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Energy Exchange

In the transition to Distribution System Operator, we are increasingly connecting distributed generation customers. Distributed Generators – mainly renewables like wind and solar – are pivotal in facilitating the UK’s low-carbon transition. Some of these generators operate on ‘flexible’ connection agreements.

Energy Exchange, or ‘Market-Based Curtailment Management’ will evaluate market-based solutions that could make it easier and more profitable for customers with a flexible connection. In doing so it will allow us maximise the incentives for flexible connections and continue to drive the low-carbon revolution.

Project-on-a-Page summary

Project data

Start date: 01/09/2019
End date: 01/05/2021
Budget: 985,800

In 2015 we began to roll out flexible connections through our Flexible Distributed Generation (FDG) product. FDG allows generators to connect to the network for a much lower up-front cost in return for agreeing to export less electricity to the network at the few times of the year where supply exceeds demand. To date this solution has saved our customers more than £70 million and in the financial year 2017/18 saved 20,394 tonnes of CO2, equivalent to the environmental benefit of about 250,000 trees. We are currently deploying Active Network Management, an advanced in-house network control system that – among many other applications – will further facilitate FDG in the future.

We expect FDG enquiries to increase rapidly in the coming years. If they do, we need to be sure we are doing everything we can to make these connections possible.

Energy Exchange will design, devise and test different market solutions that will make producing energy more efficient – and potentially more profitable – for customers with a flexible connection.

Energy Exchange will design, devise and test different market solutions that will make it more efficient – and potentially more profitable – for customers with a flexible connection.

During the first part of the project, we are seeking feedback from our stakeholders – both existing FDG customers and those with traditional connections – so that they can have a say in how the trials are designed and implemented.

When our network is running at full capacity, FDG customers are curtailed on a ‘last-in, first-out’ basis and not any other criteria such as geography, need or whether a customer was willing to pay extra not to be curtailed. Depending on the geographical location of a generator and the load on our network at a given time, however, curtailment levels vary from customer to customer.

The trials will explore distributed generators trading their ‘place in the queue’, or swapping the actual curtailment levels, in exchange for a financial incentive.

Our market options will explore curtailment trading between UK Power Networks and DG customers and also between DG customers only. They will also look at auctioning and trading capacity rights, creating a new local ‘host’ energy market, and flexible connection customers trading their place in the queue.

Flexible connections are an innovative idea – born out of our world-leading Flexible Plug and Play project which has already saved our customers £70 million and in the financial year 2017/18 saved 20,394 tonnes of CO2.

Energy Exchange is the first time we have trialled market-based solutions for flexible connection customers, and continues our progress towards becoming a Distribution System Operator. If the market trials are ultimately proved to support FDG through increased profitability and/or lowered curtailment, market based curtailment management will pave the way to more low-carbon renewable energy.

The project will help us understand how market-based curtailment management might benefit our customers, and what would be required to deploy it across our network. The trials will help us to;

  • Design a market-based curtailment management system that works both commercially and technologically.
  • Give our flexible connection customers a say in how we design the system.
  • Quantify what the financial value of the solutions could be.
  • Forecast what future levels of curtailment could be, which is especially important given the increased uptake of electric vehicle and household renewables that put pressure on the network.
  • Generate an important understanding of how we can better manage flexible connections to pave the way for the low-carbon transition.
  • Streamline and improve the flexible connection management process.
  • Understand where and when we may need to make infrastructure upgrades in the future, which will help us save money for our customers.

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