New Fault Ride Through compliance arrangements introduced for transmission-connected generators

Ofgem approved Workgroup Alternative Grid Code Modification 1 (WAGCM1) of GC0151 Grid Code Compliance with Fault Ride Through (FRT) Requirements on 5 November. In short, this decision introduces a new, legal process, into the Grid Code – the legal text that governs those connecting to the electricity transmission system – that will allow the Electricity System Operator (ESO) the right to require a user that is suspected of a FRT failure to restrict their output to an agreed level, which could be as low as 0MW.

Fault ride through (FRT) refers to the ability of generation units and High Voltage Direct Current systems to maintain operation during periods of low voltage caused by transmission system faults and disturbances. The Grid Code sets out that assets connected to the onshore transmission network, should remain stable and connected to the system without tripping during short circuit faults and voltage dips at voltage above 200kV (supergrid voltage).

The ESO first made industry aware of its concerns surrounding FRT compliance when it issued an open letter on 6 May 2021 outlining that certain assets had tripped during faults deemed “normal” and within system parameters. From the letter it was clear that the ESO considered that the inability of generation, interconnectors or other transmission-connected plant to ride through such faults was intolerable and a serious risk that should be managed quickly and effectively. On a more factual note, the ESO outlined that between 10 February and 18 April 2021 there were eight transmission faults where generation was unexpectedly lost, which in one case, was more than 1GW. The ESO said that it would consider raising modifications to provide clarity on non-compliances, but in the meantime set out an interim process to manage failures.

In response to the open letter, SSE Generation formally raised the modification GC0151 because it had concerns that the ESO’s interim process was potentially discriminatory, and could result in generators breaching legal requirements. The ESO’s interim process could have resulted in generators reducing their Maximum Export Limit to zero, which SSE considered would risk being deemed to have physically withheld generation capacity, potentially in breach of the EU Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) market manipulation rules. Under SSE’s proposed solution, generators and networks company assets demonstrating fault ride through non-compliance would have initially faced no export limits or be constrained to 70% of Transmission Entry Capacity (TEC) or asset capability, depending on the situation. If after three months the issue was not resolved, this would be reduced to 50% until compliance was achieved.

An alternative developed by the workgroup (WAGCM1) effectively codified the process set out in the ESO’s open letter. This mirrored the interim process where a preliminary report would be required from those failing to comply with the FRT requirements within two hours of an incident, although there is a level of flexibility for longer timescales to be agreed. If those at fault find no evidence of FRT shortcomings in their part they can then self-certify for compliance with FRT prior to their reconnection or re-demonstrate compliance if there are issues found and corrected. Where FRT compliance issues are identified, WAGCM1 provides the ESO with the right to require a user that is suspected of a FRT failure to restrict their output to an agreed level, which could be as low as 0MW, albeit this is likely only to be in the most extreme cases.

The main differences between WAGCM1 and the original were the magnitude and duration of required export restrictions, and the timeframe in which a user is expected to provide an explanation of potential FRT non-compliances. Ofgem approved the alternative akin to the process outlined in the ESO’s open letter, considering that allowing the ESO and those who failed to comply with the FRT requirements to agree a level of output restrictions would mitigate the potential risks of FRT non-compliance. SSE’s proposal would have imposed an inflexible pre-determined export reduction on generators, however, Ofgem was concerned that where they choose to reconnect post-fault, it forces potential FRT risks to remain on the system operating at a level that may not sufficiently reduce the impact of the risk to the transmission system. In addition, while several workgroup members and consultation respondents considered the two hour timeframe proposed under WAGCM1 too short, Ofgem considered generators should respond as quickly as possible in order to return to normal service.

As mentioned before, SSE raised GC0151 to address concerns around commercial implications that could arise from the ESO’s interim solution, including whether reducing output to 0MW would be in breach of EU market transparency obligations. Ofgem noted that from an engineering perspective, it expects export restrictions applied at the request of the ESO as a result of GC0151 to be considered akin to a reduction in the capacity of that unit which was technically available, and thus would not comprise market manipulation.

