What we need in order to move to a decentralised grid

This panel discussion, hosted by Kiwi Power in December 2020, shares the focal points of industry discussions around the shift towards a decentralised, flexible grid. We explore the key takeouts from this lively debate here, but for those who want to dig into the detail, you can rewatch the panel or read the transcript below.  

Video transcript:

Tom Jennings:

Welcome.  We have a wide-ranging panel with different views so I’m looking forward to a proactive and interested discussion! Why is it important to move to a decentralised grid? I think it’s fundamentally about that link to the net-zero target and support of the growth in renewables. We have seen big changes, with 2020 accelerating our movement in the right direction.

Before we dive in – let’s have a quick introduction to our panellists.

• • Madeleine Greenhalgh – Policy & Advocacy Manager, Regen and the Electricity Storage Network– will be talking about storage capacity as her main interest. She’s ready to discuss what a flexible system means for a net-zero future, especially after recent government announcements.
  • John Twomey – Head of Market Development, National Grid ESO– the role of our team is looking at longer term strategic work that needs to be done across markets. I’ll be looking back at 2020 from an ESO point of view, and how reforms are shaping up as we go into 2021. 
  • Steven Meersman – Founder Director, Zenobe.  I’ll be looking at this topic from two perspectives –  firstly from our fleet of large-scale batteries and secondly from our fleet of electric bus depots that we run across the country.
  • Hugh Brennan – MD at Hive Energy. As a solar developer we are interested to see how a site we already have connected to the grid can end up playing a role with energy storage.
  • Tom Jennings, Head of Optimisation, Kiwi Power (Tom is the moderator in this panel discussion.)

So just a little bit on why Kiwi is interested in a decentralised energy network.

We provide a global power plant solution by simplifying distributed energy resources for sustainability impact.  What this means with regard to our interest in discussions today – we are using Kiwi Core platform to help DERs achieve their potential by simplifying market participations.  What we want to do is grow the amount of MW that is available to the National Grid by using our platform to access various different markets and programmes.

2020 has been a fascinating year of serious changes from a National Grid Point of view. John, can you talk us through some of the challenges and how has this brought us closer to a more decentralised grid as a result?

John Twomey: 

2020 was a unique year from a personal and business operations point of view.  What 2020 has really done is it’s given us a glimpse of the future.  We’ve seen demand suppressions up to 20% in general, this is a huge change from what we would normally forecast and the operational limits that we’ve seen in previous years. 

Equally with demand suppression, especially during the spring, we saw high penetration of decentralised energy coming onto the systems.  Particularly  with the high amounts of renewables over windy and sunny weekends – where we’ve seen some settlement periods of 100% renewables. This in essence has given us a real live scenario for how we see a net-zero system shaping up.  

Equally what it’s done is highlight the actions that the ESO (electricity system operator) has had to take in order to manage the operability of the system.  So in many cases we’ve had low inertia on the system which meant we have had to curtail renewables off the system, and put carbon intensive supplies on the system.  These actions can correlate to 20% of the movement within the market. 

One of the big things we have seen through the course of 2020 is that we’ve introduced a new ancillary service in the form of an ODFM (Optional Downward Flexibility Management product) .  This is in essence targeted at smaller decentralised assets connected on a whole system basis.  We’ve signed up 4GB of assets which provides us with a service where we can turn down generation as and when we need it. That’s been really successful but also it’s been put in place over very rapid time scales.  Probably timescales which –  I can imagine – market participants haven’t felt favourable, and equally from an ESO perspective, we haven’t felt comfortable with so that’s something we need to take forward and look at in the course of 2021. 

All in all, it’s given us a really clear indication of what the future looks like and it has shown that a lot of focus on transitional work is needed.  Particularly on the ancillary services  market to make sure that these markets operate as we expect and equally the ESO becomes a residual balance and is not taking the majority of actions in real time.

Tom Jennings: 

Thank you John. Steve, what’s your view on the demand suppression side of things – what are these changes and the impact seen on the Xenobe side?

Steven Meersman: 

Well, I think it’s incredibly positive and frankly I think that John is really underplaying the massive achievement of ESO.  Frankly launching a service in that record time is brilliant, and the reason it worked so well is that they were very open with the industry around what they were looking to do, what they think they might not get right the first time and creating an open dialogue, which I’m looking forward to seeing more of in the future. It almost brings that software and tech company approach to market management. Obviously, resilience is key but getting a minimum product out there that works and refining it as you go along over a 6 month trial period. We have seen two things here: 

1. People really welcome the opportunity to enter into dialogue across the industry
2. The massive uptake in the market in terms of participation in the service.

It’s really positive that we can learn the lessons from the COVID period in terms of a flash forward to what our energy system will look like 5 years from now.  

