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National Grid ESO outlines plans to support UK energy security in light of Russian invasion of Ukraine

National Grid ESO's control centre. Image: National Grid ESO.

National Grid ESO's control centre. Image: National Grid ESO.

“This is the time for action,” National Grid ESO's executive director Fintan Slye has said, unveiling new measures to support the UK's energy system through the energy crisis.

Speaking at an industry event, Slye announced changes such as to metering requirements for the Balancing Mechanism to support the entry of demand side response and the potential to publish the Winter Outlook early.

He said the Russian invasion of Ukraine is “challenging us all to look again at the security of supply within the British energy system”.

As such, in the short term, the ESO is assessing what the implications of various permutations of global sanctions or reactions could be. Slye said that there is currently sufficient capacity in place, and no immediate threat to security of supply, with adequate supplies secured through the Capacity Market to ensure security of supply margins are maintained through next winter.

Indeed, the T-1 auction for 2022/23 saw the target set at 5.36GW - higher than the pre-qualified capacity due to the volatility of the energy market, with all capacity then clearing at the maximum price of £75/kW/y.

The ESO is also investigating the idea of publishing its annual Winter Outlook earlier than normal in order to ensure a shared view across the market and allow more time to assess various scenarios.

Last year, the ESO released an early look at its Winter Outlook in July that warned of tight margins on the system, an expectation it then expanded upon when the Winter Outlook was published in full in October 2021.

Aside from the impact on energy security, Slye also highlighted how the war in Ukraine is causing energy prices to rise, with this expected to result in the energy price cap rising once again for the winter period.

“In the short term, the ESO will do everything we can to continue to manage the system in a way that minimises costs,” Slye said. He referenced how the ESO has been reviewing the balancing market and some of the exceptionally high-cost days seen this winter.

The ESO is to finalise this review and publish its initial conclusions over the coming weeks, with the focus of this review being ensuring that consumers are well served and that no one can game the market and drive up costs for consumers unnecessarily or inappropriately, Slye said.

This is an area Ofgem has also said it "stands ready" to use its powers to change the market rules on if necessary, with the regulator carefully monitoring the outcome of the ESO's review.

Slye added that an area the ESO should be able to move more quickly on is consumer participation in markets, with one of the biggest blockers to demand side response entering the market being National Grid ESO’s metering requirements, which were designed for big power generators and not small retail consumers.

“We want to open the door to supplier aggregation in the Balancing Market through changing the paradigm," he said.

"Using probabilistic analysis and techniques such as asynchronous polling we think that suppliers will be able to provide appropriate aggregated real time signals to the ESO and meet regulatory requirements.”

This would help suppliers to bring aggregated demand into the Balancing Market, with the ESO’s Power Responsive team to convene an industry working group to define the processes and standards that will be needed.

Additionally, as of Slye’s speech yesterday (22 March), the ESO is taking a revised approach to metering standards that will open up the Balancing Market to this aggregation. The ESO is to work with suppliers to get these up and running and to trial and refine the approach. This will allow the standards to be informed by the experience and enable suppliers to build and evolve their consumer propositions based on live experience.

The ESO is also working with the government to see what technical support and assistance it can provide to help maintain electricity supplies in Ukraine, as well as working with its international partners through the Global Power System Transformation Consortium to explore what help can be marshalled across the global system operator and research community.

"In conclusion, my message is simple - this is the time for action – we need to move at pace and reform our energy system – to deliver energy security, to tackle climate change and to protect our people.

"This is both important and urgent - energy is the lifeblood of society and the economy – we must do this, we must do this right, and we must do this right now," Slye said.

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