The previous project NIA2_NGESO053 assessed the pros and cons of more coordinated procurement of energy, response and reserve under different market designs. The results suggest there are significant potential benefits from co-optimisation in the context of GB’s future net zero system. Realising these benefits would require implementation of Central Dispatch. Separately, ESO has identified significant issues in current scheduling arrangements, which we believe Central Dispatch could mitigate.
This project will provide a qualitative overview of different scheduling approaches and quantitatively estimate the impact of self vs central scheduling under national and zonal pricing. The project will also test whether improvements to the BM or strengthening balancing incentives market participants face may impact the case to move to central scheduling.
Benefits
Central Scheduling could realise significant consumer and system benefits through improved utilisation of energy limited assets such as batteries, facilitating co-optimisation of energy, response and reserve, and iimprovements to competition through a move from portfolio settlement to unit settlement. It also brings risks around how efficiently interconnector trade could be done between self & central dispatch markets.
This project will enable robust understanding of the potential consumer and system benefits and possible risks through quantification. This will inform key decision-making processes regarding significant reform options in the Review of Electricity Market Arrangements (REMA) Programme which would impact the energy system transition.
Learnings
Outcomes
The project provided key insights into a range of outcomes:
- Consumer and socioeconomic benefits from self and central scheduling, under both national and zonal pricing. In particular, the key drivers of the benefits case for a move to central scheduling.
- The impact of compensation payments to make participants whole under central scheduling, and the cost of resolving forecast errors.
- The change in redispatch volumes per technology under self- and central scheduling.
The impact on the case for central scheduling from introducing incremental reform to balancing arrangements (e.g. wider BM access, increased competition and liquidity) under national pricing.
- The change in merit for introducing central scheduling or zonal pricing under FES24/CP30 and Beyond 2030, which signifies faster decarbonisation and an increased network build out.
- How NIV chasing impacts balancing costs and whether measures to mitigate it, alongside other balancing reforms, could be an alternative to wholesale reform.
Lessons Learnt
During the scoping phase, a number of potential workstreams were identified, given the wide range of potential market designs (identified in the NESO REMA Dispatch work). A comprehensive approach was undertaken to determine the research questions within each workstream and projected outcomes. Incorporating input from the project partners, NESO, Ofgem and DESNZ, priority workstreams were identified which formed the Core workstreams. These were selected based on their relevance to the REMA Programme, cost and deliverability within REMA timescales. Ensuring the scope was well-defined, and clearly understood by all parties, was critical to project success.
It was recognised that throughout the REMA Programme, input assumptions and methodology for modelling exercises were the subject of considerable debate. We therefore wanted to engage with industry stakeholders at an early stage to gain feedback and challenge on our proposed approach. This was an incredibly valuable exercise, which provided a number of helpful insights on the modelling design and setup and resulted in a change to our planned approach for the sensitivities. We believe this fostered a more robust modelling approach.
The project utilised expertise across a variety of stakeholders, within NESO, the project partners, DESNZ, and Ofgem through an iterative process in which the modelling methodology and results were subject to robust challenge and evaluation.
