By Jo-Jo Hubbard, CEO, Electron, and Victoria Turnham, Head of Network Innovation, ENWL
Increasing renewables to meet demand
The energy crisis that has enveloped Europe and the UK has shown beyond a doubt that we need more renewables – and we need them fast. Not only can more renewables increase the total electricity supply to meet demand, but they can dilute the influence of gas prices on businesses and families’ wallets.
However, even for shovel-ready projects, developing and connecting renewables to the grid is not as quick or straightforward as it could (or should) be. Queues for grid connections stretch to ten years in places, and the ever-present threat of curtailment weakens both individual project business cases and the case for a more renewable-dominant energy mix.
Avoiding expensive ways to reduce grid congestion
Large-scale investment in grid upgrades is one way to shorten queues and ease this congestion, however this approach is slow and expensive. In the meantime, we need to do better at optimising the network and renewable generation capacity we do have.
There have been proposals to do so via the ESO role, however network capacity optimisation isn’t necessarily best delivered using a top-down approach. The majority of demand flexibility and over a third of generation assets are likely to connect at the local distribution level. Therefore, it is at this level that we need to create bottom-up flexibility to enable energy assets to optimise when and where they use and generate power. This will allow the distribution systems operators (DSOs) who operate these networks to connect more clean energy generation locally.
“We need to move from just thinking about ‘how much’ energy we use to ‘when’ and ‘where’ we use it in order to reflect true system costs and squeeze every drop we can from our renewable fleet and distribution networks.”
Jo-Jo Hubbard, CEO, Electron
Project BiTraDER: the solution
Rather than try to achieve this local flexibility through a centralised, command-and-control system, the best way is to create dynamic local marketplaces so that producers and users can directly contract with one another in the most cost-efficient way.
An early exploration of this concept was Project TraDER in the Orkney islands, where abundant wind generation was frequently curtailed due to network constraints. The latest iteration of the concept is now Project BiTraDER – a collaboration between Electricity North West and Electron, partnered with AFRY and LCP-Delta.
BiTraDER is a four-year, £8.4m innovation project that allows renewable energy generators connected to the ENWL distribution network to avoid curtailment and generate more revenue via peer-to-peer curtailment obligations trading.
In plainer English, renewable generators who are next in line to be switched off due to network congestion can go to the live market and offer a price for another generator to take their place. The ‘buyer’ in the trade will offer a price that makes commercial sense for them – they expect to make more money generating and selling their energy than the trade costs. The ‘seller’, on the other hand, expects that the price offered is worthwhile for them to switch off due to their own unique project economics.
The market is designed to operate live on the ENWL network and connect the participants directly, making the process as smooth and efficient as possible. The beauty of such a market-based approach is that the more customers that connect to the market, the greater the choice, liquidity and value of the initiative.
“BiTraDER is a ground-breaking project where we will be trialling peer-to-peer trading of curtailment obligations in real-time, live on our distribution network, so that we can see the real impact this has on connected customers’ behaviour and local constraint management. It forms a key aspect of our ‘Flexibility First’ approach, where we can provide a platform that empowers connected customers to trade and participate in flexibility.”
Victoria Turnham, Head of Network Innovation, ENWL
Optimising network capacity with local markets
Success for BiTraDER will demonstrate that local markets can efficiently self-organise in order to optimise network capacity, and that this has benefits for everyone in terms of power prices, renewable revenues, greater utilisation of low-carbon generation and reduced or avoided network upgrade costs.
BiTraDER differs from previous initiatives aimed at optimising network use and reducing curtailment, in that it is delivered by a neutral market facilitator in Electron. Though the DSO is one of the main beneficiaries in terms of reduced congestion and need for upgrades, directly connecting participants allows them to more effectively find the right price to best incentivise flexibility for all involved. This also allows for far more granular optimisation than can be achieved via top-down ESO-operated flexibility schemes. Crucially though, the two do not need to be mutually exclusive, and participation obligations for national level flexibility schemes can be traded in the same manner as curtailment obligations.
You can sign up to participate in Project BiTraDER here.
