Flex market webinars tend to cover similar ground: what’s been procured, what’s coming next, how to register, etc. Our recent session with Scottish and Southern Electricity Networks (SSEN) talked to those aspects of what we do, but I wanted to focus on four insights in particular that came out of the conversation with Paul Fitzgerald, who leads SSEN’s DSO flexibility markets, and Electron’s Nick Huntbatch.
1. Long-term and short-term markets are solving different problems
An early question I put to Paul about running flex markets: is flexibility inevitably heading towards day-ahead and real-time procurement, with long-term contracts becoming a footnote?
“There are two needs when running these markets,” says Paul. “There’s the network need, but we’re also catering for flexibility providers that have different types of assets and different business models of participation. So we absolutely feel that there is still value in the wide range of market products, from long to short term.”
It would be a neat story if that flexibility service provider (FSP) variety mapped cleanly onto which markets people use i.e. smaller, more dynamic assets going for shorter timeframes, larger ones committing further out. I asked Paul whether it does. The answer is no, not right now.
“I’d say that there’s not a clear distinction. In the long-term markets, you have more dynamic assets, mixes of domestic customers, EVs. We probably see more activity with the smaller assets in the shorter-term markets, and maybe day-ahead, potentially – but nothing really clear-cut.”
Nick’s follow-on narrowed the FSP variety to a different variable: how an FSP is set up to participate.
“It’s the FSPs who have the APIs and the integration that participate with these compressed timelines that you typically see in day-ahead markets,” he said.
So the network side has a clear split for the moment (long-term versus short-term need). The FSP side doesn’t split as cleanly by asset type, but rather by whether an FSP has been built for speed.
2. Get the flex market running before you perfect it
SSEN’s day-ahead market design process took into account other FSP learnings from running these markets at different timescales.
“We only really had commitments for the availability payments and utilisation payments in our short-term markets, but we introduced them into our long-term markets, after listening to FSP’s feedback that they wanted more revenue certainty,” says Paul.
That same philosophy showed up in how SSEN and Electron approached launching day-ahead markets.
“As an implementer-enabler of these things, there’s two mistakes you could make,” says Nick. “One is to assume that things like day-ahead markets are a copy and paste of longer-term auctions.
“The other one would be to spend too long testing our assumptions in the market, in a closed room trying to come up with something which is perfect. So what we did was get out there early, to test how they can be used by the DSO, but also how our users interact with the platform. We continue to improve from there.”
3. The day-ahead pilot is justifying its own expansion through outage management
That test-and-learn approach played out in a day-ahead trial that SSEN ran with us earlier this year – which then led to trialling this market structure for outage management.
“It means we can take outages at times that we couldn’t normally do without flexibility, whether it’s outages during the winter, for example, that we can’t normally take because of that peak load,” says Paul.
We’ve written up the trial results in detail elsewhere, explaining our live day-ahead market that SSEN and Electron set up within a week, running in Maidenhead to protect customer supplies during planned power works.
The new detail that came up on the webinar is what SSEN plans to do with it.
First, timing. Paul confirmed SSEN is restarting day-ahead at greater scale in September. “The Electron platform has now been scaled, so we can really go and accelerate the use of day-ahead markets. We’re planning on commencing that again from September.”
Second, the trial is helping SSEN make the case for scaling it further. “The results of this market also allow us to further develop the CBA – cost-benefit analysis – tool, to get ahead of the game to understand what we need to do to scale day-ahead markets,” says Paul.
Third, outage management isn’t a one-off use case. Paul was clear that it’s a step towards a much wider set of applications.
“There’ll be operational and connection acceleration flexibility coming in and curtailment exceedance avoidance flexibility,” he says. “So it really widens those opportunities for use cases, and there’s lots more value for the markets coming forward.”
4. ED3 is where flexibility stops being one thing
Those new types of flex are starting to rear their heads because we’re currently straddling the transition to a new price control period, moving from ED2 to ED3. All DSOs and the regulators are thinking about what’s needed to make sure we can continue delivering an affordable grid.
“If we think about what we do right now, flexibility is mainly used for reinforcement deferral,” says Paul. “Already we’ve procured a gigawatt of flexibility, with 1.3 GWh of flexibility dispatched, purely for reinforcement deferral. So it’s quite a narrow use case.”
A gigawatt of flexibility against one use case is a baseline ED3 is about to move on from. Paul named connection acceleration as one of the new applications coming: “If customers are stuck behind reinforcement delays, we will now be able to use flexibility to release capacity to get customers connected earlier, and for better management of our network.”
Paul was also upfront that some of this is still an open question. “There’s more feedback on what we can do: flexibility to encourage more vulnerable customers to participate, how we can get more smaller assets involved, and our local networks as well,” he says.
That’s where a big part of our work with SSEN sits – figuring out, alongside them, what it takes to scale flexibility markets in practice, so it delivers value at a system level, and for SSEN and the FSPs providing it.
If you’re an FSP thinking about getting involved in SSEN’s markets, or you want to follow how this work develops from here, reach out to the team.
The quotes in this article have been edited for clarity.
