The new flexible and distributed electricity system has taken an important step forward with National Grid’s consultation on a new System Needs and Product Strategy (SNAPS). The market will be analysing this closely to understand the scale of the market for these services and to which technologies will win out in the emerging battle between incumbent generators and distributed batteries.

The strategy aims to reduce the 20 or so confusing ‘products’ National Grid uses to ensure the system is operating effectively, to five clear areas of system need:

  • Mitigation of Rate of Change of Frequency
  • Frequency Response
  • Reserve
  • Reactive power
  • Black start

National Grid’s need for services to maintain frequency response has largely driven what Regen has referred to in our paper on ‘Energy Storage: Towards a Commercial Model’ as ‘the first wave’ of battery storage with 200 MW of battery capacity procured under the Enhanced Frequency Response (EFR) tender last year. This section will, therefore, attract particular interest. Those looking for clarity on the size of the market will be pleased to see some numbers, but given the challenge of forecasting how intermittent generation will impact on use of the transmission grid, National Grid describe these as illustrative only. The numbers are based on the Future Energy Scenarios ‘Consumer Power’ as a Base scenario and with two possible sub scenarios.

The values in the table below show the illustrative market size and the inter-relationship between rapid ('sub-second enhanced') and slower (>FFR Type) frequency response services:

Source : Regen - rough analysis from National Grid illustrative graphics, System Needs and Product Strategy Report June 2017

So what do these numbers tell us about the market for system needs at transmission grid level? One point that is immediately clear from the huge range is that we do not know the size of the market. The illustrative numbers suggest that the response market could grow significantly or stay fairly static at around 1 GW.

It is notable that the more 'very rapid response' available (“EFR type”) the less overall response capacity is needed. In other words the faster grid can respond to frequency fluctuations the less the overall quantum of fluctuation. So it is likely that in the future batteries could not only provide cheaper solutions, but also very rapid response which will reduce the overall response requirement.

Another conclusion is the nature of the market for ‘system needs’ is still very unclear. Not only is there a huge range in the size of the market but National Grid has put up for debate key questions we might have hoped they might be further advanced on: how long will contracts be for; what procurement methods will be used; and how can they encourage wider market participation and new business models such as demand aggregation and regional markets?

Regen is currently working on a new paper on co-location of storage with renewable generation and demand that will examine the impact of SNAPS on these business models more closely – we will be publishing the paper in September with our partners: Vattenfall, Triodos, Green Hedge and TLT.

Author: Merlin Hyman and Johnny Gowdy

Contact: jgowdy@regensw.co.uk