National Grid has won plaudits for overhauling its suite of balancing services. But some industrial firms worry that what they have done for years may no longer be as highly valued – and could do with some pointers on emerging opportunities.
Breedon Cement’s Hope Works has been providing DSR for around 20 years, according to optimisation manager, Spencer Green. It can shed about 14MW of load via four large motors participating in Frequency Control by Demand Management (FCDM).
However, says Green, the “Damoclean Sword” hanging over FCDM – the scheme is set to close at the end of this year – places a question mark over Breedon’s future DSR participation.
“FCDM has worked well for us in terms of the level of forecasting required and the amount of revenue it generates versus the inconvenience to production plant,” says Green. “We are trying to determine whether the newer frequency products still fit for us.”
Flex versus production
He thinks the company, while it cannot deliver bi-directional flexibility, can still provide some value. But Green is concerned that if auctions move closer to real-time, it could prove too difficult to balance flex provision with core production needs.
“If the auctions become weekly, daily, or even half hourly, it reaches a stage where it is either a full time job for somebody – which is not the game we are in – or it is time to leave it to the professional demand-side responders,” says Green.
“That would be a shame, but ultimately we have to make a quality product. Starting and stopping a continuous process heightens the risk for us, in terms of meeting quality criteria.”
Green says the firm could look at letting an aggregator control the flex within Breedon’s industrial boundaries, but thinks intraday markets may prove too challenging given that unplanned events do occur on manufacturing sites.
“It would depend on the level of autonomy we would have. Right now, we can simple say we are not available. In the new schemes it would depend on the penalty regimes, how non-availability penalties would affect us.”
As a seasoned Triad avoider, Green is confident that Breedon can avoid racking up Capacity Market (CM) charges over winter. In terms of CM participation, the company signed up last year, but will not offer capacity over the coming winter due to the low clearing price.
“It wasn’t worth the production pain,” says Green. “We’ll miss the revenue but it wasn’t ingrained into our finance plan and we will take a view [on participation] year to year, depending on the price.”
Green says Breedon has discussed with energy suppliers the possibility of making money from flexibility in the wholesale markets, or “taking National Grid out of the loop,” as he puts it.
“With a supplier you have more of a relationship and understanding about what you can and cannot achieve. We are looking at some of those options, but it tends to be something you can only do with your incumbent supplier, so it depends how far down that road they are,” he says. “But I imagine they are all starting to work on those propositions.”
How could market participants help convince those with flexibility that they are not wasting their time?
“Just provide some clarity on what we can and cannot do,” suggests Green. “Explain a means of valuing our offering in comparison with others so we know where we sit in the market.”
That would enable I&C firms to determine a “realistic evaluation of what we can contribute to system stability and performance” he says.
DNO flex schemes
Green suggests DNOs have a role to play as they look to start procuring flexibility, especially if they can provide some certainty with set services and requirements. But he says engagement would be a useful start point.
“Are we in a geographically advantageous position, or does it make no difference whatever we do? Understanding the local situation as opposed to national schemes would be of some benefit,” he says.
“Some DNOs seem to be more proactive than others. We’ve not had contact from ours regarding anything of that nature.”
This article was originally published in the 2018 DSR Report. The report includes a number of other qualitative interviews as well as a quantitative end user survey about demand-side response.
It also includes the views of National Grid, energy companies, aggregators and consultants. Download it here, free of charge.