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| Reference Number | NIA2_NGESO069 | |
| Title | The Implication for the ESO of 24/7 Carbon Free Energy Trading | |
| Status | Started | |
| Energy Categories | Other Cross-Cutting Technologies or Research (Energy system analysis) 50%; Other Cross-Cutting Technologies or Research (Energy Economics) 50%; |
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| Research Types | Applied Research and Development 100% | |
| Science and Technology Fields | SOCIAL SCIENCES (Economics and Econometrics) 100% | |
| UKERC Cross Cutting Characterisation | Not Cross-cutting 100% | |
| Principal Investigator |
Project Contact No email address given National Grid plc |
|
| Award Type | Network Innovation Allowance | |
| Funding Source | Ofgem | |
| Start Date | 01 May 2024 | |
| End Date | 30 April 2025 | |
| Duration | ENA months | |
| Total Grant Value | £620,000 | |
| Industrial Sectors | Power | |
| Region | London | |
| Programme | Network Innovation Allowance | |
| Investigators | Principal Investigator | Project Contact , National Grid plc (100.000%) |
| Industrial Collaborator | Project Contact , National Grid plc (0.000%) |
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| Web Site | https://smarter.energynetworks.org/projects/NIA2_NGESO069 |
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| Objectives | The project will follow a 2 phase approach. The first phase will involve a series of workshops, case studies and discussions where the different market design options and modelling scenarios will be assessed, reviewed, agreed and documented.In the second phase the modelling scenarios with be developed while the trading pilot takes place with the recruited market participants.Scenario modelling will give insight of feasible timescales for the up-take of 24/7 CFE trading. Scenarios will be developed to, for example, consider the speed of up-take by different types of electricity consumer (including electrolysis), different consumption patterns, timing of market design impacts (zonal versus nodal), etc.The implications (both positive and negative) for scheduling, dispatch and system operation will be explored, along with the associated impacts on ESO forecasts, processes, etc. Analysis will support ESO in understanding how market participant behaviour could change. The degree to which 24/7 CFE trading may change asset operation and could provide additional value streams will be explored, for instance in storage or renewables, e.g. RES with lower output but greater diversity in timing of production. There are many elements to consider to deliver the optimal outcome from the ESO"s perspective. Key objectives will be defined (e.g. coordination of supply and demand with CFE instruments, treatment of CO2 emissions, management of transmission constraints etc.) and consider ESO response to the development of a 24/7 market including support for specific aspects of the arrangements. The projects scope consists of 2 phases with defined work packages under each phase. Phase 1 will take around 3 months and will be focussed on a series of workshops, discussions and case studies where the different market design options and modelling scenarios will be assessed, reviewed, agreed, and documented as outlined below:Through a work package approach a number of case studies will be selected, defined, scoped and delivered. The Phase 2 scope will also be agreed and documented based on the outputs of the case studies.The final deliverable of Phase 1 will be a Market Design Document including summary of feedback from participants, description of chosen bidding and auction design for Phase 2, draft market rules for phase 2, draft pricing principles (underlying drivers of hourly certificates) and a summary of implications and next steps. Phase 2:Phase 2 will develop models based on the key findings and analysis in phase 1. These will then be tested and further refined. This phase is approx. 8 months long. This phase it will look at the modelling scenarios with be developed while a trading pilot scheme takes place with the recruited market participants through a number of work packages:Through a work package approach this phase will develop, test and refine a model based on initial results. Scenario integration and alignment will be documented. The number of cases studies and sensitivities will be agreed but may include Scenarios of demand for CFE; Impacts of temporal mis-matching between consumption and production of CFE; Locational issues; Additional value streams; Inclusion of nuclear energy; Green hydrogen requirements.The pilot design will be agreed with and then executed with stakeholders with results, learnings and implications for any future commercial roll-out detailed and provided. To evaluate the impacts on system operation:To better understand circumstances in which dispatch patterns could be impacted by 24/7 CFE trading, whether these changes will be beneficial for system operation or otherwiseTo identify the actions which ESO can take (directly or through influencing the design of the scheme) to ensure that the beneficial impacts are maximized and the non-beneficial impacts are minimisedTo deliver insight on how 24/7 CFE trading will influence the market:To set up a pilot to explore potential trading arrangements, generating the first ever empirical data on green certificate price formation and insights for any future commercial roll-out detailed and provided | |
| Abstract | 24/7 (hourly) matching of Carbon Free Energy (CFE), is a significant change from the status quo (annual matching), enabling consumers to meaningfully reduce GHG emissions in real time. Demand and regulatory changes mean that 24/7 matching could rapidly begin at scale. It is critical for ESO to understand implications for system operation, market design and dispatch patterns of this change. The study will consider the ESO roles and interactions with system objectives including coordination of CFE instruments, treatment of CO2 emissions, and management of transmission constraints. Through this project the ESO will better understand the actions it can take to mitigate risks and maximise the benefits, from a system operation perspective, which arise from the development of 24/7 CFE trading. | |
| Data | No related datasets |
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| Projects | No related projects |
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| Publications | No related publications |
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| Added to Database | 02/10/24 | |
