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UKPN bids to ‘supercharge’ network flexibility market with new roadmap, tender process

Image: Getty.

Image: Getty.

UK Power Networks (UKPN) has unveiled plans to revolutionise the way it procures flexibility and “supercharge” the services market.

The distribution network operator (DNO) has claimed an industry first with the publication of its new Flexibility Roadmap, a consultation document which professes to be a “major step-change” in the way networks operate.

The cornerstone of the proposals is the introduction of commercial markets for flexibility services, through which UKPN can procure flexibility from third party-owned distributed energy resources such as renewables and batteries. This flexibility can then be used to respond to planned or unplanned outages, or even free up additional capacity on distribution networks.

UKPN cited an Imperial College London study that found procuring this capacity through such means, instead of via costly new infrastructure, could save network operators billions of pounds by 2050.

UKPN is now planning to launch its first tender for flexibility services using such means next year and procure more than 200MW by 2023 – the year in which existing regulatory price controls draw to a close.

Following an initial auction carried out in 2017 via conventional tendering processes, the DNO said it would carry our its next flexibility procurement in Q4 2018. While this has now been postponed to March 2019, UKPN remains committed to using the Piclo Flex platform unveiled last month.

Barry Hatton, director of asset management at UKPN, said the “ambitious” flexibility policy would drive value for customers and create important new markets.

“The Flexibility Roadmap proposes a radical rethink to the way we do business, moving away from automatically building new assets and instead giving the distributed energy resources market the opportunity to offer their services.

“We strongly believe our role is to be a neutral facilitator of market-based solutions that provide the lowest cost option for our customers, not to prescribe them. Hence, we want to use open and transparent market mechanisms to procure the flexibility we need to manage our network. If the market can provide the capacity we need at a more cost-effective rate than building new infrastructure, that’s exactly what we will do.”

Uses and timelines

UKPN said it had identified three core use cases where such flexibility can actively support its operation and management of networks, specifically in load related reinforcement deferral, managing planned maintenance and response to network outages.

The network operator is now planning to market test using flexibility to manage load related reinforcement of extra high voltage (EHV) and high voltage (HV) networks through the remaining period of current regulatory price controls (RIIO), which comes to a close in 2023. Representative of three-quarters of UKPN’s total load reinforcement programme, it estimates that its own market for flexibility could be more than 200MW for its load related reinforcement deferral use case by that time.

UKPN is, meanwhile, exploring a range of commercial solutions for accessing similar flexibility on its low voltage (LV) networks. It now plans to market test some LV reinforcement as part of its forthcoming flexibility tender in March next year before developing further flexibility products by RIIO-1’s end.

Project eligibility

A chart included within UKPN’s consultation document outlines precisely which distributed energy resources could be eligible and where, with the most interesting detail both the desired response times and response durations. With pre-fault and post-fault response durations timed at three hours, it could make for interesting developments for longer-duration battery technologies.

Image: UKPN.
Image: UKPN.

Next steps

The consultation is to run from August until 8 October, with UKPN keen to receive industry feedback on the principles of its flexibility roadmap and any areas it may have missed.

A procurement event is to follow next month, leading into a tender process which commences in December. The full tender will occur in March 2019 for contracts 6 months and 18 months ahead to provide flexibility from 2019/20 and 2020/21. A repeat process is planned for each year, taking UKPN towards the 2023 RIIO-1 expiry.

Meanwhile a Flexibility Roadmap launch event is to be held in October, and UKPN has committed to hosting a bi-annual DSO flexibility forum to help shape future procurement processes.

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