Generation case study
Introduction
A dairy farmer is looking to provide flexibility services to Electricity North West through an Operational Utilisation & Variable Availability contract by increasing generation to help reduce the impact of constraints on the network.
About flexibility services
When the demand for electricity is greater than the amount that Electricity North West can provide, we procure flexibility services to alleviate constraints on our network during peak times. These services are provided by companies or individual customers known as flexibility service providers (FSPs) who own assets in our region such as generators, battery storage and electric vehicle (EV) charge points. FSPs should be able to generate more, or use less, electricity during a pre-agreed service delivery window, and provide at least 10kW of flexibility capacity either individually or via an aggregator. This allows us to balance supply and demand, ensuring a safe and reliable supply of energy for our customers. In return for providing extra capacity, FSPs receive payment from Electricity North West.
Generating renewable energy from animal waste
The farm will provide an Operational Utilisation & Variable Availability service by using its biomass plant to increase electricity generation when instructed by Electricity North West. The biomass plant generates electricity by converting manure from 600 dairy cows on the farm into renewable natural gas (RNG) using a retention pond (digester). Compared to many other renewable energy options, biomass has the advantage of dispatchability, meaning it is controllable and available when needed. Converting animal waste into electricity is cost-effective and helps reduce waste going to landfill or being released as greenhouse gases into the atmosphere.
Pre-tender
Our tenders are published on the ElectronConnect platform twice a year in spring and autumn in line with our Network Development Plan (NDP) and Distribution Future Electricity Scenarios (DFES) publications to reflect our latest network requirements. To be notified of our upcoming tenders, the farmer signs up to our flexibility mailing list.
Before the launch of the tender, the farmer:
- Registers the business on ElectronConnect to pre-qualify to participate. The information submitted such as credit checks and insurance details is assessed by Electricity North West. Once approved, the farm's commercial qualification remains valid for future tender rounds.
- Electricity North West utilises the framework style Standard Flexibility Services Agreement developed by the Energy Networks Association Open Networks Project. The farmer can sign up to the general T&Cs of this agreement as part of commercial qualification, and a signed copy must be returned via Electron before placing a bid.
- Registers their asset(s) on ElectronConnect.
Tender process
Pre-qualification
Once the Invitation to Tender (ITT) has been published, the farmer reviews the network's flexibility services requirements using the map included in our latest flexibility service requirement. Once they have established that the farm is located in a requirement zone seeking an Operational Utilisation & Variable Availability service, they calculate how much of the required demand response they can offer, when, and at what price. Before submitting a bid, the farmer uses the cost calculator tool on our website to check that the prices they are prepared to offer for availability and utilisation don't exceed the ceiling price that we are offering for the service as part of this tender round. The cost calculator can be found in the ITT appendices for our latest flexibility services requirement. At this point, the farmer decides they would like to participate in the tender.
The next step for the farmer is to complete technical qualification on ElectronConnect by confirming the assets they wish to put forward in the competition. Electricity North West then assesses the technical details of the participating assets and their capability for delivery. If the farmer is unable to provide 10kW of flexible capacity, they can still take part via an aggregator. Aggregators such as electricity suppliers combine load from multiple customers to provide flexibility services; this is explained in more detail in our homeowner case studies on Peak Reduction and Scheduled Utilisation. The farmer is notified via ElectronConnect that their assets meet the requirements of this tender, allowing the farm to move to the bidding stage of the process.
Submitting a bid
For the final stage of the procurement process, the farmer submits a bid to the tender via the ElectronConnect platform. This is done by linking the pre-registered assets to the availability and utilisation payments, as well as the periods where the farmer can respond. Once the bidding window has closed, Electricity North West assesses the tender responses before accepting or rejecting bids based on the proposed payment and the asset's ability to meet the specification. If the farmer's bids are successful they will then enter into a flexibility services agreement with Electricity North West to deliver the Operational Utilisation & Variable Availability service within the required service windows.
Helpful tips to consider before submitting a bid
- Prices should be made up of an availability payment and a utilisation payment. Availability is the price paid to the provider even if Electricity North West does not call on the flexibility service. Utilisation is the price paid to the provider for the level of response it has actually provided on request. Note: Electricity North West will not always utilise as much energy as it has requested; there is a level of over-procurement built in to ensure a sufficient response is available if required.
