Mark Meyrick, head of trading & smart grids at Ecotricity details why the company has launched a flexibility business and what sets it apart in the market in this sponsored post.
Last year, Ecotricity partnered with experienced German smart grid, or virtual power plant (VPP), operator, Next Kraftwerke, to launch our own flexibility platform.
The new platform is designed to provide flexibility not only for Ecotricity and our power portfolio, but also for business partners and supply clients. It’s a proven model that has been a material revenue earner for thousands of businesses in Germany over the last eight years: the platform wirelessly connects thousands of businesses, energy generators, and energy storage systems, remotely monitoring the energy grid and making small adjustments to these assets.
Why the move into flexibility platforms?
As a green supplier entirely dependent upon renewable power, developing a smart grid is a particularly important piece of work for us, as we seek to embed more flexibility into our power portfolio. For Ecotricity, it’s about strengthening our commitment to generating renewable energy that works for our customers – and the grid.
Our entry into the flexibility market is a first among the independent supply sector, which has typically been characterised by aggregators, now either being swallowed by bigger players, or taking out supply licenses in an effort to access other income streams, such as the traded and balancing markets. For these aggregators, theirs has largely been a non-risk presence in the ancillary services market, sharing income with their clients on a best-effort basis.
However, at Ecotricity, we need to develop this proposition for ourselves, not least to enable some of our storage plans, so it’s useful to be able to offer such additional income stream possibilities to partnering businesses, who can see we’re invested and fully committed.
With this in mind we have initially connected up our 6.9MW windfarm at Alveston in South Gloucestershire. This asset is being deployed for traded and balancing markets, as well as frequency response.
Critical to its successful participation in the VPP is the ability to accurately forecast generation output as well as very short-term prices – and then to control the asset activity 24 x7 in conjunction with those forecasts and our proprietary ‘bot’ which interfaces with our flexibility platform, and is critical in controlling renewable and Demand Side Response (DSR) assets.
Demand-side response and energy storage
The VPP controls not only generation assets, such as our wind farms, but also DSR customers and the storage assets we have in development. It will also be a key element of our domestic offering, harmonising smart EV charging, domestic PV and domestic storage, as well as providing DSR income to our business supply sites. We believe that an offering for business clients incorporating DSR activity with their supply will be leaner and cleaner for clients, both in terms of billing and metering, and also because any DSR created imbalances won’t trigger any tolerance/‘take or pay’ clause penalties.
A big problem faced by owners, or prospective developers of renewable assets and DSR providers, is that it’s very difficult to model the business case to see whether involvement in a third party VPP, such as ours, is really worth it. Revenue streams are complex and constantly changing, either in their design or value.
For this reason, it’s a crucial part of the process to model the revenue stack for our clients, sharing the assumptions and being very transparent as to how that revenue stack is created – and what we think it’s worth. We do this after we’ve made a site visit and examined the essential and optional loads with the plant manager.
This is important, because we know that in the past aggregators have over-promised and under-delivered in many cases. In some extreme cases, aggregators have sought to penalise their clients for wanting to run their plant at times that differ from the aggregator’s wishes. Our scheduling ensures a client’s ‘must run’ load is never impacted.
A healthier grid – better for everyone
Our experience as a supplier in managing our power position will be a major plus, because VPP performance will be a function of how well we optimise the revenue stack, which is very much a function of good forecasting for short-term system needs, a necessary part of what we do as a supplier. In addition, we’re able to spot the most valuable opportunities in the market and optimise the flexible assets of our customers to capture them.
We’re excited to be working with such an innovative partner as Next Kraftwerke, who have over 6,800 sites and 6GW of power under their control. Our proposition means lower costs or enhanced revenues for our partners and clients, as well as enabling the further deployment of battery storage and renewable generation into the market – a vital part of the UK’s journey towards a cleaner, smarter grid.
If you are interested in unlocking additional revenue from flexible assets, contact: Mark.Meyrick@ecotricity.co.uk