Optimising Battery Energy Storage Systems (BESS) into new markets

The energy transition in the UK is underway, it has momentum, perhaps not at the speed required, but there is undeniably movement in the right direction. We have seen the UK’s renewable capacity increase exponentially over the past 10 years. There has also been significant growth in cleaner flexible technologies with front-of-meter battery storage now sitting at 1.7GW – up 600MW from the previous year – and the development of innovative markets such as National Grid’s DSR Winter Flex mechanism. With this increase in battery deployment, we have seen numerous new developers and investors enter the market, keen to take advantage of the ‘battery boom’. Recently, this has been accelerated by strong and sustained prices in Ancillary Service markets and the wider wholesale market. In this blog, we take a look at the ESO’s ‘newest’ Ancillary Services within their Dynamic Frequency Response (FR) product suite, and how we approach the complex task of getting our customers’ new and existing assets into these markets.  

Batteries place on the grid, today and tomorrow

The UK’s utility-scale battery capacity has grown year on year, bringing National Grid much-needed frequency support as demand becomes less predictable and more and more intermittent renewables connect to the grid. According to National Grid ESO in their most recent Future Energy Scenarios, by 2030 the UK will need 13GW of energy storage, comprising of batteries and other storage types. Behind every battery is an intelligent optimisation platform and a leading trading desk, such as ours, that trade the flexible power into different markets at the most appropriate and profitable time. Our trading desk can stack revenues, i.e., to participate in multiple markets simultaneously or in the same settlement period, to ensure that the most margin is captured by the asset. As the battery market has grown, National Grid has developed new and bespoke products well suited to batteries, in effect, sending out market signals to optimisers and developers to incentivise further deployment and innovation. Over the past two years, we have seen three such products introduced for participation across the UK.

The newest markets on the block

In late 2019, National Grid ESO (hereafter, the ESO) set out its vision for the future of its Frequency Response products. They announced that some existing services were to be replaced with a suite of new ones containing: Dynamic Containment (DC), Dynamic Regulation (DR) and Dynamic Moderation (DM). These services were to have a High and a Low product allowing the grid to procure different volumes of upward and downward frequency response capability i.e., to keep grid frequency at 50Hz. The High product would require participants to remove energy from the system with the Low product requiring the opposite. DC was fully launched in November 2020 as a Day Ahead auction-procured post-fault service tasked with keeping frequency within 0.5Hz either side of the 50Hz target but requiring no action until a 0.015Hz deviation is detected. While DC complements the existing Firm Frequency Response (FFR) service, DM and DR were designed to eventually replace it. Introduced at different points in 2022r, DM (May 2022) and DR (April 2022) are pre-fault services responsible for keeping frequency within 0.2Hz of the ESO target. DR requires greater action than DM for the same change in frequency, making it the more energetically demanding service to provide. The phase out of FFR is planned to be a gradual one with an estimated completion time of early 2024, which will see FFR provision move entirely to the new FR suite and shared across both DM and DR services. With DC becoming less profitable (recently), due to optimisers opting to participate more actively in the volatile wholesale markets, it has become increasingly important for batteries to be able to participate in DM, DR and any other lucrative service for which battery assets are cost-competitive and meet the technical requirements – Revenue stacking.


Dynamic Containment


Dynamic Regulation


Dynamic Moderation

Onboarding batteries into new markets – An example

Optimisation of batteries into new markets can only succeed if the testing and onboarding of the asset have followed a strict and structured process. This process requires collaboration between a number of teams internally, from the Tech & Power Operations team all the way through to our on-site Engineering team and also externally, liaising closely with our customers and their respective operations & maintenance (O&M) teams. Let’s look at arguably the biggest ‘shake’ up of the ancillary markets in recent years, the introduction of the new suite of balancing services by National Grid, Dynamic Containment, Dynamic Regulation, and Dynamic Moderation. 

Before the Power Ops & Engineering team takes on the testing of an asset into a new market, our Legal, Commercial, and Regulatory teams are proactively involved in industry consultations, usually with the ESO, giving our customers and us the ‘right of feedback’ to consultations and an early understanding of any proposed new services that the ESO wish to launch. This early engagement with National Grid, provides us with an opportunity to act as an advocate for our customers, ensuring that the products developed and launched can be delivered safely, effectively, and successfully allowing maximum optimisation potential of a battery asset.

Once the consultation period is over, and confirmation that the new service or market meets the aforementioned criteria, our Product team will begin to outline high-level system requirements in order to be able to operate assets in that service for National Grid services. The service terms and operating guidelines tend to be different from previously launched services, so this requires the design of the infrastructure and platform to be built in a modular and scalable way to enable seamless market entry. 
Once the high-level requirements are fully understood, we then identify areas where technical capabilities need to be further developed and enhanced to provide the service. In some instances, internal business processes may also need to be reviewed and refined. For implementing the new Dynamic FR suite, the change impact was initially far-reaching due to the unique technical nature of the product and required the collaboration of multiple teams throughout the Tech & Data Science teams. It also required interaction with our Trading, Asset Operations, and Engineering teams as well as Tech colleagues responsible for trade capture and billing reconciliation. 

The Engineering team, who install our proprietary hardware on-site with the asset, work closely with customers and their respective O&M teams to ensure their sites and assets are both registered and approved to work within the rules and guidelines of new services when launched – ensuring they can participate within these services, on-time with no penalties, and therefore, obtain maximum revenues. With reference to the potential penalties that National Grid was to impose within the first year of the new dynamic services going live, we successfully protected much of the revenue earned by our customers’ assets by continually reviewing performance to ensure the assets were operating within the boundaries of the service(s).  
Not only do we continually review and monitor the current performance of assets, but we also look at how the assets we currently trade and manage can perform in new and future products and services which National Grid proposes to launch. This involves running simulated tests on how the assets would perform and subsequently entering them into those markets for optimal value. 

An emphasis on testing

A constant emphasis throughout our product development and life-cycle is testing, this is where we look to identify and resolve issues which occur early, prior to a full product launch. This testing is multi-layered, happening on early prototypes to confirm business processes, then within each sub-team as each minor element of functionality is developed. We run a staging version of software, so that testing can be conducted in a controlled and isolated environment before committing changes to our live production systems. We also have developed, and use have a physical dedicated hardware testing area where we can run fullend-to-end tests, with hardware similar to that, which would be installed on site enabling a fully simulated environment to capture any potential issues which may arise prior to physical deployment on site. Prior to any product launch we will conduct a live trial, where the full end-to-end business process and product development can be fully tested in a real-world scenario. This will always be conducted within a controlled environment with manual backup controls in place and many of the development team on hand to support. This type of testing is invaluable in preparing for our full-service launch that generally follows shortly afterwards.

Battery capacity in the UK is growing, albeit with some challenges, alongside the huge investment in renewable generation. Therefore, National Grid’s marketplace will evolve and grow alongside the energy transition, ensuring the appetite for investment in clean assets remains. As asset owners/investors, it is important to ensure that your optimiser is both agile, diligent, and capable of not only optimising your asset day-day but is also prepared and ready for the launch of new battery/flex markets and opportunities. 
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