In the UK, DSO flexibility markets have been up and running for several years and all DNOs have committed to procuring flexibility as an alternative to grid reinforcement.
“So, how much flexibility was procured?” is a question we are often asked after a DNO has concluded their most recent flexibility procurement round - and quite rightly! How can we know the development of these markets without proper tracking and measurement? But confusingly there are different ways to calculate this figure.
In this blog, we explain two different methods of calculating how much flexibility has been procured. The aim is not to say which is right or wrong, but to ensure the industry knows the difference and to start a discussion about whether we should agree on how to consistently measure flexibility procurement
Back to basics - MW vs MWh
When discussing energy flexibility we need to distinguish between a system’s capacity for flexibility and its actual usage of that flexibility.
- Power Capacity (MW): capacity reflects the instantaneous ability to provide energy required to do work (such as a generator’s capability to provide electricity).
- Energy/Usage (MWh): “usage reflects demand or utilised capacity multiplied by the amount of time that demand or capacity is in use.”
(Check out this helpful blog from Enerdynamics for more information “MW vs. MWh: Do You Know Your Electric Units?”)
In DSO flexibility markets, MWh figures are not typically used as a measure of flexibility procurement. This is because contracts are often for weeks, months and years in the future making it difficult to forecast the MWh of utilised services before the event has taken place.
If a DNO were to use MWh, they would need to estimate the number of hours of flexibility services that assets are expected to provide to the local network, multiplied by the capacity of the assets contracted to provide the service. Estimating hours of utilisation is complex and difficult with forecasts depending on factors such as the speed at which EVs, renewables, heat pumps are deployed and connected to the grid. What’s more, a DNO can pay for assets to be available to provide flexibility, even if they do not end up utilising the service.
As a result, when talking about how much flexibility has been procured DNOs typically use capacity (MW). Below explains two different methods DNOs use to calculate how much flexible capacity has been procured.
Cumulative capacity
The first way to measure flexibility procurement is to add up the total amount of capacity secured across all the signed contracts for all types of flexibility services.
When a Flex Provider bids to provide a DNO with flexibility services, they check whether their assets are in the right area and whether they can provide the service at the date and time the DNO has advertised (called the service window). If flexibility is needed in an area multiple times, an asset can bid into each Service Window and win contracts for multiple years.
For example, the imaginary DNO Electricity Power UK (EPUK) has contracted with the following assets to provide flexibility services:
By simply adding up the total capacity across all of the awarded contracts, EPUK has procured 85MW of flexible capacity. Flex Provider A has won four contracts from 2 assets totalling 55MW across 2021-2023 and Flex Provider B has won one contract from a single 30MW asset in 2022.
Standalone capacity
The second method is to calculate the standalone capacity of the assets that have been contracted to provide flexibility services. This method differs from the cumulative capacity method as it does not count assets providing flexibility services across several service windows more than once.
Whilst this results in a lower figure, it represents the maximum capacity of the assets a DNO has procured to provide flexibility services. In EPUK’s case above, this would equate to 55MW of flexible standalone capacity. Asset A1 with a 15MW capacity is providing services in 2021, 2022 and 2023. As it is the same asset providing the service in each window, the standalone capacity procured by EPUK is still 15MW.
To put it another way, if I hire a bouncy castle for the next four years for my daughter’s birthday, I can either say I have contracted 4 bouncy castle birthdays, or I can say I have the capacity of one bouncy castle for the next 4 years.
The two methodologies also apply when DNOs advertise the amount of flexibility services they are tendering for. DNOs can use the cumulative figure including all service windows or DNOs can take only the standalone MW needed in a particular location.
Differentiating between cumulative capacity and standalone capacity is important for consistency in flexibility market statistics and for understanding progress and development. Whilst neither has to be the “right” way, one method lends itself to looking at progress in total contracted services and may therefore be more indicative of eventual utilisation figures, and the other steers towards having a better understanding of flexible asset capacity in the market.
What do you think?