Social Energy bags fully domestic frequency response contract in weekly auctions

Social Energy has become the first company to a win a fully domestic contract as part of National Grid’s two-year trial of weekly firm frequency response (FFR) auctions.

The 4MW contract will be fulfilled using a fleet of batteries installed in customers’ homes. The supplier had previously secured fully domestic contracts for FFR in 2019 but within the already established monthly auctions held by National Grid Electricity System Operator.

The company said the contract will cover four fifths of its available domestic battery capacity.

“Social Energy has got just over 5,500 houses that are enrolled in our grid services programme, and of those, we have 5MW regularly tender into the monthly FFR auctions,” explained the firm’s chief technology officer Steve Day.

“Those same 5MW are eligible and are now participating in the weekly auctions as well. Every megawatt for us is roughly 500 to 600 homes. It varies a little bit. We’ll adjust the composition of each megawatt depending on the particular circumstances of the customer and the availability of their particular asset – the battery in their home – to deliver those services.”

He continued: “The nameplate capacity, if you like, is much higher and we basically allocate a proportion of the power their inverter has available for frequency response. But that is a very dynamic process, and by that, I mean we will minute-by-minute optimise what each individual battery is doing, between contributing to an FFR contract and doing something else.

“That something else could be another flexibility contract that we’re performing or it could be providing self-consumption benefit for the homeowner, discharging the battery to meet a load that’s turned on in the home or to soak up some excess solar that’s being produced by panels on their roof.”

Although the coronavirus pandemic has slowed growth, Day told Utility Week they are currently increasing the size of the battery fleet by around a megawatt every couple of months. He said a typical customer could expect to earn around £120 per year by providing the service, with payments being received as a credit on their energy bill.

“We’re trying to make it as fit and forget as possible but it’s fair to say we’re learning by doing; trying to understand what customers are comfortable with,” he added. “In the first instance, they are sold the entire proposition and they participate in everything. If they tell us that actually they’d prefer their battery doesn’t do this or does more of this, then we will do our best to accommodate them and have done in the past.”

Day said they are now regularly bidding the batteries into to both the weekly and monthly auctions. He said the addition of the weekly auctions has brought more opportunities to generate value from the batteries: “If we have to bid into a monthly auction, we get one opportunity once per month to bid into that. Actually, we’re pretty successful at it, but if we’re not, we have to wait for the next month before we can bid again.

“With the weekly auctions, we have a second bite of the cherry. We can bid more frequently to ensure we can capture as much value as possible for our customers and sometimes there are price advantages between operating in those two markets.”

Day said energy markets have become much more open to domestic flexibility in the last few years: “I’ve been doing this for a long time since back in the days when no one really took seriously the prospect of domestic assets providing these sorts of balancing services and a lot has changed since then. It’s business as usual now for Social Energy to be doing this only with domestic assets. A lot of the barriers have come down.”

He said Social Energy is also using the batteries to provide flexibility to distribution networks and is preparing to enter balancing mechanism as well. In the case of the latter, Day said the company previously planning to do so through its role as a supplier but is now considering registering as a virtual lead party.

He said the latter option would allow them to provide services to third parties, adding: “We are in discussions with a number of parties to deliver the sorts of services that we’re skilled at doing for them as well as for ourselves.”