System operator takes steps to address excess generation in response to COVID-19

With demand for electricity presently suppressed compounded by seasonal reductions to levels of between 13-15GW, National Grid ESO (NGESO) is to seek approval urgently from Ofgem to change the Grid Code to allow it to instruct electricity distributors (DNOs) to disconnect embedded generation as a last resort. The change proposal – GC 0143 “Last resort disconnection of embedded generation” – was brought forward by it on 30 April and was discussed at a specially convened meeting on 1 May.

The Grid Code Review Panel approved the majority decision to seek urgency, and there was subsequently an exchange of letter’s with Ofgem. Urgency has now been approved by the regulator. Comments on the proposal (here) are sought by close of business Tuesday (5th May), and National Grid is aiming to submit its modification report to the regulator by close of business Wednesday (6th May). Its hope is that approval will then be forthcoming, and the change will come into effect ahead of the bank holiday weekend.  

But NGESO has also fast-tracked a new flexibility service, the snappily titled Optional Downward Flexibility Management service, which in key respects is a revival of the old demand turn-up arrangements that flattered to deceive between 2016 and 2018 before being killed off because of a lack of sufficient market interest. 

These proposed changes have come out of the blue, and some of you may have seen my recent comments on twitter at @newangliaenergy questioning their handling, but it looks as if both interventions will go live by the end of the week. This article sets out my views more fully.

What it says on the tin – GC0143

Criteria for allowing urgency are very specific, and they are intended for big-ticket items or those with material time-specific impacts outside of normal modification timescales. That said, NGESO says the GC0143 change is essentially clarificatory, designed to make explicit that emergency actions can be applied via the DNO to push embedded generation off the system (as well as demand, which are already subject to the rules set out in OC6). Accordingly, it would give the system operator unambiguous powers to instruct distributors to disconnect generation connected to their networks and these instructions would be legally binding. 

Details in the proposal are pretty sketetal. The instruction could apply to a specified embedded power station or stations. It could be to disconnect generation “supplied via one or more specified grid supply point(s) with an aggregate registered capacity of a specified value” provided it does not exceed the local total; or “a specified proportion of the aggregate registered capacity”. The change would be operationalised ordinarily by a phone call.

NGESO notes that, whilst it is hoped never to use this power should it be confirmed, implementation of this modification is sought by 7 May 2020 due to the period of low demand that is anticipated starting over the Bank Holiday weekend commencing 8 May. A sunset clause has been included that will time-out at clock change on 25 October 2020. A more enduring solution will be progressed in the meantime. 

Difficult times

The pandemic has led to demand for electricity falling by up to 20% compared to recent seasonal values. National Grid has been open about the operational challenges it has been facing. On 20 April, for instance, it turned off 1.8GW of wind and instructed pumped storage operators to use power to pump water up hill. It also made extensive use of interconnectors to export power, but even then had to bring onto the system large swathes of biomass and CCGT generation. 

NGESO is therefore also seeking to mitigate the operational risks due to this by establishing a new service for downward flexibility management (which some term a “footroom” service). It has already made fast progress and will go live with the new service from 7 May, paying industry players to reduce generation export or to use more import power over the summer. This service requires a minimum 1MW commitment (which can be aggregated if from the same grid supply point) and the ability to deliver for three hours. The MW requirement will vary daily, but it anticipates this will be between 0-3GW and that it could need the service on above a third of days over the period from May to end August.

Providers cannot double-dip. They are not permitted, for instance, to be separately registered as balancing mechanism (BM) units, or otherwise active in the BM and they cannot be participating in or contracted to any other balancing/flexibility or related service during periods when the service is offered. Similarly, they cannot be signed up to a DNO’s active network management scheme or a flexible connection. Eligible aggregators and service providers will welcome NGESO’s decision to treat the service as an ‘applicable balancing service’. That means, unlike the original demand turn-up service, which saw diminishing take-up summing less than 600MW in total over three annual contracting rounds. providers will not be exposed to imbalance price risk.

But National Grid evidently believes that this new service may not be enough or take-off quickly, and the GC0143 proposal is clear that it wants the ability to make emergency instructions for distributed generator disconnection as the present position “is ambiguous and would potentially leave DNOs in a position that they would feel exposed … to legal risk”. Or more likely that it is likely to face such risks itself.

Far from ideal but …

Obviously, the system operator must have latitude to intervene to preserve the system and security of supply. It does feel anomalous that larger generation that either offers into the BM or holds balancing service agreements with the system operator to come off the system would be compensated. But the fact is that there is no similar basis to compensate local generation (assuming it can actually be pushed off the system). 

The Grid Code proposal is also silent on the relationship with the ODFM service. A revival of demand turn-up in combination with generation turn-down) of course could provide a safety valve, while potentially allowing local generation to continue to harvest benefits from its investment. Aggregating local distributed generation up to 1MW is likely to be impractical or impossible for most local sites at least for the foreseeable future, and it is unlikely that a liquid market will develop in a matter of weeks with other pandemic fall-out. But it is good to see NGESO dipping its toes in the water again, and the sunset clause attaching to GC0143 should help focus its mind to develop a more enduring replacement service later this year.

As ever these developments do raise important questions around industry code governance. It is concerning that it took over five weeks into the lockdown to bring the Grid Code proposal forward, and the wider industry has been given two working days to consider it. It’s not as if we don’t know when bank holidays are coming. As for the new flexibility service, this is not subject to any formal industry governance, which continues to be anomalous.

Another point on governance. GC0143 as it presently stands has nothing in it other than the change to the words to the Grid Code itself (no metrics, examples, impacts or mitigations are discussed to assist the market assimilate a complex and important rule change). While that of course is the job of the modification report, there is nothing of any real substance in the proposal itself that will aid interested parties to understand the change and its potential impacts. And the Grid Code Review Panel doesn’t have DNO representatives on it, so there is a prospect that an important modification will go the Authority without an official distributor perspective in it. 

You have until close today (Tuesday 5th May) to offer any views on GC0143. The Authority will be asked for a decision by close of the 7th.