Companies in southern Scotland are to be asked whether they will accept payments to reduce export to the grid or turn up demand.
System operator NGESO will offer the payments as it seeks to reduce pressure on a key connection at the Scotland-England boundary and reduce the so-called ‘constraint’ costs arising because of limitations in network capacity.
The new market will be an interim solution beginning in Q4 this year, and NGESO expects it will be in place for 3-4 years. It will use a third-party software system, because NGESO does not want to have a “burdensome and resource-intensive” manual system like that it employed for another demand turn-up option – ODFM – used during the Covid lockdown.
Scottish generators – particularly the growing number of wind farms – produce more and more power and although it is sold to customers in England and Wales the network capacity to transmit it is limited. The situation is particularly acute at the so-called ‘B6 boundary’ – the area of the network at the Scotland-England border.
When more power is produced than can be transmitted, Scottish wind farms cannot export to customers across the boundary and NGESO has to make payments in compensation. These constraint payments are recouped from customers. Across the country constraint payments can run into tens of millions of pounds each week, and B6 is a significant part of that and an area where costs are growing fast.
The system operator and network owner have already used technical options to maximise the carrying capacity of the wires, including rerouting circuits in local substations to make best use of them. They can also vary the maximum capacity of cables, because they are limited by thermal factors; a windy cold day acts to cool the overhead cable so power restrictions can be altered.
Now NGESO wants to try to develop a local market and it will ask companies north of B6 to bid to help minimise flows across B6, either by raising demand or by avoiding grid export, for example from companies with rooftop solar.
NGESO wants to bring forward new sources of flexibility, so the new option will only be open to companies who do not already participate in the Balancing Market. The minimum size offer will be 1MW but that can be from aggregated smaller sources. The system operator expects to have two options for participants, with day-ahead and within-day notifications. It is designing the product now and seeking feedback from stakeholders on the structure and on unwanted consequences. It wants to avoid, for example, companies being paid to ‘waste’ energy.
The consultation closes on 8 April. Download the document here