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ESO readies for low summer demand with new Optional Downward Flexibility Management consultation

Image: National Grid.

Image: National Grid.

The Optional Downward Flexibility Management (ODFM) service is to be reinstated this summer, with National Grid ESO now consulting on its terms and conditions.

The service was first introduced in 2020 to help manage the significantly lower than average demand caused by the COVID-19 pandemic, offering small scale renewable generators additional commercial agreements to reduce their output.

National Grid ESO has now outlined how whilst its central case for the summer suggests there is in fact no requirement for ODFM, there are credible worst-case scenarios that could require additional downwards flexibility, with the continued COVID-19 restrictions likely to present lower demand periods for longer durations this summer than seen in the past.

As a result, the service is to be reinstated and is set to go live at 23:00 Friday 30 April and remain in place until 23:00 Sunday 31 October.

The consultation into its terms and services comes as a result of requirements under Article 18 of Commission Regulation (EU) 2017/2195 of 23 November 2017, which established guidelines on electricity balancing that mean the ESO must consult on terms and conditions related to balancing the system.

National Grid ESO said that whilst it was aware of providers having previously informed its of service improvements that could be made - and is welcoming views and comments through the consultation - changes to the service will only be made where necessary, economic and efficient to do so.

One area which it is not proposing to change is a movement to pay-as-clear pricing, with the ESO stating that analysis shows pay-as-bid is “much more economically efficient” than pay-as-clear. It is therefore proposing to seek a derogation for ODFM to remain as pay-as-bid.

It will also explore improvements in parallel to the consultation, although it is unlikely that significant changes such as addressing imbalance and cashout will be brought in due to the costs and time that would be required.

The focus will instead be on more enduring solutions that offer greater value to the end consumer - with ODFM not being considered an enduring solution - with this delivered through the Reserve Reform programme. The ESO also pointed to how wider access to the Balancing Mechanism also provides a continuous route to an enduring downward flexibility service.

"As the Electricity System Operator, we are committed to communicating regularly with our industry stakeholders and to working in partnership to manage the effects of the pandemic," David Wildash, market services senior manager at the ESO, said

"We want to reassure you, and all our colleagues across the industry, that we have well-developed procedures in place for situations such as these and do not expect any issues with continuing to reliably supply electricity."

ODFM first came into play during a challenging time on the grid, joining a raft of different measures to mitigate the impact of COVID-19. Less than a week before it was unveiled National Grid ESO raised an urgent Grid Code modification that clarified its ability to disconnect embedded generation in an emergency event, something which was criticised at the time as unlike ODFM it didn't compensate the generators that were disconnected.

In January 2021, it opened a consultation to develop new guidelines around disconnection of embedded generation in emergency situations.

The Grid Code modification was raised in the first place due to fears that a mix of factors including low demand caused by the COVID-19 lockdown - which could be further exacerbated by the bank holiday - could merge to create “exceptionally” low demand on the 8 May, the weekend after it was raised.

Whilst no embedded generation was forcibly disconnected, the ODFM did come into play that weekend as embedded generation was voluntarily reduced. Limejump told Current± that on 10 May, up to 238MW of embedded generation was requested to shut down between 4am and 7am.

The service was wound down on 25 October 2020, having been dispatched on five separate occasions. During these, NGESO sent instructions to a value of £12.7 million and settled just over £11.9 million after applying performance measures.

Full details on the new consultation can be found here.

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