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National Grid confirms sweeping changes to balancing markets

National Grid has confirmed an overhaul of the grid balancing markets it operates, pledging to “rationalise” products such as frequency response and operating reserve.

In a letter to participants sent earlier this week, National Grid confirmed a series of decisions it had taken over eight markets in particular, having initially hinted at the overhaul within July’s ‘Systems Needs and Product Strategy’ consultation.

The letter, signed by National Grid's head of business development Claire Spedding, outlined the products the system operator intended to cull as well as a number of short term actions and forthcoming releases.

National Grid said that having assessed all products currently on the market, it had judged what was no longer required, mainly as a result of the need being met elsewhere. The SO will no longer procure any volume from these markets.

All existing contracts are to be honoured however National Grid is intending to reach out to participants to discuss possible alternative routes to market.

The eight products up for the chop include both the Enhanced Frequency Response and Rapid Frequency Response markets, which are to be rolled into an improved frequency response product in the new year, and the Enhanced Optional Short Term Operating Reserve (STOR) and STOR Runway tenders which will be replaced by a newly-designed STOR market.

Image: National Grid.

Image: National Grid.

National Grid is to follow up on this week’s letter with a number of ‘quick wins’ which it hopes will resolve some uncertainties caused by the cull. Before the end of the year the SO intends to clarify its requirements, publish guidance on how the mandatory frequency response market interacts with the wider assessment of FFR, improve its market information report, update and publish the assessment principles document and trial alternating between full tenders and month-ahead tenders each month.

This will be followed by a rollout of standardised timeframes in Q1 next year.

While expected, the confirmed retirement of the EFR market after just one tender will perhaps be disappointing to the UK’s utility-scale battery storage market. Last year’s tender was significantly oversubscribed and brought 200MW of battery storage applications to market, all of which will be operational before the end of February 2018.