decreasing tolerance’ (DECTOL) to allow them to continue to access and deliver other system services outside of the capacity market, thus avoiding penalties for not meeting their other obligations.

This means they can such units can apply a downward adjustment to the capacity they submit into the Capacity Market auction to reduce their exposure to difference payments in order to reflect their commitments to system services provisions.

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