Tom Jennings: 

I’d like to echo Steve’s view on what hugely positive work the ODFM was; the speed of roll outs and learnings as we went along was absolutely superb.  Hugh,  it would be great to get your take on the operability of the system. As John mentioned, various different assets were being curtailed as we tried to manage the high- fusion solar side of things. Keen to get your views on this.

Hugh Brennan: 

The role of solar parks in this will only get bigger. We are moving from solar plants having on/off switches to being part of the solution.  For all involved, the window into the future that we got this year is really helpful as this will be a balancing act between moving to a greener grid and also dealing with the timing of when certain events happen like, for instance, everyone suddenly deciding to buy an electric car. And a balancing between committing resources vs. protecting the public purse.  DERs can be green or not green – there are two separate discussions here – and moving to a distributed supply/demand operation is part of what we’re doing, along with the greenification of everything.

Tom Jennings:

 I completely agree. And it’s about taking advantage of the flexibility that sits inherently within the network to move towards that green network and away from a centralised alliance. Madeleine, what is your view on the policy support and impacts as we move towards this future of a decentralised network, and the fast roll out of programmes such as ODFM.  What is the policy impact?

Madeleine Greenhalgh:

We welcome the speed at which they were done, from a policy perspective sometimes it can take us quite a while to think through the implications of a different service on a system and creating those markets and policies to welcome flexible assets can take some time. And it should, it should be well thought through and we really saw in April the speed in which the ESO can react. We can do this really quickly – let’s take that forward and do it again in the future. I completely appreciate John’s point; we must step back now and look at how those new markets and services ran, but from a policy perspective we really need to see what is coming next.  How are those exciting things we saw over the COVID period going to play out? How are we going to use them, and build them into the system over the next few months?

Tom Jennings:

Madeleine, without throwing you under the electric bus(!), as we move into 2021, from a policy point of view how do we develop these markets, and make sure we continue to move in the right direction towards a decentralised, flexible grid?

Madeleine Greenhalgh:

 The key thing for me is net zero flexibility; decarbonised flexibility.  We talk about decarbonised generation a lot and we are on a really good path for this.  We don’t talk about decarbonised flexibility enough, or the value that could be recognised. We really need to recognise the value of the lack of carbon in certain flexible assets and give them the step up they need into the network, in the same way we do with generation. For me, that is the next step to develop these markets and services coming up – how do we make sure they are net zero?

Tom Jennings: 

This feels like a nice moment to pass to Steven to share some views on decarbonised flexibility.

Steven Meersman: 

There’s lots of movement that’s been happening which is positive and as we are coming out of yet another lockdown people are thinking about decarbonising from a financial perspective.

We’re getting closer towards a point where it’s financially silly not to look at decarbonising. I do think there is a need for coordination across various participants in the industry and the regulators (plural!)such as Ofgen, and other government parts playing a role.  We see goodwill from everyone in their own silo, but more coordination could link the pieces up and make sure the landscape gets easier to navigate.  

The TCR review – a lot of people in the industry don’t understand yet what this means for them, and if they did they would be ‘jumping on their soapbox’ questioning the government on why they are making investing in greener things and cleaning up air quality more expensive..  The costs for a bus operator or a last-mile-delivery company could easily be one or two vehicles every three years for every depot, purely disappearing in these charges. Creating the forum for these debates would be beneficial for us to achieve what we want at the lowest possible costs.

Tom Jennings: 

I’d like to pick up the coordination point with John.  How do we make sure that as an industry we are working together on a larger scale?

John Twomey: 

A couple of things spring to mind…

1. How we develop and implement new products – on a local level, ESOs have a power responsive group that’s been up and running for a while.  Feedback includes that we should make sure we set out a clear need for what we want without going too far with the design of what that is – we can hand this design element over to industry to work out how these new challenges can best be met with different flexibility solutions being provided in locations across the country. 
2. On a broader policy level we are coming into a phase where we are suddenly going to see the implementation of different types of market arrangements. Today we broadly have ESO markets; by 2023 we will have the establishment of DSO markets.  We need to ensure we have coordination alignment between these two markets. We also want to make sure the market providers where possible can stack services between those markets, and there’s a system for that.  It might not extend across all products, but we should be aiming to maximise efficiency of every asset that is being delivered across the country.  I think the DSO to ESO is going to be a really big one.
3. From an ESO point of view, we are working out how to be transparent with our plans and share as much data as we can.  We have operational forums that happen on a weekly basis which can help us understand the mood music from the industry in terms of the areas we need to focus on.

Tom Jennings: 

I’d like to pick up the point around accountability in the industry with Hugh – do you feel we are working together as we are moving forward to different market arrangements?

