Distribution markets make a slow start

Markets for fexibility run by distribution network operators (DNOs) have made a very slow start, according to comments made at NGESO’s recent Power Responsive forum. There have been bidders available for just 20% of the requirement so far offered. However, there have been dramatic differences in the response to offers, which are very location-specific. Some locations have received bids covering more than 100% of the need, while some received no bids at all.

This is an extract from an article in the February issue of New Power Report. Subscribers can read the full report by clicking here and logging in

Comments – most anonymous – at the meeting suggested some reasons why. On hardware, they cited high connection fees from DNOs and the cost of meeting new ‘G99’ regulations for fault ride-through. They said DNO connection requirements were inconsistent and in some cases had legacy protection requirements that were too onerous. The cost of meeting MCPR (medium combustion plant regulations set by the EU) on emissions also were a barrier. As regards the new market offerings, companies that considered bidding had found little visibility. They wanted to know how often they might be called on and what total utilisation they might expect. They said that recent changes made to the charging regime by Ofgem had made flexibility less attractive. The DNOs’ price control regime was equally damaging: since DNOs are currently making submissions for the next RIIO price review and determinations have yet to be made by Ofgem there were no contracts available beyond 2023. A three-year visibility was not long enough to be practicable, one commentator said. The potential providers also wanted consistency across DNOs: similar products, contracts that were identical as far as possible, and a common platform to bid for where all the options available across all the DNOs.

This is an extract from an article in the February issue of New Power Report. Subscribers can read the full report by clicking here and logging in Not yet a subscriber? New Power is a specialist report for anyone with an interest in the UK energy industry. We look in-depth at all the issues that have to be addressed to rebuild our industry – moving from our centralised high-carbon power system to one that will provide heat and power securely, affordably and with minimal carbon dioxide emissions. Contact subscriptions@newpower.info to find out more.

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