Revenue Opportunities

Balancing UK energy supply and demand is a complex business. More so now we’re shifting to an increasingly diverse and decentralised generation portfolio.

But along with challenges, this brings opportunities – especially for organisations able to utilise energy-related assets to participate in much-needed grid balancing services.

For example, we’re working with West Sussex County Council, who procure energy through the LASER Energy Frameworks, to maximise returns from co-located 4MW battery and 7MW solar PV assets. These have been installed on a former landfill site near Chichester to support the council’s energy strategy.

Dynamic support to maintain grid frequency

Most recently, we’ve been generating income for West Sussex County Council (WSCC) via National Grid’s Dynamic Firm Frequency Response (DFFR) scheme.

DFFR is designed to maintain the grid within its required frequency limits of around 50 hertz by managing the normal second-by-second changes.

Participants need to deliver a response when required within two seconds and to fully respond within up to 30 seconds. Event durations are then required for up to 30 minutes – but are typically a lot less.

This usually involves discharging a required level of power that is proportional to the frequency change to maintain system frequency at parity. But participants may also be required to absorb excess power, which is why battery storage assets are so suitable.

Potential five figure monthly revenues

Revenues from DFFR vary, as they are secured on a tender basis and depend on the requirements of National Grid. But during summer 2019, potential earnings can reach five figures each month.

However, as with any demand side response activity, pursuing a variety of revenue streams is the best strategy. And we’re certainly doing that with West Sussex County Council.

After careful market analysis and in-house modeling, we devised a strategy to maximise returns that also works alongside the supply and power purchase agreements we provide to WSCC.

Additional income from static response

As a result, as well as exporting during the winter 2018/19 Triad periods, we’ve enabled their assets to deliver low static Firm Frequency Response (FFR), mainly during daytime periods in the early summer.

This requires full capacity discharge over half hour periods when grid frequency drops below 49.7 hertz.  

With Static FFR, we’ve achieved an average top-of-the-market return this year for WSCC.

Then for any gaps in frequency participation, we can also generate income via our market arbitrage product Market Access.

Access to a £6-billion market

Market Access provides a route to both the Day Ahead (N2EX) and Within Day (APX) markets, right up until each delivery period. Together, these markets trade around 125 TWh a year, or around £6-billion in cumulative trade value.

When prices peak, we can then sell volume onto the wholesale market on a customer’s behalf.

And the whole process can be managed using automated controllers, so everything happens seamlessly and without creating any work or inconvenience for our clients.

Bespoke strategy is key

A revenue-stacked approach certainly delivers the best returns.

But like anything we do, any strategy also needs to be bespoke to fit around a business’s own priorities and constraints.

Certainly, the team at WSCC seem pleased with the result.

“The approach taken by the npower team in helping us to quantify the uncertainties in the future energy market and then develop an asset optimisation strategy that meets our corporate energy priorities – while also managing the inherent risks – has been very beneficial to us,” says Energy Services Manager Daire Casey.

For more information about demand-side response opportunities and maximising returns from on-site energy or storage assets, talk to our Energy HQ team. You can reach them on 0800 193 6866 or send an email to nbs@npower.com.

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