After a competitive tender process, Piclo has been selected by National Grid to run a Local Constraint Market (LCM) in a move to clamp down on one of the fastest rising constraints costs of operating the power grid in the UK.
The new initiative will allow Scottish homes and businesses to benefit by helping to manage peak wind energy flows and participate in creating a local marketplace that diverts extra wind power into local assets at times when southward flows are at capacity – benefiting everyone from those who are charging EVs, businesses with battery storage and even iconic Scottish pumped hydro stations that have pioneered renewables in the region for decades.
The new market will bring operating costs down for critical transmission grid balancing and redirect money back to customers at a time of high energy prices. In addition, it will support more local, low cost, energy to be used as prices soar as a result of the war in Ukraine, the recent cold weather and the closure of Nord Stream 1.
James Johnston, CEO at Piclo said, “We cannot address the energy crisis or reach net zero if we continue turning off wind power at a time when power prices are soaring. Currently it must be done because there is simply no mechanism to divert that power. Now with the Local Constraint Market we can work with National Grid ESO to give local businesses, consumers, and industry the opportunity to absorb that power that would otherwise be wasted, while reducing costs in the process.”
The Piclo Flex platform will manage the end-to-end flexibility process for the new LCM, including operating a day-ahead market and facilitating the dispatch, settlement and payment for flexibility services.
LCM – a part of National Grid ESO’s 5-Point plan – is a key factor in managing transmission constraints and helping to tackle rising consumer and transmission network costs. Currently, the majority of constraint management actions are taken through the Balancing Mechanism (BM )of which some of the fastest rising are located in Scotland. The service is targeted specifically at the B6 boundary with the objective of reducing the annual constraint spend.
Johnston continued, “This is a game-changing moment for Piclo, with our independent marketplace solution now poised at the centre of enabling TSO and DSO flexibility needs to accelerate decarbonisation and bring down costs for consumers.”
Currently, the Anglo-Scottish B6 boundary has the highest constraint cost across the GB network, with costs expected to increase as a result of forecasted renewable generation growth in the area. The LCM will initially focus on helping manage this highly constrained area by introducing an independent marketplace, Piclo Flex, to widen access to new sources of flexibility.
The LCM plans to ramp up early in 2023 on Piclo Flex and will be especially relevant for Flexibility Service Providers with assets located around the B4-B6 border, including smaller assets that fall below the usual 1MW minimum requirement threshold for BM participation.
Interested parties are encouraged to register their interest on Piclo.Energy and subscribe to National Grid ESO’s Future of Balancing Services newsletter for more information. Further information from the ESO is published here https://www.nationalgrideso.com/local-constraint-market.
Claire Dykta, Head of Markets at the ESO said, “We were glad to see competitive bids from 3rd party platform providers to support the delivery of this initial Local Constraint Market. Piclo promises a fast-start solution and we look forward to this helping ESO target rising costs and unlock further provision of flexibility services from distributed assets.”
National Grid ESO joins a growing list of leading utilities adopting Piclo Flex as the independent marketplace for flexibility services, including the UK’s UK Power Networks, SP Energy Networks, Electricity North West, the United States’ National Grid, Portugal’s E-REDES and Lithuania’s Energijos Skirstymo Operatorius (ESO).