GC0151 was implemented on 8 November. While the new process could have serious implications for those failing to comply with FRT requirements, material output reductions are likely to only be used as a last resort and in the interests of mitigating impacts on the wider transmission system. In its decision, Ofgem touched on the potential for further modifications with workgroup discussions highlighting a number of deficiencies in the current FRT requirements. The ESO is expected by Ofgem to take these issues into consideration in assessing Grid Code compliance and there is potential for changes to the FRT requirements to be progressed as a separate modification in the future if the industry deems it beneficial.

We will be keeping track of all future FRT changes through our bespoke weekly impact report for generators which sets out the current open energy consultations and industry code modifications you should be aware of. Such changes can impact the technical requirements for assets, costs and revenues, and how parties might trade or participate in balancing services or the balancing mechanism. An impact rating and explanation are provided for each change to help prioritise your resources and understand the effect on the business.

For more information on the Bespoke weekly impact report for generators please contact Tom Faulkner at t.faulkner@cornwall-insight.com or by calling 01603 542123.

You may also be interested…

Service | Bespoke weekly impact report

An update on the very latest regulatory and governance changes that are relevant to your business. Tailored to meet the needs of your organisation, you can rest assured that you will receive the latest regulation developments to ensure you are compliant with all your obligations.

Service | Alerts services (electricity or gas)

An overview of industry developments that you and your business should be aware of. You can subscribe to either gas, electricity or both ‘Alert services’. Each alert provides you with a timely update of any changes to regulation, policy, consultations or proposals.

Related thinking

Business supply and services

Wake-up call: Cost pressure in the GB energy market

This Energy Perspective was published in Issue 791 of Energy Spectrum on 10 January 2022.  The current crises afflicting the energy supply sector, driven by rising energy input costs, are of economy-wide concern. The price of energy has always been an issue of significance for national economic competitiveness, inflation, monetary...

Home supply and services

The risks of short-term interventions distorting long-term incentives in the energy market

Christmas 2021 was not a time of cheer for the energy industry and its customers. There is acute stress on energy suppliers and consumers from current bills - let alone where they may move to in the coming year. And it seems the political and regulatory debate has moved on...

Business supply and services

With great power comes great responsibility – what can be done for customers and suppliers in these challenging times?

Given that the situation in the wholesale markets shows no signs of abating, both the government and Ofgem have a shared responsibility for helping to steward the energy sector through a period of profound challenges for suppliers as well as for their customers. Furthermore, the risk of structural damage to...

Commercial and market outlook

Price cap set for 46% rise for Summer 2022, Winter 2022-23 cap may exceed £2,000

Following further highs in wholesale prices and the costs associated with the raft of supplier failures seen in the last few months, Cornwall Insight is forecasting that the domestic default tariff price cap for Summer 2022 will increase to approximately £1,865 per annum for a typical dual fuel customer, with...

Heat networks

Heat network approaches being developed by devolved administrations and UK government

A number of further consultations on the policy approaches for heat networks have been issued in recent weeks:  The Scottish government published its draft Heat Networks Delivery Plan on 15 November, outlining how it will quintuple heat demand provided from heat networks in Scotland by 2030; and The UK government issued...

Power and gas networks

Location, location: The increasing complexity of embedded benefits

There is growing recognition of the need to reform our current network arrangements to support a more dynamic and flexible electricity system as we undergo the transition to net zero. Among the network elements currently going through a period of review are Distribution Use of System (DUoS) charges, which recover...

Regulation and policy

Just the bill please – who picks up the costs of market exits?

This article is an extract from our Energy Spectrum Nutwood. find out more about a subscription to Energy Spectrum here. Between 9 August 2021 and 19 November 2021, 22 energy suppliers exited the market impacting more than 2mn mainly domestic customers. Supplier exits result in a number of costs being...

Regulation and policy

Keeping an eye on compliance

In response to the rising wholesale energy prices, Ofgem published a letter on 29 October setting out the steps that it is taking to protect the short- and long-term interests of consumers. In addition to its intention to consult this month on the current price cap methodology, Ofgem set out...