Enduring Auction Capability Platform: A new and improved platform for procuring frequency response services
24 Nov 2023 - 3 minute read
Our new Enduring Auction Capability (EAC) platform enables market participants to bid on opportunities to deliver multiple frequency response services simultaneously for the first time.
What is the EAC platform?
The EAC is our new platform which enables us to procure Dynamic Containment, Dynamic Regulation, and Dynamic Moderation Response Services. It allows market providers to access multiple markets at the same time, which makes the procurement of balancing services more efficient and allows us to select the option that offers the best value.
New way to procure frequency response services
We partnered with N-SIDE and SOOPs to facilitate the design, build and implementation of the new EAC platform. It includes several new features, including co-optimisation, splitting/stacking, a new sell order design, an advanced clearing algorithm, the capability for negative pricing and overholding.
These features enhance the process of bidding by allowing multiple services to be bid for at the same time, reducing the need for manual and duplicated processes.
Some of the key features include:
- The procurement of Dynamic Containment, Dynamic Moderation and Dynamic Regulation together in a single auction
- Participants can submit multiple offers across different response services, allowing the auction clearing algorithm to select the option that optimises the market most efficiently
- Sell orders can be priced below £0/MWh, which allows for clearing prices to also be negative enabling providers to offer to pay the ESO for providing an ancillary service
- Units can deliver Dynamic Containment, Dynamic Moderation, and Dynamic Regulation at the same time
- The algorithm allows us to accept more sell orders than we require if this results in a more efficient solution overall, resulting in cheaper procurement of these services
The benefits of the EAC platform
By introducing innovative features such as co-optimisation, stacking and an advanced clearing algorithm, we can procure response services more efficiently. The new auction platform and market design benefits market participants through the removal of duplicated processes and, ultimately, delivers a reduction in costs to end consumers.
Our regulator, Ofgem, said the "design of EAC creates a more efficient environment for the ESO to procure Response Services, while also fulfilling the needs of market participants in facilitating a co-optimised, stackable auction. Combined, we expect this to benefit the consumer as the ESO can clear this auction in a way that maximises market welfare.”
What is Market Welfare?
Each buy order has a bid price and each sell order has an offer price. Market welfare is the total of all accepted buy order quantities times their bid prices, less the total of all accepted sell order quantities times their offer prices. The clearing algorithm seeks to maximise the space between the revenue that providers require to offer the service and our willingness to pay for it.
Platform testing and user feedback
Before the launch of the EAC platform, market providers participated in a series of trials from September to mid-October. This helped ensure a smooth transition and allowed providers to test new features such as co-optimisation and stacking. Over 25 providers participated offering 3GW in volume. Many participants took the opportunity to explore the system and provide their feedback prior to the launch.
First live auctions deliver cost benefit
The first round of auctions on the EAC platform took place on 2 November. We received bids from 23 participants with a total of 109 units, with co-optimisation and overholding delivering great results. Clearing prices in almost all Dynamic Frequency Response markets fell with an average clearing price of £2.46 (35% lower than the average clearing price for the previous 7 days). The cleared volume remained stable as before.
The future of EAC
As we continue to work with market providers, we plan to start procuring our newly reformed reserve services through the EAC as they are developed.
If you can provide frequency response services, create an account on our Data Portal to see the auction results. You can also subscribe to our mailing list here to get the latest EAC news delivered directly to your inbox.