Reactive Power is an essential service used by NGESO to control the system voltage level within the limits that are defined in the Grid Code and NETS SQSS.
Conventional transmission connected sources of reactive power are being replaced by renewable and decentralised units. This change to the generation base, along with a changing demand profile, makes controlling voltage on the NETS more challenging.
The project is to explore if a reactive power market could be developed to help ESO access more reactive power in the right location, create market access for more providers, incentivise more efficient new technologies and lower the overall spend on reactive power control. This will facilitate ESO’s goals to deliver Competition Everywhere, Zero-Carbon System Operation, and Whole Systems Outcomes by 2025.
Benefits
Not required
Learnings
Outcomes
The project has delivered a market framework designed to meet the challenges faced by both the ESO and providers. It forms the foundation for the way forward, towards the implementation of a desired end-state market solution.
The market should enable all commercial providers to be eligible to participate, though to only be selected if they bring a benefit to the system in terms of incremental capability (‘additionality’) and/or cost efficiency.
A coordinated approach to implementation needs to be taken as DSO’s will need to re-run network studies to understand limitations and potentially modify connection agreements to allow providers on the distribution network to provide reactive power services.
A methodology has been developed to define nodal MVAr requirements, node-to-node effectiveness, and specific provider-to-node effectiveness. This enables a consistent, transparent and repeatable way to produce market signals.
Based on the technical analysis a nodal market is recommended, where reactive power requirements are identified and stated per node and effectiveness factors are calculated per node for the different products.
The market design is recommended to run over two timeframes:
- Long-term annual markets operating in investment timeframes which offer multi-year contracts to underpin investment in assets, complemented by annual year-ahead contract rounds to finesse procurement
- Short-term market operating at the day ahead stage to enable participation of assets unable to make long-term commitments
- Further engagement with Ofgem and TO’s to settle on framework for TO assets’ indirect participation.
Consultation with stakeholders ahead of market launch to understand residual challenges for some provider types and to conclude on specific design features.
Through the additional work undertaken, a number of internal reports were produced: a report on the existing implementation gaps and a report on the Functional Requirements for the short term market including the Reactive Power Clearing Algorithm.
Building on the outcomes of Phase 1, we have initiated additional BAU funded work to progress the project towards implementation and explore long term procurement, the design of a D-1 market, and broader analysis of the impacts of procuring across three timescales. Further work may be undertaken through this innovation project and is under consideration.
Lessons Learnt
The project provides insight into the expected market size, location of reactive power providers and capabilities of different technologies. This insight has supported the work to design the proposed market and should continue to inform and support decision making in the next phase of refining and implementing the market.
The DER report identifies key technical, commercial, and regulatory barriers for DER to be considered and several possible ways forward on how to overcome these. The critical next steps involve changes impacting distribution network owners and will require a coordinated approach to implementation.
The economic modelling gives insight into the potential costs, actions, and associated carbon emissions for managing the system under ESO’s Leading the Way FES 2021 scenario for 2025. This provided the ESO with views on the potential benefits of a competitive approach to reactive power.
The requirement setting defines nodal MVAr requirements; node-to-node effectiveness; and specific provider-to-node effectiveness which enables a consistent and repeatable way to produce market signals. Results can be sensitive to inputs (e.g. changes in network topology) and will need to be carefully calibrated based on ESO system operational views.
The market design delivers the market framework appropriate to meet the challenges faced by both the ESO and providers. It forms the foundation for the way forward, towards the implementation of a desired end-state market solution. The design gives a detailed overview of procurement considerations and prototype mathematical formulation of clearing algorithm objectives, which form the basis for development of a clearing algorithm.
There are a number of areas that need further analysis and consideration, including:
- Implementation readiness and cost, gap analysis and cost-benefit analysis
- Further design refinement with internal and external stakeholders
- Provider readiness
- Refine TO participation approach
- Further explore residual value of TO assets and expired RAB assets
- Service stacking
- DER participation through a coordinated approach to implementation with the DNO’s
