Western Power Distribution (WPD) currently posts requirements for its increasingly unremarkable commercial flexibility tenders on a six-month cycle – usually in February and August.
However, the procurement itself takes place on weekly basis. Participants provide their availability by midnight on Wednesday, the company accepts the volumes it needs the next morning and delivery begins on the following Monday.
WPD launched its Intraflex project in November with the aim of testing closer to real time procurement using the NODES platform developed by the Nord Pool power exchange and Norwegian energy company Agder Energi. In August, the network operator began the first of two trials of the platform, which will last until the end of September.
“We do acknowledge, we’re very much at the starting point of this work,” says Watson. “For the initial trial we’re running – so the trial that’s running over August and September – we are putting our requirements up on the platform on Fridays and Mondays.
“On the Fridays we’re procuring for the week after, and on the Mondays, we’re then doing Wednesday, Thursday and Friday.”
Watson says NODES is a constantly clearing marketplace, meaning contracts can be agreed immediately after they are posted: “We’ve had some that have been clearing within half an hour.”
That said, the gap between procurement and delivery is a bit longer for the time being: “We’re still not actually super close to real time – we’re a couple of days ahead – but there is scope to push that closer.”
“We thought, we’d start by trying to get something at the simpler end of things up and running and get some actual operation experience,” he adds; “check it works, check that we have the capabilities, check that participants have the capabilities, and go from there.”
Speaking to Utility Week around half-way through the trial, Watson says things have been going well: “Even in the few weeks that’s we’ve been operational there’s been lots of interesting learning. There have been thing that have happened that we weren’t necessarily expecting. But that’s the point of these trials and most them have been really quite interesting.
“In the next month , we’re going to increase the volumes that we’re putting on there; try to procure a bit more and in cleverer ways”.
“Part of what we’re trying to understand with trial is: who is it useful to,” he explains. “Does it bring additionally volume? Does the additional complication offset the value you get from that?”
The second trial will begin in spring 2021 and will see company explore day-ahead and intraday trading. It will also test a new function of the NODES platform that is designed to prevent trades from creating an energy imbalance at the national level.
“Whilst balancing mechanism providers of ancillary services see their positions adjusted following calls by the ESO, there is no such process for the DNO,” WPD explained in a registration document for the project, which is being supported with funding from the Network Innovation Allowance.
“With current volumes of DNO-called demand-side response limited, this imbalance is lost in the noise. However, as volumes increase a process to account for them would allow for the whole system cost of the action to be reflected.”
Watson lays out the end goal: “Ideally, we’d be in a position where participants are proactively putting a number of bids onto the platform that are constantly updating as market information changes. And then as we need it, we can see what’s available and buy and you could do that at any point in time.”
But WPD is also looking at the other end spectrum – procuring flexibility further in advance– as part of the related but separate Future Flex project. The hope is that this will bring forward even more flexibility, in particular from domestic assets, pushing down prices.
“There are different approaches to how people engage with the domestic side of flexibility,” says Watson. “Some people take a more simplistic view and that’s where Future Flex will be in its element.”
Watson said domestic flexibility will obviously involve much larger numbers of assets: “What we’re trying to do there is make things as simple and low cost per entity as possible because obviously you need the scale on the domestic side.”
The Future Flex project is at an earlier stage than Intraflex, with the first of its two trials set to begin in November. Watson says they are still in the process of recruiting participants.
Despite their differences, he says the two approaches are primarily trying to meet the same need for pre-fault management of network congestion, which accounts for the “vast majority” of WPD’s flexibility requirements.
“We’re intrigued to see where the value sits for different types of participants,” he adds.