Demand response products get mixed customer response

National Grid has attracted just a fraction of its target in a new demand response product that would help manage system stresses.
Rebecca Yang, commercial manager at National Grid, told New Power that the new product (enhanced Stor) was a response to the situation on 4 November, when the system operator (SO) issued a Notification of Inadequate System Margin (Nism). That day was mild and demand was low, and Yang said the SO could not bring on expected generating units, in some cases because they experienced failures coming back from outage.
As a result, National Grid launched a tender for “enhanced operational Short Term Operational Reserve (Stor)”, looking for capacity that is not in the balancing market at present. Yang said: “We want to attract additional response from the demand side, [that can] declare availability within day”. The tender – capped at 200MW – was launched before Christmas and closed on 8 January, with the aim of bringing winning plant online from the end of January.
Yang said there had been “lots of discussion and interest” but few tenders. Those that were submitted came both from organisations with generating units and big demand customers. Yang said the successful tenders would be just a fraction of the planned 200MW, putting the failure to attract more down to the timescale and the work needed to qualify bidders – “we want something up and running and dispatchable from the [National Grid] control room”.
Yang denied that the low response would leave National Grid short of management tools, saying the measure was an addition to existing tools and the system was well supplied.

Power Responsive products in tender
National Grid has had a much more positive response to the first products offered under its “Power ­Responsive” brand, Yang said.
Speaking at the Electricity Storage Network annual meeting on 27 January, commercial development manager Leon Walker said the SO had been “overwhelmed” by the response to the first trial, a tender to supply enhanced frequency response. Walker said National Grid had received 72 submissions, from overseas as well as UK parties, offering a total of 1,370MW – far exceeding the 200MW sought.
The SO plans to take offers no greater than 50MW from any one bidder. It is offering four-year contracts that will start in the winter of 2016/17, although Walker said that contract period was “being discussed internally” and at the regulator as the SO preferred two-year contracts. “Is that the right number of years,?” he asked. Yang said she did not expect the period to change because facilities such as storage are capital
intensive so they “need a longer term”.
Walker said the parameters of the trial had changed slightly to accommodate storage better and he invited other potential bidders to “come and talk to us” to discuss requirements.
National Grid plans more discussions with industry in February and March and a final tender process in April, so the new trial service is in operation in the 2016/17 winter. Yang agreed that the response had surprised National Grid – “we knew we would have lots of interested parties but were surprised the technologies were ready to deliver at commercial scale – the market will be very competitive”, she said. But she did not expect to significantly increase the volume procured.
The first Power Responsive product to be tendered has been dubbed “Power Turnup”, and that is running a few weeks ahead of enhanced frequency response, Yang said. That is because the product – which will pay customers to increase demand at times when there is too much generation on the system – has to be in place in May, to be used over the summer. The SO wants companies to be able to soak up excess power overnight, or between 1pm and 4pm.
Those contracts will be bilateral agreements – National Grid has already published a price. It is offering availability fees of £1.50/MW/hr for ‘committed windows’ plus utilisation fees at £60/MW/hr or £75/MW/hr. Yang said of the measure, “we have some interested parties”, which are either big demand customers or sites running, for example, combined heat and power (CHP), who can cut their self-generation and import part or all of their load instead. She could not give an indication of how often parties might be called on.
Yang said it “doesn’t matter where the [Power Turn-up] service is located, but some may be constrained by local networks. We are encouraging providers to speak to their local distribution network operators”.

Finding the way for users
Some users have found National Grid’s existing and new products hard to negotiate. Yang admitted that National Grid was “fully aware of the complexity” of the landscape and said the company was working on providing clearer information and training. The company was also planning sector-by-sector engagement, she said, starting with the public sector and water companies.
She said she hoped that companies who were gaining less value from the Stor market than in the past would look at providing new services such as fast frequency response that would have more value. Stor providers on long-term contracts could bid to provide new services and relinquish Stor contracts if they were successful. “Migrating them into new contracts will provide headroom [in Stor] for new entrants,” she said.


First published in the February 2016 issue of New Power.

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