A NEW OPPORTUNITY FOR RENEWABLE GENERATORS BY PROVIDING FLEXIBILITY
by RES | Jan 24, 2023 | Reading time: 3 min
By Robert Spurr, Head of Routes to Market in the UK&I, RES
Local flexibility markets are on the verge of expanding significantly. Since 2017, innovative distribution network operators (DNOs) such as UK Power Networks (UKPN) have been incrementally increasing the flexible capacity that they procure to alleviate network constraints. During times of peak demand or excess renewable energy generation, flexibility providers can help DNOs to balance the grid by providing demand turn-down or generation turn-up.
Creating flexibility by turning local renewable generation down
For the first time however, this summer UKPN will procure generation turn-down (or demand turn-up) within its local flexibility market, helping to incentivise more renewables to connect and generate electricity. The tender is seeking around 500MW of flexibility across more than 1,000 ‘flexibility zones’ in the South East of England from summer 2023 to the winter of 2025/26. Sites need to be able to provide a minimum of 10kW of flexibility (which can be aggregated) for 30 minutes.
Naturally, with over 12GW of solar, wind and storage in our managed asset portfolio, UKPN’s introduction of generation turn-down to its flexibility procurement process caught our attention. If awarded, it presents a new source of revenue generation for our renewable energy asset clients, further improving project outcomes. Critically, it also demonstrates how renewable energy can be utilised as we move to a net zero future and zero carbon network.
After reviewing our portfolio to identify which assets fell within the allotted flexibility zones, we reviewed each asset’s eligibility against the tender’s requirements before completing a suitability analysis. Once we understood which projects would be viable to submit, we approached asset owners to highlight the opportunity and get the green light to complete pre-qualification. For some projects this included reviewing contracts such as power purchase agreements (PPAs) to ensure participation in local flexibility markets was permitted. If successful, we will also support owners with making changes to PPAs to allow participation.
Generating revenue through providing flexibility with renewable assets
As a result, we now have several managed assets in the pre-qualification stage waiting to sign up. Once contracts have been signed, RES will manage participation from its control centre and handle invoicing. The number of hours of flexibility utilised and utilisation fee for that flexibility will vary to reflect real-time market dynamics as well as according to the requirement for and availability of flexibility within that specific zone. Turning down generation can expect to be called on for between 10 and 40 hours per year.
This type of incremental value opportunity is only set to increase as other DNOs – in the UK, Europe and beyond – also look at innovative ways to gain greater grid flexibility.
As the UK transitions to a more flexible grid, DNOs including UKPN are acutely aware of the need to incentivise existing flexibility and renewable energy assets to participate in local flexibility markets and coordinate participation across markets. And it’s a win-win for both parties. Accessing existing flexibility at the local level will deliver quick wins, even if longer-term investment in grid infrastructure is still required.
Agility to respond to evolving flexibility market opportunities
National Grid and DNOs across the country are becoming increasingly agile and collaborative in response to pressures to balance the grid. Asset managers must do the same to keep ahead of market opportunities and for RES, it is an excellent example of how we continuously go the extra mile to find new opportunities and routes to market to fully optimise our clients’ assets.
In 2020 for example, we registered several of our clients’ wind and solar generation assets to participate in National Grid’s Optional Downward Flexibility Management (ODFM) service. The scheme, which was introduced at short notice, invited small scale renewable generators to turn down or turn off their generation to help National Grid manage periods of low demand on the transmission network as a result of COVID-19. Between May and August, over 100GWh was called upon.
A moving target requires an expert
Flexibility is playing an increasingly important role in the UK’s transition to net-zero. However, the ESO’s and DNOs’ learn-by-doing approach is bringing new balancing and frequency services to market every year, creating a moving target for most renewable energy asset owners. This requires an expert who has the skills, experience and expertise to maximise revenue, minimise cost and maintain the asset’s value from the year it was built, and every year afterwards.
At RES, we pride ourselves on our dedication to our craft. Being at the forefront of innovation, we proactively collaborate with industry stakeholders to shape and deliver the UK’s transition to net zero, while maximising market involvement on behalf of our clients.
To find out how we can maximise the routes to market for your renewable energy assets get in touch with Robert Spurr at: [email protected]