Centrica says local energy market platform could be rapidly adopted nationwide

A senior figure in Centrica’s ground-breaking Local Energy Market (LEM) trial in Cornwall has said the underlying platform could be rapidly rolled out across the UK by essentially “clicking a button”.

Product manager Sam Wevers was speaking to Utility Week after the company announced a “major breakthrough”.

Western Power Distribution (WPD) and National Grid Electricity System Operator (ESO) are now both procuring flexibility services through the marketplace it has created. The company claimed it is the first time anywhere in the world that local and national electricity system operators have done so through a single third-party platform.

The LEM platform allows buyers to place bids for flexibility services that are then matched through auctions with offers from sellers, which include 100 Cornish homes and 150 local businesses. The platform manages the whole process for both sides from contract creation through to baselining and settlement.

There are two sets of auctions – three-month, one-month and day-ahead for availability and day-ahead and intraday for utilisation. The first auction took place in early August.

They are carried out using a clearing engine developed by the Belgian company N-Side, which also provides the matching algorithm for the European day-ahead power markets.

To find an optimal solution and ensure all contracts are viable, the engine considers not only prices but a number of other factors including physical network constraints, parameters set by flexibility providers and potential conflicts between national and local service requirements.

Wevers said the LEM platform allows providers to easily customise their offers: “If I want to add more detail, then I can add in my asset parameter constraints.

“I can say this is my ramp rate, this is my recovery time, this is my minimum uptime etc. And then the clearing engine will take that into account and ensure that asset is not cleared for a contract that it can’t deliver.”

“When we talk about what the product is, it’s almost self-defined,” he added. “The sellers can restrict themselves down using their parameters if they want to, but if they just want to be very generic then they can do that as well.”

He said the platform also provides several ways to avoid or resolve conflicts between the service requirements of the ESO and WPD: “One of the things we’re trying to show is how, using a market platform, you can coordinate the two different buyers and their needs.”

“As National Grid, I can go into the LEM platform and I can see the bids and contracts that WPD has coming up over the course of the next days, weeks and months,” he explained.

“I can know that WPD has a downward flexibility service at a particular point in the grid at a particular point in time and I can use that to manage when I might to call on a service at a national level.”

If an apparent conflict nevertheless arises, the clearing engine uses a list of pre-agreed rules to try to find a workaround. If none can be found, then local needs take precedence.

Wevers said 50MWh of flexibility has already been delivered through the platform. The aim is to reach 300MWh of availability and 150MWh of utilisation by the trial’s conclusion in spring.

He said it could be rapidly adopted by other network operators afterwards: “It’s an inherently scalable and modular solution. If we import a new grid model, we can spin-off a new version of the LEM anywhere relatively quickly.

“It’s a complex platform that has a whole bunch of microservices sitting underneath it. But fundamentally, we can click a button and scale it up across the UK or overseas and that’s what are next steps are now – looking for those new projects.”

Colm Murphy, electricity market change development manager at National Grid ESO, said: “This phase enables distribution network operators and National Grid ESO to purchase flexibility services from the same pool of resources but also introduces checks to make sure our respective services don’t counteract or interfere with each other.

“This is expected to be increasingly important as we plan to make increasing use of flexibility services, which in turn raises the chances of conflicts occurring. It’s potentially a significant problem, so this trial is an exciting step to find a solution.

“It also allows us to find out how flexibility providers behave in marketplaces that have different rules and processes. We’re keen to encourage new players to join the market so finding out what they like and dislike will be useful in shaping future markets.”

The LEM trial was launched by Centrica in late 2016. In May 2018, the company announced it would test the use of blockchain to enable peer-to-peer trading between participants.

The following May, the British Gas owner revealed it had finished installing smart battery systems and solar panels for those that didn’t already have them in the 100 homes taking part in the trial and had begun aggregating them together into a “virtual power plant” to enter the flexibility auctions.