Applicable Balancing Services Volume Data (ABSVD) prevents parties from being unduly penalised for delivering the balancing services they are contracted to provide by the ESO.
So:
- how does ABSVD work?
- why is it relevant to battery energy storage systems (BESS)?
- how are ABSVD payments settled?
How does ABSVD work?
When sites deliver certain balancing services (e.g. frequency response), they naturally deliver energy around their already contracted position (physical notification). Deviating from their physical notification (PN) results in an imbalance. Any imbalance volume is usually paid for at the system price.
Check out our Energy Academy video if you want to learn more about how imbalance pricing works.
ABSVD quantifies the volumes of energy associated with providing applicable balancing services. This way, imbalance charges associated with providing an applicable balancing service are removed for service providers.
Note: the removal of imbalance charges is different to the energy costs associated with providing a service. (For example, making sure you have enough State-of-Energy (SoE) to provide a balancing service in accordance with ESO guidance isn’t covered by ABSVD payments.)
Why is this relevant to BESS owners?
From Sep 21 - Aug 22, frequency response services contributed to 88.9% of battery revenues, namely via the new Dynamic Frequency Response suite (Dx) and Firm Frequency Response (FFR). Since both Dx and FFR services are categorised as applicable balance services, ABSVD payments represent a significant amount of reimbursement for BESS owners.
In a recent article on BESS operation across the July 2022 heatwave, we saw Tesla-operated Holes Bay charge to a high SoE whilst providing high-frequency DR (see figure 1 below). ABSVD payments would have recovered the imbalance (charging) costs whilst the asset was being paid to provide the service. With the high import power associated with providing asymmetric DRH, and cost-recovery of this energy via ABSVD payments, the asset was essentially paid to charge up.
FFR and Dx are not the only balancing services classified as applicable and a full list of these services is available on National Grid’s ABSVD methodology consultation document.
How are ABSVD payments settled?
The way in which ABSVD payments are settled depends on two main factors:
- the applicable balancing service
- whether an asset is a Primary Balancing Mechanism Unit (BMU) or Secondary/Non-BMU.
For balancing actions taken in the Balancing Mechanism (BM), these adjustments are taken as part of the normal BM settlement process. However, in July 2022, BM revenues only made up 0.12% of BESS revenues, so for today’s BESS fleet, ABSVD is more relevant to other services.
ABSVD is only applied to Primary Balancing Mechanism Units.
For a Primary BMU, National Grid calculates ABSVD. Figure 2 (below) shows an example of the delivery profile associated with providing DC on 18 July 2022. In this example, an asset contracted to provide 10 MW of low-frequency DC on this day would’ve produced 1.06 MWh of additional (imbalance) energy. This imbalance energy is the Applicable Balancing Service Volume for which ABSVD payments would be calculated. (The actual formula for making payments can be found in National Grid’s ABSVD document.)
*Collared refers to limiting the amount of volume allocated to an MSID pair to the volume of service that is actually delivered. This is important to ensure any volumes associated with ABSVD are recognisable against other positions. (Read more here.)
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