Compare the flex market: Piclo lands Beis funding for next phase

James Johnston: If it can be traded, it will be traded

Piclo is preparing to launch the next phase of its flexibility platform, a genuine marketplace that enables people to bid into multiple tenders – and trade their commitments.

It will also provide ‘compare the market’ type functionality for people to strike standardised and simplified flexible PPAs – using historical data to rate providers.

The company has secured £562k of government funding to build the marketplace, which CEO James Johnston said is now “exiting stealth mode”, though the trial is unlikely to launch officially before summer.

Trade deals

To date, Piclo has focused on DNO flexibility services, encouraging those with flexible assets to register them on the platform and bid into relevant procurement rounds and secure contracts to help balance local grids.

Now it has built out the sell-side of the market (some 250-plus registered flexibility providers), it is working to add more on the buy-side. This includes secondary trading of ancillary services such as Stor, where contracts can now be transferred after National Grid ESO adopted a rule change.

More services, including trading flexible connections, will be added, though “it’s not going to cover everything to begin with,” said Johnston. “We need to prioritise the low hanging fruit.”

However, the types of product that can ultimately be traded on the marketplace will only be limited by contractual rules – if they are allowed to be traded, they will be traded, said Johnston.

Compare the flex PPA market

Later this year Piclo aims to launch the flexible power purchase agreements (PPA) aspect.

Asset operators and developers seek offtake agreements with a licenced entity so they can access all markets. They can choose from a variety of providers, with some aggregators now holding supply licences.

But it is not always a transparent process and the market lacks standardisation.

Piclo aims to enable a standard format and process to take place on the platform so that flex asset providers can pick a partner according to their merits and ultimately use historical performance data to inform decisions.

Value and visibility

Putting everything in one place via a single interface for traders is one of the platform’s benefits, said Johnston. Common processes and market transparency encourages participation, he added, and Johnston believes that greater transparency on offtaker performance “can only help developers attract finance to complete their projects”.

He thinks the marketplace can also add value to market participants through better co-ordination.

“For example, if flex providers are sharing the latest availability of their assets in order to secure transfers of Stor contracts, that visibility is useful to DNOs in their planning,” said Johnston. “So it adds value and helps them to co-ordinate.”

He added that the standardised DNO contracts the ENA is working to deliver will also be integrated into the platform when they are ready.

Competition is good

There are now several other flex marketplaces vying to enable similar multi-faceted trades, such as Centrica’s Local Energy Market in Cornwall, and the Nodes market platform, a joint venture between Nord Pool and Norwegian utility Agder Energi.

Johnston has always argued that competition will drive innovation.

“It is very useful to have emerging platforms. If you think about standardisation in a transitioning market it will lead to bad results,” he told The Energyst in 2018.

“But I believe there will be natural consolidation. Look at the stock market, it is not a regulated monopoly but there are only two in the UK. I think that will eventually emerge in flex. There are a small number of parties focusing on different niches, so let that play out,” said Johnston. “And if there weren’t any other players, we would be quite worried.”

That view has not changed, he told The Energyst this week.

“The biggest challenge competitors face is not each other, but trying to move the market forward; trying to create the liquidity and volume of transactions, that is our shared goal,” said Johnston.

“Emerging competition and approaches are very welcome. All the [flex] platforms are subtly different, and as long as we continue to grow and learn from each other, right now there is definitely room for multiple platforms.”

In the meantime, Piclo also has international ambitions.

“I can’t say anything right now, but we have a lot of plates spinning globally,” said Johnston. “Watch this space.”

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