Firm Frequency Response: final auction results
November 2023’s Firm Frequency Response (FFR) auction results were the last ever for the service, as National Grid ESO’s plan to phase out FFR was completed.
Despite only 100 MW being accepted, prices remained steady
The average price of accepted bids has remained stable despite the volume dropping in the last few months.
The required FFR volume dropped to 100 MW as the final stage of the phase-out concluded. 102 MW of bids were accepted, the lowest amount seen since October 2021.
The average price of accepted contracts remained steady at £5.43/MW/hour, marginally above October’s average of £5.38/MW/hour.
November’s top FFR contracts
Tynemouth (25 MW, operated by Arenko) repeated the feat of securing the largest 24-hour FFR contract of the month, having done so in October. ANSC-011, a behind-the-meter asset operated by Anesco, won the largest EFA block pair contract of the month at £11.58/MW/hour in EFA blocks 5 and 6.
Stable prices show the market prefers shorter-term contracts
Despite falling volume requirements in FFR, prices didn't drop, and even though FFR currently provides more revenue than Dynamic Containment, the number of FFR bids fell by almost 25% compared to October 2023.
The reduced FFR bids show operators value the flexibility of not being tied to a one-month contract. It also suggests battery operators are preparing for the removal of the service and are getting comfortable with not using it as a source of revenue.
Batteries in Britain currently rely on FFR less
With November being the last month of FFR, it’s important to look back at how much the service has contributed to battery revenues over the last few years.
Throughout 2020, FFR made up 40-50% of batteries’ revenues. This all changed when Dynamic Containment was introduced in Q4 of 2020 and became the dominant source of revenue for batteries in GB.
However, in 2022, DC revenues dropped as the service became saturated. This led to FFR revenues rising, providing batteries with around 30% of its revenue at times.
Several batteries managed to successfully take advantage of rising FFR prices in 2022. In October 2022, Runcorn secured an FFR contract that provided £17,334/MW for the month, the most revenue any single battery made in the service. Lascar Works was another site that secured a contract worth over £17,000/MW, doing so in December 2022.
National Grid will buy more Dynamic Regulation volume
As part of the phase-out of Firm Frequency Response, National Grid announced that the Dynamic Regulation service would see volumes increase from 230 MW in September to 350 MW in December.
Dynamic Regulation clearing prices for October are currently averaging £8.77/MW/hour, marginally below what they were in September.
This price could change as the market adapts with the upcoming launch of the Enduring Auction Capability and the phase-out of FFR. However, it’s likely most asset providers will still be looking to the lower cycling Dynamic Containment in the future, as well as opportunities in wholesale markets and the Balancing Mechanism.