The National Energy System Operator (NESO) is trying to reduce gas use by bringing wind farm operators back into the market at times when they might switch out.
The initiative responds to new phenomena in the market that are a consequence of heavily weather-based systems and the terms of the UK’s Contracts for Difference (CfD) scheme, which gives power plant operators a predictable return.
Wholesale prices in the GB energy market can now be zero or negative at times, because high wind and solar periods produce more power than is required. Under the terms and conditions of CfDs, many renewable energy plants get zero payment for these periods, rather than receiving the CfD’s reference price. But if they drop out of the market as a result – easy for wind farms, which are very flexible and can reduce their generation quickly by re-angling their blades to catch less wind – the system can change from having an excess of power to a shortfall.
NESO has to go to market to secure replacement power for these periods and this currently may mean taking bids from gas-fired plant. This is contrary to NESO’s plans to operate the system free of fossil fuels. What is more, because the negative price periods are short – possibly as little as half an hour – and gas-fired plant is less flexible than wind and has to be teed-up ahead of time, it may cost more and burn more gas than the brief period would warrant.
NESO is now inviting wind farms to act as so-called ‘merchant’ plant at times during these periods. Instead of switching out when the price is negative, they can bid against other market participants.
Other sources, such as fast-acting batteries and other storage, or demand-side response, may also be options now and in the future.