The UK Energy Transition | Up to 300MW of aggregated assets to be admitted into the Balancing Mechanism
Published on 12th Feb 2024
Welcome to our top picks of the latest energy regulatory and market developments in the UK's transition to net zero
This week we look at: the admittance of up to 300MW of aggregated assets into the Balancing Mechanism, new arrangements to restore Great Britain's power grid, National Grid's call for adjustments in supply chain contracts, and streamlined regulations for the installation of electric vehicle chargepoints.
Up to 300MW of assets to be admitted into the Balancing Mechanism
The National Grid Electricity System Operator (ESO) has announced changes to allow up to 300MW of aggregate assets into the Balancing Mechanism (BM). The changes will now allow a capped cohort of assets to participate in the BM as part of an aggregated unit, where each asset has an individual capacity of less than 1MW.
The ESO states that the changes will widen consumer participation in flexibility, by opening the BM up to small scale assets such as EV chargers and electric heating systems. This will help the ESO to balance the electricity system in real time.
These aggregated assets will be subject to relaxed requirements for operational metering to encourage participation. Current metering rules require assets in the BM to deliver readings every second with a permitted margin of error of +/-1%, which has discouraged smaller entrants. After conducting a trial on allowing small scale assets in June 2023, the ESO has decided that the 1MW assets will need to provide 10 second readings with a permitted margin of error of +/-2.5%.
The ESO has commissioned an independent report to determine the exact changes it should make to the operational metering requirements to encourage these 1MW assets to participate in the BM over the long term.
Ofgem approves arrangements for restoring power grid
Ofgem has approved a set of code modifications to implement the Electricity System Restoration Standard (ESRS). The ESRS was announced by the government in a policy statement in April 2021 and sets out requirements for the restoration of Great Britain's power grid in the event of a total or partial shutdown. The ESRS requires the ESO to be capable of restoring 60% of demand on the transmission network within 24 hours and 100% within five days. These targets must be capable of being achieved by the end of 2026.
Ofgem has approved the following modifications to energy industry codes to implement the ESRS:
- The DCRP/MP/22/02 modification amends the Distribution Code to set out requirements including the introduction of the "bottom-up" restoration method. This method approaches restoration from the distribution level after a blackout, instead of at the transmission level.
- The GC0156 modification sets out changes to the Grid Code related to the controllability and availability of generation and network assets. Changes include ensuring that generators and network substations can continue operating for at least 72 hours after the loss of external electricity supplies.
- The GSR032 modification alters the National Electricity Transmission System Security and Quality of Supply Standards. It introduces design requirements for transmission systems to facilitate participation in restoration plans, to permit power stations to synchronise with power islands, and to prevent system collapse during restoration.
- The CM089 and CM091 modifications align the System Operator Transmission Owner Code with the Grid Code and require transmission owners to consider the impact of proposed outages on the ESRS.
These modifications are due to come into effect on 4 March 2024.
National Grid calls for increases in supply chain contract commitment limits
National Grid has written to the government to call for changes to supply chain contract rules so that the long-term demands of an increasingly decarbonised power system can be met.
The suggestions were set out in a written submission which was issued in response to the House of Commons Energy Security And Net Zero Committee’s inquiry into supply chain issues affecting the clean energy sector. One action which was recommended by the transmission system operator was for the government to allow 10 year guarantees to be given in supply chain contracts. National Grid explained that this would enable a reserve of capacity for vital equipment to be built up in the medium-term. Currently, supply chain contracts are subject to legal limits of 8 years. However, National Grid warned that this limit risks constraining the UK's ability to roll out the required grid infrastructure to support the move to net zero. It advised that by 2030, it will need to have built over five times more new transmission lines than have been built in the previous 30 years.
The submission also highlighted the importance of increasing the UK's manufacturing capability, calling on the government to introduce targeted incentive packages for clean energy manufacturers. It noted the skills shortage in the sector and called for the development of a skills pipeline to address this issue.
National Grid also welcomed the government's recently published Transmission Acceleration Action Plan, which recognised the importance of supply chain certainty in reaching net zero. The operator stated that it will undertake a review of supply chain challenges and opportunities faced in the delivery of a decarbonised power system, and looks forward to sharing the outcome of that review with government and industry.
Government announces measures for EV chargepoint installations
The government has announced a suite of new measures to support the installation of new electric vehicle (EV) chargepoints across the UK.
Under the announcement, the Department for Transport (DfT) has issued a consultation paper which proposes to give EV chargepoint operators the right to carry out street works using a permit instead of a licence. Currently, chargepoint operators do not have the statutory right to carry out streetworks and must obtain a licence from the local highways authority which causes significant delays and costs.
As part of the measures, the government has allocated the first grants from the £381 million Local Electric Vehicles Infrastructure (LEVI) Fund, under which five local authorities have received £14.2 million of funding for charging projects. The LEVI Fund is designed to support the installation of thousands of new chargers nationwide and includes funding for dedicated EV officers to be recruited to support procurement.
The DfT has also launched a fresh grant for state-funded schools and education institutions to procure and install chargepoints on-site, up to the amount of either £1,500 or £2,500 per socket depending on the area and type of installation, to a maximum of 40 installations per site.
The Minister for Technology and Decarbonisation, Anthony Browne, said "this latest set of measures will mean EV owners everywhere benefit from easier and more convenient access to chargepoints."
This article was written with the assistance of Jack Duffy, Johnny Hartrick, Madeleine Begg and Luke Webb, trainee solicitors.