The SNAPS (System Needs and Product Strategy) consultation took place last July, to understand the views of the balancing services market. The main issues identified included: there high number of products which providers could tender for; the poor clarity over what each product was attempting to address; and the poor clarity with regards to contracts. With the UK energy sector seeing greater demand for renewable services, we thought we’d look at what has come out of the SNAPS consultation so far, and what it means for sustainable energy providers.
The consultation revealed complaints that the National Grid’s current balancing service is hard to access, non-transparent, and not future-proof. As a response, the National Grid has promised to simplify and standardise their approach to procurement. From a provider’s point of view, having more transparency will allow them to make more informed long-term decisions without having to jump through a complex set of hoops.
The simplification of the process not only allows for more transparency, but also allows more businesses and types of renewable energy to get involved. At the moment, the complexity surrounding the process puts new entrants and technologies off from the service – this means that the National Grid has, until now, been missing out on opportunities to upgrade the UK’s energy system so that it can be cheaper and cleaner.
The National Grid has been testing out a new auction system, which will allow providers to bid up to 1 day in advance. This test is an attempt to standardise the market and make the lives of investors much simpler. This much needed change will hopefully allow more renewable energy providers to access the market and deliver a better deal to consumers.
Outdated products removed from active procurement
With an updated contract system, comes updated services. The National Grid has promised to remove any obsolete products that it currently has, and stop actively procuring certain types of products going forward (although they won’t be cancelling any existing contracts). Our hope is that this change will allow an influx of new technology – especially energy storage technology.
By doing the SNAPS review, the National Grid has recognised that it needs to adapt in order to survive. We are currently seeing record contributions to our energy mix from renewables, and that demand is only going to increase. Whilst the demand for renewable energy increases, the accessibility for renewable energy firms hasn’t. The Grid has noticed more frequent fluctuations of demand, and older services are unable to respond sufficiently. Now, they will turn to more innovative solutions to supply EFR (enhanced frequency response), allowing for businesses of all sizes to access the market.
This another positive step for the market, both from a customer and provider point of view. With more companies having access to the service, there will theoretically be more innovations brought forward to help drive efficiency and clean energy. The National Grid had initially planned to release their alternative solution by March 2018, but recently announced that this reveal has been pushed back to the end of 2018. What we do know, is that opportunities for new providers, including alternative technology providers, to enter contracts from next year have been promised.
New opportunities for sustainable energy providers
As mentioned above, we are expecting an influx of sustainable and renewable energy providers to the National Grid. The question is: what type of technology is going to be most favoured? Our best guess is that energy storage systems (ESS) are the plat-du-jour. In the UK, ESS are particularly useful for renewable energy sources because it reduces the dependency on environmental factors. Battery storage systems are able to store energy when production is high, and then provide energy to the Grid when there are fluctuations. This hint comes from the review of the “Black Start” service, which is the emergency system used in the event of a partial or total shutdown.
We also expect that within the next few years, the number of smaller, innovative businesses to dramatically increase, as a result of the changing demands and requirements, and the decentralisation of the services. We can also hope that, as the system is more accessible, it will incentivise investors to put their money into new innovations. This can only be beneficial to the future of the energy landscape. The Grid will continue to be able to optimise its service, and as this happens they will be able to balance supply and demand on as quick as a second-by-second basis.
The challenge will be managing a system with a huge number of participants and lots of new energy sources. Hopefully the proposed system will work efficiently enough to provide opportunity and balance to all providers, and deliver a high quality and cost effective solution to customers.
As we can see, the SNAPS consultation has provided much potential and promise to the energy storage market. The proposals to have a high frequency response time and a better balance supply is going to drive innovation and technology in this field and provide more efficient, cheaper solutions to the customer. We look forward to seeing what proposals and products the National Grid come forward with later this year.
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