- When calculating the tender bid prices the provider should consider the cost of lost revenue, fuel costs, environmental or permit fees, initial set-up costs, maintenance, other revenue streams available, energy savings benefits etc.
- When thinking about availability periods the provider should consider the practicalities of these periods, the processes required to ensure that the service can be delivered, seasonal considerations e.g. major televised events, Christmas period, weather-related issues e.g. extreme cold weather increasing heating demand and maintenance periods.
Flexibility service products
Electricity North West procures four common products (services), which align with the Open Networks service definitions:
- Peak Reduction
- Scheduled Utilisation
- Operational Utilisation
- Operational Utilisation & Variable Availability.
The Operational Utilisation and Variable Availability product is used to keep the power flowing during an unplanned network event during maintenance work or network thermal constraints.
The farmer ensures their asset is available to deliver the demand reduction response during the service windows specified in their bid response.
Dispatch
The farmer can choose to receive dispatch instructions via application programming interface (API), email or our remote terminal units (RTUs).
Worked example
The farmer has a biomass plant with an installed capacity of 100MW and has signed an Operational Utilisation & Variable Availability service (generation increase) contract with Electricity North West.
The farmer can increase the biomass plant generation by up to 20MW during certain pre-determined time periods. In this example, the pre-determined period is November-February every Monday-Friday between 3pm-10pm. The farmer can respond to requests for generation increase within 15 minutes. The restoration time after responding to electricity demand reduction is one hour.
Availability dispatch
It is assumed there is a network constraint in December. On Thursday, we will ask the farmer to be available to increase their biomass plant generation by up to 15MW the following week on Wednesday between 3pm-8pm*. The farmer is expected to be ready to respond to utilisation calls within 15 minutes of receiving our dispatch signal. Availability fees will be paid to the farmer to remain in a state of readiness to respond immediately to a utilisation instruction during the service window (i.e. on Wednesday between 3pm-8pm), even if the reduction is not requested. In this example, the farmer will be paid for 15MW of availability over five hours.
Availability payment (£) = availability fee (£/MW/h) x increased generation capacity (MW) x refined availability service delivery window (hrs)
Utilisation dispatch
On the same day (Wednesday), Electricity North West sends a dispatch request to the farmer to increase the biomass plant’s generation by 8MW between 4pm-7pm**. If the farmer responds within 15 minutes, they will receive an additional utilisation payment for providing additional energy generation in MWh to the network. In this example, the farmer will be paid for 8MW of utilisation over three hours (between 4pm-7pm), equal to 24MWh.
Utilisation payment (£) = utilisation fee (£/MWh) x energy delivered (MWh)
* The DNO can refine a week ahead the volume of availability required (i.e. 15 MW instead of 20MW) and the availability windows required (days and hours) (i.e. only Wednesday instead of Monday-Friday and 3pm-8pm instead of 3pm-10pm).
** The DNO can instruct/utilise a portion of the refined available volume (i.e. 8kW instead of 15MW) and only for a portion of the refined available time window (i.e. 4pm-7pm instead of 3pm-8pm).
Example: the farmer responds to an availability instruction for generation
Example: the farmer responds to a utilisation instruction for generation
Baselining
A baseline is a reference used to measure the amount of flexible capacity delivered to the network by FSPs. There are different kinds of baselining methodologies used depending on the type of asset and service being provided. These include historical baselines (using past meter readings to estimate the baseline using standard algorithms) and nominated baselines (using other forecasting techniques such as weather-based models to estimate the future baseline). The baselining methodology will be agreed between Electricity North West and the farmer post contract award and at least six months before the first utilisation period. More information on the different types of baselining methodologies can be found on our FAQs page.
Invoicing
Subject to the delivery of flexibility services, the farmer will invoice Electricity North West and receive payment by bulk electronic clearing (BACS) by the end of the following month (after the invoice is received). More details on payment can be found in the terms and conditions of each Invitation to Tender.
Useful links
Register for updates
Sign up to our flexibility services mailing list to find out about new requirements and receive invites to our events.
Get in touch
If you would like to leave feedback, book a meeting with a member of our team or if you have any questions about flexibility services, please get in touch.