Part 2: Answering the unanswered from Piclo’s e-conference
On 7th October 2020, Piclo held our second e-conference “DSO flexibility markets - the development across Europe and the role of Active Network Management”.

We were delighted to be joined by such an ensemble of industry experts, resulting in two lively roundtables on the topics of “unlocking DSO flexibility across Europe” and “the developing role of Active Network Management”.

With too many questions from the audience to answer on the day, we thought we’d follow up with some of the key insights we took from the afternoon’s polls (see Part 1) and sit down with James Johnston, CEO and co-founder, to answer from a Piclo perspective some of the questions that weren’t covered.

Part 2 asks James Johnston four questions that were asked throughout the two roundtables. To watch the e-conference recording, click here.

James Johnstone, Piclo CEO and Co-founer

Roundtable 1: Unlocking DSO flexibility markets across Europe

Q1. What do you see as the barriers to moving DSO flex procurement closer to real time vs multi-year scheduled awards?

“There are still many key barriers to moving flexibility markets closer to real time procurement but it’s worth highlighting some that we at Piclo are aiming to improve - qualification, market access and ESO-DSO coordination.

Firstly, for shorter term procurement to be possible it is important that a qualification register exists. Effectively, this register would contain a list of pre-approved companies and assets that are able to bid into competitions. The register would be used instead of a System Operator running qualification periods before each competition, where companies are provided with a short period of time to apply and qualify to participate in that one competition. It is only by having a continually reviewed register, in which operational assets can qualify at any time, that there would be assets and companies able to bid and provide services at short notice.

One type of register already in use in the UK is called a “Dynamic Purchasing System” (DPS), which have been used by multiple DSOs, including UK Power Networks and SP Energy Networks. Being accepted onto the DPS means that the System Operator has pre-approved a Flex Provider for participation in their competitions and the Flex Provider won’t need to apply again for the duration that the DPS is set to last. So we see the wider adoption of DPS and growing confidence in their use as important for shorter term procurement.

Secondly, it will be necessary to streamline market access as the industry moves towards shorter term procurement. Providing flexibility services across multiple markets at short notice is simply unfeasible through the manual interfaces that exist today. Piclo is looking to enable Flex Providers to access markets through an API, seeing this as a key enabler moving forward.

Thirdly, there is increasing recognition for the importance of ESO-DSO coordination when it comes to procuring flexibility. It will be critical to ensure that a System Operator’s procurement (be it local or national) does not have adverse impacts on other networks.”

Q2. What challenges have you faced in engaging with flexibility providers? How did you overcome them? Do you foresee the service to be extended for reserve markets (mFRR/aFRR)?

“A key challenge we’ve faced with flex providers engaging in DSO flexibility markets has been building market confidence.

From the perspective of a Flex Provider, engaging in new revenue streams is likely to have high administrative costs such as from searching, qualification and bidding. When this is combined with uncertainty in revenue value, whether there is going to be more competitions held in a particular area and the regulatory trajectory, building confidence was always going to be key.

This is the core reason Piclo constantly undertakes user-research from both the System Operator and Flex Provider perspective. The aim is to ensure the platform is as easy to navigate and user-friendly as it can be - reducing barriers to entry such as from high searching, qualifying and participating costs as much as possible.

It is also the reason behind our ethos to be as open and transparent as possible, we publish all historical bidding and competition data to ensure flex providers have the information they need to make informed decisions about participation and pricing. We also encourage System Operators to provide bidding guidance and maximum budgets for the same reason.

With respect to extending our services to other markets, this is something we are actively looking into - watch this space!”

Roundtable 2: The developing role of Active Network Management

Q1. Flexible Power just announced a collaboration across four UK DNOs. What impact does this have on the active network management landscape?

“Standardisation across DSO flexibility markets is valuable to the industry, so it is encouraging to see the ongoing efforts in this space. As an agnostic and independent marketplace, Piclo will continue to work alongside Flexible Power as well as individual DNOs such as WPD, SSEN, UKPN and SPEN to develop DSO flexibility markets further.

DSO roles are still in an early stage of development. Whilst these roles continue to be mapped out, inevitably there are open questions about how generalist DERMS platforms fit in with more specific use cases like Flexible Power. In any case, there will always be a key interplay between DSO back-end systems, which decide when and where to dispatch flexibility, and marketplace interfaces that enable flex providers to participate in DSO markets on their own terms.

Our vision for standardised market access and participation includes the current DSO flexibility markets and the different pathways to participate in ESO markets and more. We see this streamlined market “gateway” as critical for increasing engagement from a wider pool of flex providers across different flexibility markets as well as enabling shorter-term procurement. We are excited to be working across DSOs, ANM/DERM providers and National Grid ESO to build these interfaces out and streamline access and participation across the energy sector.”

Q.2 What does the panel think of the new Optional Downward Flexibility Management product in the UK from the ESO and how this relates to local flexibility tenders/ANM?

“We saw the introduction of National Grid ESO’s Optional Downward Flexibility Management (ODFM) as an exciting development.

Engaging with as wide a pool of flex providers as possible is important for a cost effective net zero so opening up flexibility markets to smaller, embedded assets, such as renewables, is a step in the right direction.

As time moves on, the focus should obviously move towards flexibility that enables more renewable energy onto the grid as opposed to turning down these generators. We are excited to be trialling this type of flexibility in Project LEO looking at two peer to peer models:

Firstly Curtailment Trading, which is where renewable generators can offset the need for curtailment by incentivising a source of nearby flexible demand to increase output at peak generation times.

The other, Allocated Capacity Trading, would enable renewable generators to purchase unused connection capacity from nearby generators instead of paying for expensive grid reinforcements, with Piclo marketplace providing a single place for generators to advertise their need to buy or sell connection capacity.”

Click here for Part 1: Poll insights from Piclo’s e-conference