Utility Week

UTILITY WEEK | 14TH - 20TH FEBRUARY 2020 | 25 Market view F lexibility is defined as "the ability to be easily modified or the willingness to change". It's a definition that wouldn't normally be considered synonymous with the energy industry, but flexibility is exactly what the power system requires if we are to achieve net zero targets in just a few decades. That means more competition. It seems everyone has suddenly woken up to the flexibility possibilities created by distributed energy resources (DER). The electricity system operator, National Grid, is opening market access to smaller units and revamping the products it procures. Why? Because with more variable and fluctuating renewable generation and less system iner- tia, it requires new types of smaller distrib- uted assets to modify their production and consumption, and do so more quickly than before to keep the system balanced. Retailers and balancing responsible par- ties are also seeking flexibility from their own assets and third-party DER portfolios. Why? Because renewable energy has made the wholesale energy market spiky and reducing their imbalance position is more valuable. Distribution network operators (DNOs) are all offering flexibility programmes, pro- curing services to help manage load growth and outages. Why? Because regulators are encouraging flexibility solutions where they offer the most cost-effective option to solve issues on the network. Opportunities to monetise These changes are also bringing the concept of power system flexibility to a new audi- ence. DER device manufacturers, inverter manufacturers, DER portfolio owners, local authorities, and big energy users all see new opportunities to monetise flexibility from the connectivity they have to DER assets. They do not necessarily want to become energy traders or market participants, but with a portfolio of assets and a range of potential buyers of flexibility, they are realising that opportunities exist, especially with multiple parties all vying for access to the same DER. These new "aggregators" of flexibility can bring rapid access to large portfolios and hence market liquidity, thereby increasing competition and ensuring efficient pricing. Aggregation is no longer just standby diesel generators but includes batteries, electric vehicle (EV) charging infrastructure, indus- trial and commercial energy users, and smart homes. Imagine the amount of flexibility available in a net zero world with electricity generation, heat and transport all electrified (or even part-electrified with hydrogen). In many ways, the UK has led the way in developing the environment for flexibility. Ofgem was the first regulator to promote flex- ibility within DNOs by introducing mecha- nisms that encourage flexibility by equalising the traditional differentiation between capex and opex. However, the liberalised structure of the system is making whole system co- ordination and multi-vector co-operation a greater challenge, with many more parties (and individual interests) to manage. Flexibility initiatives abroad The US has encouraged flexibility for many years. Through programmes such as Inte- grated Grid Planning, utilities have been able to target energy efficiency and demand response programmes at specific customer groups and locations to deliver combined network and system load management. Because they are vertically integrated and hold the customer billing relationship, the deployment of these programmes to resi- dential customers with incentives has been easier, for example with simple tariff rebates. These programmes are being extended beyond pool pumps and air-conditioning load, to EVs and batteries. Similar schemes operate in Australia. The closest UK equiva- lent remains teleswitch heating loads on Economy 7 tariffs. The US has also led the way in the devel- opment of standards and technologies that are key enablers for flexibility. California has introduced Rule 21, whereby all new invert- ers being installed must be "smart". A smart inverter must be capable of communicat- ing to let the utility know its location on the grid and provide control in response to pro- files published by the utility. The utility has access to control all DER on its grid location and hence provide mass-scale flexibility. In Europe, the 2019 Clean Energy Pack- age (CEP) was a watershed moment for flex- ibility. It set out that member states should allow and incentivise DNOs to procure flexi- bility services, including congestion manage- ment. It also provides for the procurement of demand-side flexibility as a cost-effective substitute for energy capacity or network reinforcement. It is clear that the role of the DNO – or distribution system operator (DSO) – should remain as a neutral market facili- tator but with "backstop" options for direct control via connection agreements and to own DER on occasions when other com- mercial entities will not. The latter is at odds with the current UK position. The CEP is a game changer because it encourages the use of flexibility within DSOs, pushes for greater co-ordination with transmission system operators (TSOs) and ensures that energy markets are accessible by DER. Market framework options European Distribution System Operators (E.DSO) has published a series of frame- works for how flexibility markets could be adopted. The Netherlands is well advanced in adopting these; here the DSOs and TSO have collaborated to develop a single, inde- pendent flexibility platform to access short- term flexibility. It allows the DSOs to publish flexibility requests and co-ordinate these with TSO and market flexibility requests. The Netherlands, like Germany, is also adopting the "5 per cent rule", where DER can be curtailed up to 5 per cent of annual import/ export beyond which network reinforce- ment is triggered. Studies have shown that this doubles hosting capacity and provides a clear trigger for network reinforcement. The coming decades will see unprece- dented change in the UK's power system, especially as we race to meet our net zero target; we will all need flexibility and to be flexible to achieve it. Alan Gooding, executive director, Smarter Grid Solutions Flexibility is the future For the UK to have any chance of meeting its net zero target, its power system must be flexible. Alan Gooding suggests some lessons the UK grid can learn from flexibility services in other countries. Operations & Assets

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