16 Nov 2021
Alex Done

Quick Take - DCL volume requirements

Context - what’s been happening?

  • Dynamic Containment (DC) is a fast-acting, post-fault frequency response service used by National Grid Electricity System Operator (NG ESO) to manage frequency after significant deviation from 50 Hz.
  • Dynamic Containment is split into two products: low-frequency response (DCL), launched October 2020; and high-frequency response (DCH), launched November 2021.
  • Both DCL and DCH have been dominated by battery energy storage sites (BESS).
  • In November 2021, the market underwent significant changes, including revisions to requirements and the launch of DCH.

Motivation - why is this interesting?

  • In September 2021, National Grid ESO released its forecasted, low-frequency Dynamic Containment (DCL) requirements for November.
  • Now we’re a couple of weeks into the month, we can also see the ESO’s actual requirements.
  • Looking at how these two values compare can help us understand how much DCL the ESO actually needed and how much it might procure for the rest of the month.

Graphic - what does it look like?

The graphic (below) shows how forecasted and realised DCL requirements compared for November 2021.

Forecasted vs realised DCL requirement. Data shows avg. values calculated from ESO’s September market information report and linear orders over 1 November-16 November 2021.
  • What to look at - The differences between the ESO forecasted and realised requirements.
  • Things to keep in mind - We’re comparing average requirements here, which means sample size is important.

Key takeaway - why you should care?

  • Average requirement across the month has been considerably higher than forecasted by the ESO back in September.
  • This is most prominent in EFA block 5, where the ESO expected a 0 MW requirement 93% of the time with an average requirement of just 10 MW across the month.
  • So far across the month, EFA 5 average procurement has been closer to 300 MW, with highs of 505 MW.
  • On six separate EFA blocks over this period, the ESO sought to procure >900 MW of DCL, despite forecasting no such requirement at any point during the month.

This means one of two things:

  • The ESO needs more DCL than it thought it would in November; or
  • Requirements for the remainder of November are likely to fall... sharply.

The former is more likely, especially when you look at requirements in EFA 3-5. Even if the ESO has a 0 MW requirement for DCL for the rest of the month, average procurement levels will still exceed those expected in the September market information report.

Want more?

If you’d like to dive into some of the ideas discussed above in more detail, we’d recommend checking out some of our other articles:

If you’ve found this quick take interesting and you want to hear more about the topic, then please reach out. Our research pipeline is (in part) filled using great suggestions from our users, so if you want more or the same (or something totally different) let us know!

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