National Grid ESO’s new dynamic frequency regulation services suite needs fast-responding assets, such as batteries, to enhance grid frequency stability. Operators will be able to pick and choose the services they provide. However, managing the state of charge ahead of time and keeping systems within warranty constraints by stacking these new products to achieve desirable utilisation and revenues adds complexity.

As the National Grid ESO procures Dynamic Regulation with a minimum unit size of 1MW, it could mean significant underutilisation of most existing systems below a 2-hour duration. So what does this mean for the state of charge (SoC), and how we can create the optimum ‘stack’?

In this blog, we explore a theoretical battery’s response to the new Dynamic Response (DR) and Dynamic Moderation (DM) services, modelling the expected impacts to the utilisation, cycling, and State of Charge (SoC) management.

In essence, optimising flexible assets in traded energy markets means trying to maximise (or minimise) the captured price for whatever energy can be sold (or bought) by the device in question: a gas power station, battery storage or just a single electric vehicle. In practice, it is often a highly complex exercise requiring processing and a combination of information from two distinct sources: the asset characteristics and market intel.

The Balancing Mechanism (BM) is the primary flexibility market in the UK. In 2019 over 2TWh of flexibility was procured through the BM with a value worth over £800m. Batteries are only a recent (and small) participant – the vast majority of flexibility is provided by CCGTs and some through pumped storage such as Dinorwig.

As the UK decarbonises and real time balancing of the electricity system becomes more challenging, battery energy storage will play a crucial role in maintaining a stable system.

The UK’s Electricity System Operator, National Grid ESO, has the ambition of operating a zero-carbon electricity system by 2025. This growing requirement for robust real time balancing of the system has been the dominant revenue driver for battery storage projects over the last few years, via Firm Frequency Response.

As the ESO begins a journey of reform in UK frequency regulation via new services such as Dynamic Containment, and 2025 draws closer, we look back at how the system has changed and the impact that batteries have already had, through the lens of grid frequency.

After the excitement of January 2021, which saw Day-ahead prices of £1,500/MWh and Balancing Mechanism (BM) prices of £4,000/MWh, it feels strange to write about the comparatively mundane topic of Dynamic Containment (DC). However, it’s perhaps easy to forget that current prices of £17/MW/hr (resulting in battery revenues of £140+/kW/yr.) are just as exceptional and are going to be vastly more important to the returns from battery systems this year than value obtained through trading -something almost no one was saying would be the case in 2021 a few years ago when frequency response was old news.

The market is clearly in a phase of transition so the most important questions for investors and developers are: how long are these prices likely to last, and what will things look like afterwards?