National Grid head of commercial operations Cathy McClay believes the system operator’s 2020 target to achieve up to half of grid balancing from demand-side sources rather than large power stations is “totally achievable”.
Speaking at the DSR Event in London, McClay said that National Grid was also looking at longer-term contracts for demand-side response or balancing service providers.
McClay said she “was not a fan of 10 year contracts” because they risk locking in obsolescence in a system changing faster than people imagined.
By way of example, she cited projections in 2012 of some 4GW of solar PV on the system today. The actual penetration of solar PV is now approaching 14GW, said McClay.
However, she pointed to the recent Enhanced Frequency Response (EFR) tender, which allocated four-year contracts, as evidence that National Grid, is prepared to look at longer terms.
“[The EFR contract lengths] were very successful, because be achieved very good prices,” said McClay. “We are looking at how we can give the market confidence that [DSR] is not just the latest fad and will not suddenly go away if they invest.”
“So we are looking at approaches for longer term contracts. But there has to be a sweet spot somewhere in between [10 years and two years],” said McClay.
In the longer term, McClay said National Grid would prefer “to move to markets where possible rather than tenders, but that will take time”.
She said that National Grid would be working to improve market participation by clearly signposting what it will require over the next few years.
“The other way you can give confidence is by having a visible, transparent and liquid market. So we are going to be doing a lot more work this year on explaining how much of these services we think we will need – over the next five years at least – and how much we have already procured,” said McClay.
“If we can do that, then people will understand that it is a steady, sustainable opportunity for them.”
Cathy McClay was speaking at a conference on demand-side response organised in conjunction with a new DSR market report. The report contains a survey of 200 end-users, as well as the views of National Grid, aggregators and suppliers, and other market experts. Download it free of charge, here.
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