Flexitricity calls for end to Mandatory Frequency Response

Flexitricity founder Alistair Martin has called on National Grid Electricity System Operator (ESO) to phase out its Mandatory Frequency Response service, describing it as a “closed shop”.

Martin said balancing and ancillary services should only be procured through open markets to maximise competition and provide the best value for money.

As suggested by the name, all large generators connected to the transmission network are required to offer Mandatory Frequency Response but the service is not open to other types of resources.

By contrast, Martin said: “Firm Frequency Response and all of the other forward-contracted frequency response types are open market. Anyone with the technical qualifications can offer those.”

“Put simply, the rest of the market feels that the smaller the pool that you fish from, the less likely you are to achieve a competitive price, and so the open markets for frequency response should be the only markets for frequency response,” he explained.

“You should not be procuring frequency response in an area where only a subset of the market can offer it because you cannot possibly get the best price that way.”

Martin said one reason the ESO still uses Mandatory Frequency Response, the oldest of its frequency response services, is it can be procured at short notice when an unexpected need arises. Firm Frequency Response is contracted a month ahead but: “You don’t know everything you need a month ahead. A day ahead you know a lot more.”

The ESO is currently in the process of introducing a suite of three new “end-state” frequency response services – Dynamic Containment, Dynamic Regulation and Dynamic Moderation – to replace the established services. Their introduction is part of a wider programme to overhaul of balancing and ancillary services as the ESO seeks to make the power grid ready for zero carbon operation by 2025.

The first of the three – Dynamic Containment – began operating in October 2020. The inaugural Dynamic Regulation auction is scheduled to take place in April.

As a faster acting service, providing a response in under a second, Martin said Dynamic Containment fulfils a different function to Mandatory Frequency Response. He said its role could be performed by Dynamic Regulation and Dynamic Moderation but they will need be procured with sufficient granularity and close enough to real time: “The more that National Grid increases the day-ahead frequency response procurement, the more able they will be to buy shape of response as opposed to lumps of it.

“And if they buy shape, then they’re shaping it to fit their needs over the course of a day, therefore the less and less need they will have to dip into the Mandatory Frequency Response market.”

When asked whether it plans to phase out Mandatory Frequency Response and replace it with the new services, a spokesperson for the ESO said: “Mandatory Frequency Response is a crucial requirement and an essential part of our toolkit to ensure the security of the system in real time to ensure sufficient response is held and meets our frequency policy at all times. Our plans on how and when the new response services will form a part of this will be published at a later date.”

Martin said until it does, the ESO’s work to reform balancing and ancillary services will not be complete: “That means you haven’t finished. That means you haven’t got your procurement sufficiently sophisticated yet so please keep doing it, please keeping moving, because you can’t keep this on the books – it’s an exclusive product.”

Regarding the wider reforms programme, Martin acknowledged the scale of the challenges involved, saying he is “very happy with progress”. However, quoting Daft Punk’s famous song, he urged the body to go “harder, better, faster, stronger.”

He said the ESO has done “some quite transformational things” in terms of widening access to the Balancing Mechanism.

Flexitricity was the first aggregator to trade in the Balancing Mechanism as a Virtual Lead Party – a newly created role allowing signatories to the Balancing and Settlement Code to operate aggregated units – sometimes referred to as ‘virtual power plants’ – without becoming the registered supplier for the component assets.

Martin lauded the ESO for opening up “a fairly huge and complicated dataset in the dispatch transparency information.”

But he noted: “As we dig into that dispatch transparency dataset and as we deal with our operational experience with a wide variety of different assets, what we see is that dispatch transparency is not the same as dispatch efficiency.”

Martin said the Electricity National Control Room “does not yet dispatch everything in merit that is technically capable of delivering the best value service for the need that’s there.”

“They absolutely have moved and they’ve moved an awfully long way down that road but the journey they still have to undertake is quite substantial,” he added. “By opening up that dataset they allow everybody to analyse how well they’re doing, how efficiently they’re doing it. They’re living in the open now. That’s very much to be praised.

“We need the next step which is to continue to accurately find areas of dispatch inefficiency and to correct those. It’s almost certainly a combination of control room operation and operational practice on one side and IT on the other.

“Looking at the records for our assets and comparing those to the dispatch transparency dataset, we can see plenty of instances where our customers assets were in merit, technically capable and didn’t get used.”

Accordingly, Martin also urged Ofgem not to scrimp when it comes to authorising investment by the ESO to upgrade its systems, saying this will save money for customers in the long run.