National Grid ESO is looking to unlock stacking within the Balancing Mechanism (BM) as part of the development of the Dynamic Containment service.
As part of the continued development of Dynamic Containment, National Grid ESO is to unlock the ability for participants to stack their revenue streams, with batteries able to tender for bids in both the BM and Dynamic Containment during the same periods. It has set a target go-live date of 10am on Wednesday 27 January.
“From market engagement, we recognise the additional value that adding the ability to stack in the BM will offer,” National Grid ESO wrote in a document detailing the change. “We anticipate this additional flexibility and revenue stacking will increase the efficiency of battery assets delivering the service, increase competition which would in turn reduce costs to the consumer.”
Given the crucial nature of the Dynamic Containment service, National Grid ESO has taken a cautious approach to allowing the stacking of Bid Offer Accepted (BOA) assets. Those wishing to participate in the BM must ensure such activity does not erode or compromise the ability to deliver Dynamic Containment therefore.
There are a number of general principles participants must adhere to in order to stack the two going forwards, including ensuring asset Maximum Export Limit (MEL) and Minimum Import Limit (MIL) accurately reflect the physical capability of the unit, that pricing data can be used to 'price out' tranches of capability, and Operational Baseline (OB) matches physical capacity, along with other cautions.
“We are excited to add the capability of BM stacking to the new Dynamic Containment service as part of frequency reform,” National Grid ESO stated. “We plan to include this capability for all new services that are introduced to the market as we recognise the additional value that adding the ability to stack in the BM will offer.”
Dynamic Containment was widely welcomed in 2020, as not only a significant tool for National Grid ESO but also for providing a strong return for participants, offering 2-3 times the price of other frequency response services. By allowing stacking, the value proposition for battery storage in the UK continues to grow.
As the amount of intermittent renewables continues to grow in the UK, the need for balancing services has increased. Low winds and cold temperatures for example drove the imbalance price to a record high of £4,000/MWh this January. This further contributes to the strong cased for increased BM access.
“We anticipate this additional flexibility and revenue stacking will increase the efficiency of battery assets delivering the service, increase competition and reduce costs,” National Grid ESO wrote on LinkedIn.
For further details about BOA stacking in the BM and Dynamic Containment, see here.
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