Electricity networks agree standard flexibility contract

The Energy Networks Association has released a draft version of a standard flexibility contract agreed upon by all six of the distribution network operators (DNOs) in Great Britain, along with the electricity system operator at National Grid.

The document is based on existing contracts and agreements and was developed with the help of the law firm CMS as part of the ENA’s Open Networks project.

According to the ENA, the contracts will “boost confidence and participation in local markets for flexibility by building a level playing field, with liabilities and indemnities capped at contract value”.

The industry body said a second version of the contract that aligns more closely with the ESO’s needs will be launched later this year following further consultation, and that a review will be held in 2023 to decide whether it should be codified.

ENA chief executive David Smith said: “Britain already has one of the most reliable networks in the world and as we transition to a much-needed future smart grid, the Open Networks project is looking at ways we can speed up connections, encourage new flexible energy markets and help deliver net zero.

“We’re already moving towards a more dynamic energy system where simplicity for customers and operators will encourage new, faster connections. A common contract for flexibility represents a real milestone in our transition and will help and encourage vital new local low carbon resources to be providing energy to our system.”

Andrew Roper, ED2 director at Scottish and Southern Electricity Networks commented: “This is a welcome step forward and will give increased confidence to flexibility providers, and those interested in providing flexibility, to play an active role in the UK’s energy system. The cost-effective transition to net zero will require utilising flexibility in the energy system. Contract standardisation will make it easier for networks and customers to work together in achieving that common goal.”

The ENA has also released new figures showing DNOs plan to procure almost 2GW of flexibility over the course of 2020, compared to around 275MW in 2019 and nearly 120MW in 2018.

The DNO most hungry for flexibility is Western Power Distribution (WPD), which plans to buy two-thirds of a gigawatt during the year, followed by SP Energy Networks and SSEN, which each plan to buy around half a gigawatt.

Last week, WPD announced the results of its fourth tender, awarding contracts for 94.8MW of flexibility and bringing its total to date to 217MW.

WPD network strategy manager Ben Godfrey said: ”Over the past two years we have sought to procure flexibility services regularly at six months intervals, and it’s great is that we are continuing to see an increase in interest and an increase to the contracted flexibility volume with each round. It’s clear that our approach to securing flexibility services is effective and it’s also a reassuring indication that the market for distribution flexibility is growing.

“The scale of requirements we sought to procure against this year and the volume of providers we now have in contract are the largest of any DNO to date, putting us at the forefront of distribution flexibility globally. But we recognise there’s more work for us to do. We’re dedicated to continue developing our flexibility offering so that it attracts more participation, across more locations.”