Network innovation: coordinating Active Network Management schemes and Balancing Services

The volume of generation connected to the distribution networks is increasingly rapidly. Cornwall Insight is part of a consortium developing an innovation project focusing on specific conflicts which this can create in the market, with the aim of developing learnings which can be applied in a broader context.

Over 30GW of generation is connected to the distribution networks already – more than 25% of the total generation capacity on the system. We look set for further growth, with 2020 Future Energy Scenarios showing 45-55GW distributed generation by 2030.

Enter active network management…

One significant consequence of this increase is a fundamental shift in power flows on the distribution networks. Having historically been used to transfer power from the high voltage transmission network down to commercial and residential consumers at lower voltages, bi-directional flows are now the norm. And in many places, the distribution networks are operating at their maximum capability for reverse power flows.

Under standard arrangements, DNOs would have to upgrade their network to connect new generators in those areas. Current regulatory arrangements see a proportion of the cost borne by the connecting generator – which in many cases renders generation business models unviable.

Active Network Management (ANM) schemes enable new generation to connect more quickly and at lower cost by actively managing generation output to avoid breaching existing network limits, with no need for network upgrades. Generators face the risk of their output being curtailed at times when the network reaches its safe operating limits. Compensation for curtailment is realised upfront at the time of connection and not an ongoing basis when curtailment occurs.

DNOs currently have around 1.3GW of generation connected under ANM arrangements, with a further 3.8GW which has accepted an ANM connection offer.

…and Wider Access to the Balancing Mechanism and Balancing Services

Another impact of increasing levels of distribution connected generation is the fundamental impact on the Balancing Mechanism (BM) and Balancing Services procured by National Grid Electricity System Operator (ESO). Traditionally, large generators connected to the transmission network have provided the flexibility the ESO required to balance the system – predominantly through the BM.

Various workstreams seek to facilitate the participation of distribution connection assets in the BM. While participation is not yet particularly widespread, it seems only a matter of time before high volumes of distribution connected assets are taking advantage of the revenue opportunities available through the BM.

ANM + BM = ?

At face value, all is well. Generators can connect quickly and cheaply to the distribution network using ANM. And they can benefit from providing services to the ESO through the BM. Both of these keep costs down for consumers while generation can continue to connect.

But significant issues arise when ANM and BM are used in the same place. Most notably:

  • An ANM generator may find themselves unable to dispatch as instructed by the ESO if an ANM system stops them from (e.g.) increasing output
  • Distribution connected generators may dispatch as instructed by (e.g.) increasing output, but in response an ANM scheme could curtail a neighbouring generator, counteracting the service the ESO was seeking to procure

Both of these pose a risk to security of supply as the ESO does not see the required response in the BM; and increase costs to consumers as the ESO must re-procure the same services elsewhere.

The solution?

The innovation project we are working has so far identified the scale of the issue we are looking at and defined a series of “Test Cases” against which solutions can be assessed. These are set out in our first report under this project, which is available at the link at the end of this blog. This also details the range and scale of ANM schemes currently in use, and the potential benefits of better coordination.

Our attention now turns to defining possible solutions, which could include a combination of:

  • Reconfiguring ANM schemes to ensure they do not counteract BM actions
  • Improving information exchange between ANM, the ESO and generators
  • Changing BM rules

Over the coming months we will be developing solutions for further assessment which will be detailed in future publications.

Isn’t this all a bit niche?

Perhaps. But the specific issues identified under this project are just one example of the complexities which arise when two parties (in this case the DNO and ESO) seek to dispatch flexibility from the same customer. There are many more examples of this issue which are only going to increase as we see Distribution System Operators (DSOs) facilitating regional flexibility markets while the ESO continues to seek to use the full range of tools at its disposal to balance the whole system.

Our aim is to develop workable solutions for the specific issues identified and then consider how they may be applicable in a broader context.

This blog has been adapted from an article in Energy Spectrum. For more information on our Energy Spectrum service, please contact Veronica Truman at v.truman@cornwall-insight.com.

The first report from the innovation project has now been published and can be downloaded here. If you would like to know more about the project, please contract Andrew Enzor at a.enzor@cornwall-insight.com.

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