Power Responsive Annual Report

As society increases its focus on meeting net-zero, National Grid Electricity System Operator is collaborating with others to transform the energy industry. Over the past year we have made good progress towards our ambition of operating the electricity system carbon free by 2025, particularly in providing flexible and greener energy that delivers cost benefits to the consumer.

We recently published our 2019 Power Responsive Annual Report. Adam Sims, Power Responsive Manager, explains more about the Power Responsive programme which primarily focuses on demand side flexibility (DSF). DSF provides us with a way of balancing the network, allowing energy users to reduce their carbon footprint by changing their energy consumption.

As we transition into a low-carbon world, demand side flexibility plays an increasingly important role. Electricity system requirements are evolving, at both a transmission and distribution level, and we need additional sources of flexibility to meet these needs from an increasingly diverse range of technologies. Power Responsive is a stakeholder-led programme, facilitated by National Grid ESO, to stimulate increased participation in the different forms of flexible technology such as demand side response (DSR) and storage. It brings together industry and energy users to grow participation in DSF, making it easier for industrial and commercial businesses to get involved and to realise the financial and carbon-cutting benefits.

DSR simply involves businesses increasing, decreasing, or shifting electricity use in response to a signal, to help balance Britain’s electricity system. In return, participants can receive strong financial incentives, lower their bills, reduce their carbon footprint and play an important role in the transition to a low carbon energy system. 

National Grid ESO believes that DSR and other forms of flexible technology, such as storage, can help to provide the capacity and flexibility needed to operate the electricity system in tomorrow’s world. So, while this new reality creates challenges in operating the grid, it presents exciting opportunities for energy users.

Every year we publish an annual report for the Power Responsive programme which outlines the progress made in flexibility over the past year and provides insight for demand side providers, investors, and wider flexibility stakeholders into how markets are progressing and transitioning.

The headlines from this year’s report are:

  1. Change continues to cause uncertainty

Uncertainty was a theme reported in 2018 and has continued as demand side providers face challenging times, with many changes to markets, charges and regulations affecting their revenue streams.  The main reasons for this uncertainty are changes to the network charges providers will pay in the future as a result of Ofgem’s Targeted Charging Review (TCR), the suspension and then reinstatement of the Capacity Market, and ongoing developments to the Ancillary Services products and markets to make them fit to meet the future challenges of managing the system.

  1. Markets continue to deliver opportunities for DSF providers

The DSF providers’ share of markets continues to increase, helped by greater volumes being bought by the ESO and the lowering of the minimum unit size from 50MW to 25MW in the Fast Reserve market.  Prices have remained broadly stable, indicating mature and competitive marketplaces.  The introduction of a new weekly frequency response auction in November 2019 is likely to provide further opportunities for DSF providers in 2020.

  1. Mixed success for DSF in the Capacity Market

Whilst DSF market share and cleared price remained broadly the same for the longer-term auctions (known as “T-4” and “T-3”), participation and success continue to decline in the year ahead auction (known as “T-1"), with less than 100MW being successful in 2019. This is likely due to the price in the short-term auction collapsing and the uncertainty over the suspension and reinstatement of the market in 2019.

Click here to read the full report and for more information on the Power Responsive programme visit http://powerresponsive.com/

Since completing this year’s report, we have all been faced with huge changes in our home and business lives as a result of COVID-19. It is clear that disruption will continue during the months ahead and, as we don’t yet know the impact on our business and the energy industry, we haven’t currently reflected this in our future recommendations for DSF. However, we will be constantly reviewing our plans taking into account changing priorities for the ESO, the Power Responsive programme and our stakeholders as we work to continue operating a secure and reliable electricity system.