Arenko has claimed using battery storage to provide reserve could save consumers as much £195 million per year after National Grid Electricity System Operator (ESO) published the results from a trial last year.
The company, which has developed an automated trading platform, approached the ESO to offer its assistance following its announcement in April that it was launching a new downward flexibility service to help cope with the drop in demand resulting from the coronavirus pandemic.
“What we saw last March was demand for power came down quite considerably because people weren’t in their offices whilst the first lockdown happened – industry went quiet – so it was really just being driven by domestic demand,” said Arenko chief executive Rupert Newland.
“That increased the proportion of renewables in the system and so suddenly the grid became much more volatile as a result and much more fragile to imbalances, either in terms of additional power coming because there’s lot of wind or because there’s no wind and there wasn’t enough power on the system.”
He said the ESO had to “scramble around” to make room on the system for the gas turbines typically used to provide reserve, launching the new Optional Downward Flexibility Management service to “switch off renewables” and signing a deal with EDF to limit output from its Sizewell B nuclear plant.
“We said to them this is absolutely crackers,” Newland told Utility Week. “We’ve got batteries here today and we can provide that same service. The response was that batteries are limited duration which is why we haven’t procured them as reserve before.”
The ESO nevertheless worked with Arenko to design and trial new reserve service for batteries, initially with the software company as the sole participant.
The third and final phase of the trial – covering 20 days in September – included one battery operated by Arenko and two by Habitat Energy, with combined import and export capacities of 110MW and 106MW respectively. A fourth battery operated by Flexitricity with an import/export capacity of 49MW also joined for the final three days.
According to the results published by National Grid, the batteries were able to provide reserve at a lower cost in 80 per cent of settlements periods, saving a total of £0.68 million. Arenko said this represents a 40 per cent reduction when compared to business as usual.
The ESO said the third phase of the trial saw “a wide range of operational and market conditions” but cautioned that “linear scaling of the savings would not be truly representative”.
However, Newland said assuming a reserve requirement of 2GW, this would suggest potential savings of around £195 million per year, adding that September was “a pretty reasonable average” for a full year: “Over the summer, there was a huge requirement for reserve, which had kind of settled down by the time September came around.
“And similarly, over the winter there’s a significant uptick in demand so September is really a shoulder month.”
He said the service provided by the batteries was “directly comparable” to the gas turbines usually used and that “we could basically just do it cheaper and more effectively.” By managing their state of charge “reflect what’s going on in the system”, they were able to provide the service “for five or six hours at a time”.
“Most of the time with reserve you’re on standby,” he noted.
The ESO said it will now consult with industry to “consider the next steps in realising these savings for the end consumer on an enduring basis.”
Newland said they now want to the chance to be able to compete against gas turbines outside of trials: “We want to be up against everyone. We think one of the key benefits of this is that it drives competition in the industry. That’s very positive for consumers and we believe that batteries are the very best thing to be able to provide this service.”
He said: “This type of service is right at the centre of the grid; it’s right at the centre of providing a pathway to a zero-carbon grid importantly; it’s of huge value to the consumer; and it represents a very large new market for batteries to operate in.”
Newland said the market could offer a “solid return” for batteries “and could certainly spur significant investment into the sector.” He noted that reserve can be stacked with other services and markets, something they did throughout the trial, first offering a price to the ESO and then looking elsewhere if it wasn’t accepted.
He said “a lot of our day-to-day stuff is in Dynamic Containment” – the first in a new suite of three frequency response services being launched by the ESO: “National Grid have just opened up the ability to stack that with the Balancing Mechanism.
“We’ve been stacking the Balancing Mechanism and Dynamic Containment, and in theory – obviously depending on the structure of the market – you could stack reserve with Dynamic Containment in the future.”
“The key is having really sophisticated software,” he added. “That ultimately determines the returns for batteries in any of these markets and the ability to be able to stack and move between markets is crucial.”