National Grid Electricity System Operator (ESO) has awarded contracts worth £8.67 million to two companies to provide reactive power absorption in the Merseyside region over a nine-year period starting in April 2022.
It marks the first time the ESO has used a competitive tender to meet a long-term requirement for reactive power. They have previously been met using network assets, with more immediate needs being addressed through ad hoc tenders and trading with large generators.
Reactive power is produced or absorbed to control voltage on the network. Producing reactive power raises the voltage. Absorbing it does the opposite.
The growth of distributed generation and resulting drop in demand on the transmission network, along with reduced reactive power consumption on distribution networks, has led to greater requirements for reactive power absorption in places like Merseyside. The ESO said the closure of large conventional generators such as the Fiddler’s Ferry coal plant in Cheshire has also reduced the availability of services.
The ESO received tenders from 15 applicants and awarded contracts to PeakGen to install a shunt reactor – equipment specifically designed to absorb reactive power – and to Zenobe Energy to build a battery storage facility. It said their bids were weighed against the cost of providing the service using traditional network assets.
Speaking to Utility Week, Zenobe director James Basden said they currently plan to build a 50MW storage system at the Capenhurst substation near Ellesmere Port.
“This is the first truly long-term contract that National Grid has ever provided,” he remarked. “It’s a long-term contract that enables us to secure the capital to be able build new assets.”
Basden said whilst the tender has determined where the facility will be built, it will not be the battery’s sole source of revenue. It will also earn money from the capacity market and other balancing services such as frequency response: “We’re bringing lots of different revenue streams together. We will provide reactive power for which we get paid for by National Grid but then we will do numerous other services on the active power side at the same time.”
He said it is this ability to stack revenues that enabled the project to compete against more traditional alternatives.
Basden predicted the tender will be the start of something much larger: “What you going to find is that the reactive power market is going to grow fast and it will be bigger than the firm frequency response market by our estimation.”