Hugh Brennan: 

The more that you chat about it and make sure the silos of work have the big picture, the better.  From our point of view, if you are putting in an energy storage system – what will the demand for that be? Rather than having contracts like you would have in the US or South Korea detailing exactly what they do. It’s going to happen more gradually and on a local level, as part of the DSO transition.  That is where I see us incrementally adding, in dialogue with WB, UKPN etc, and other brands available.  But on a macro level, that’s a very specialised investment and expertise, and I see that largely continuing because it’s more at a local level that you’ll start seeing these energy storage things start to develop in dialogue with local DSOs. 

Tom Jennings: 

You touched on energy storage there… Madeleine and Steve – can we get your views on the structure of the various revenue streams that are available to energy storage and to support decarbonisation?

Steven Meersman: 

It’s about collaboration – sharing ideas and perspectives – and getting raw data.? With some of the more standardised products that’s easier, as you can look at past frequency data. But being able to communicate more data so that a developer or owner/operator can evaluate the risk of participating in on service, compared with another – I think we have come a long way, but still have a long way to go. 

The second bit is the infamous revenue stacking. People are still coming to terms with the fact that if you want to be in the storage business or decentralised flexible energy, you’re an independent power plant, you’re not a solar farm – you need to constantly move around and optimise.  I see people coming to terms with that.  

To do that you need information, and from the regulatory and procurement side – how do you develop a product that sits neatly amongst these other things?  It’s not easy but it is in everyone’s interests – as in the end the more flexibility, or the more combinations of different services that the largest group of people can bid for will drive down the cost for the end consumer – and that is what this whole thing is about. Having an open dialogue, thinking holistically about two or three years down the line, about where we want to be as an industry, and having that debate, would accelerate things further.  

Madeleine Greenhalgh:

This need for data and to have a good view of the system… at the moment it is well recognised that the ESO doesn’t have a great view of what’s happening at the DSO level and probably vice versa.  Having the data available and the information to understand what is happening in the system, but also having that digital connected service so that we can see what’s happening and then dispatch those assets in time that we need to.  Everyone talks about needing a fax machine to get in touch with some parts of the control room, and I’m not going to put this all on the ESO – as it’s stuck in a really old system -it’s just the nature of having to move from a massive piece of infrastructure with several decades worth of build up to now a very fast-moving much more real-time world of many thousands of flexible assets – so it is really hard – but that’s the critical bit that is going to get us there.  If we can’t see, understand and dispatch those assets through the data and digital technologies that we need in real-time, then we aren’t going to manage this net zero system by 2025.

Tom Jennings:

Let’s give John an opportunity to respond to that data point. 

John Twomey: 

I agree. All really valid points.  I think there are two things that come to mind.  We need to put the right data out there, that is machine readable, that participants can pick-up and do what they choose with it. The second thing is we need to make sure there is alignment and consistency in the timings of when the data is released.  As there are different sets of data that people need to make a judgement call.  It’s no benefit if they’ve just got one set of that data – so it does need to come together as a holistic plan.  What I can say on the data point is we’re approaching our rio2 regulatory new phase that kicks in from 1st April 2021 so the timings of the outcome from Ofgem is forecast to happen before Christmas 2020.  A big part of that offering is around doing more with data, building a data portal, stepping up to the plate to be able to release more coherent data out to the market in machine readable format.

The second point, which is equally or maybe even more important is the fact that a lot of our plan over the next 2 years, 75% of the capital expenditure is all geared around IT investments, so updates to the control room and in essence to truly get to a decentralised energy system, what we do need is automation on dispatch capabilities right across the board, and the right telecoms and information architecture to be in place to enable this to happen.  The plans are there, but the next two years will be a big one in terms of seeing that through. 

Tom Jennings: 

2 mins left. To summarise and wrap up these conversations. My first thought is on that point around IT investment and getting to that world of decentralised automation.  From a Kiwi Power perspective that’s something that is extremely important to us as we simplify –  through the VPP Kiwi Core platform – the move to that automation as much as possible.

So to summarise:

• John talked about the coordination piece and need for systems stacking. 
• Hugh touched on breaking down the various different silos and pointed to the bottom-up local level activity that is going to play just as an important role as the top-down part as we move to the regulatory grid changes.
• Steve you talked about the need for the costs to come down and for the important players in this to speak with the industry particularly around that data point.
• Madeleine has driven home the need for coordinated structure, looking at that data and upgrading the infrastructure in real time. 

Thank you all for participating!

Want to read more on this topic? Here’s a blog by our Head of Optimisation, Tom Jennings – ‘Flexible distributed energy lessons from 2020‘.