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Seasonal Generation

Project ran from January 2011 - August 2013

Project Description

The Seasonal Generation Deployment project was looking to explore the opportunity to utilise temporary generation, used for festivals and events in summer, installed in to primary substations to mitigate against the effects of winter peaks on the system. Traditional solutions for these winter peaks include expensive network reinforcement of transformers and circuits. The project was split in to a number of aims:

Technical

To specify the requirements for a network installation to allow third party assets to be securely stored at locations within the network such as a primary substation; and
To develop control arrangements that would enable the assets to be safely operated automatically by M2M signals or from the WPD network control room.

Commercial

To identify the value to asset owners of deploying generation assets used for network support; and
To verify that the cost to the Distribution Network Owner is more economic than conventional reinforcement. The project was terminated in summer 2013 when it became apparent the it was uneconomic for generation owners to deploy units on a seasonal basis at a cost that would be lower than traditional reinforcement costs.
 
Despite the project termination, several learning outcomes were identified within the trial that will assist future projects or business as usual initiatives that consider the use of distributed generation.

Project Phases

The original objective of the trial, was to utilise existing or new network connected generators provided for standby generation purposes, export with a power purchase agreement (PPA), or generation for short term operating reserve (STOR), along with seasonal generation (typically only currently operated during summer at large festivals and concerts). The generation in all instances would be owned and operated by either a customer and/or an aggregator. Through commercial arrangements and control methodologies WPD would utilise this generation on a seasonal basis (winter) to provide controllable peak demand management.

The project was to consist of two phases:

Phase 1 - the installation of a single point of generation at an 11kV substation site. The key objective of phase 1 was to initiate, develop and deploy the engineering interface, commercial arrangement and first stage generation control methodology.

Phase 2 -  to utilise existing network connected generation along with strategically placed generation connected to a contiguous section of 11kV network, which would be a test within a more complex network environment.  This would provide a platform for commercial arrangements and control methodologies to be further developed.

In order to minimise the expenditure of the Tier-1 fund the project was to utilise the existing revenue streams associated with distribution generation connected to the network, STOR, TRIAD and PPA:

  • STOR – Short Term Operating Reserve
    • A commercial arrangement with National Grid to provide short term generation to support the grid at times of high system load. The contracted generation receives finance for being available and then for being utilised.
  • TRIAD – Transmission Network Use of System charges (TNUoS)
    • There are three TRIAD periods per year and by using less energy or supporting the grid with generation at these times a payment from National Grid is provided.
  • PPA – Power Purchase Agreement
    • The export value (kW/h) of the generation provided to the grid.

This method was proposed as it was originally seen that seasonal generation connected to the system would be value added to an existing financial structure currently employed by energy aggregators. This project was looking to generate electricity at the times of greatest load on the network, winter peaks between the months October and March. These months align to the existing STOR seasons 5 and 6.

It became apparent, due to the commercial arrangements between aggregators and National Grid, that the utilisation of this generation could not be shared between a DNO and NG. Therefore, a DNO would have to request that a generator opted out of these STOR windows for use in the project. Despite the best endeavours of the project partners to develop a suitable contract and financial terms under which to operate the demonstration, this could not be achieved ahead of a deadline necessary to ensure engineering completion.

The project was terminated in summer 2013 when it was proven to be uneconomic for generation owners to deploy units on a seasonal basis at a cost that would be lower than conventional reinforcement.  The trial was therefore halted prior to complete technical installation.

Project Learning

The two distinct elements of this project have been the technical and commercial aspects. There has been significant learning relating to both these aspects.

The connection of the seasonal generation to the existing network has been proven to require the same design principles to that of a normal generator connection to the system.  To facilitate the appropriate operation of the generation, to minimise the usage (previous generation installations have provided full output for a continuous season), a full control system was developed.

This design, although not installed in a real network environment, has been bench tested, where simulated load signals from two primary transformers were provided and the operation of the generators appropriately simulated.  Details can be found in Appendix A of the Seasonal Generation Deployment Close-Down Report (see documents).

The commercial learning of this project centres on the ability to provide appropriate levels of generation for a period of high load on the network, usually winter, at a reduced capital cost of that compared to the capital cost of conventional network investment, usually larger power rated primary transformers. 

This project has provided learning that due to a variety of issues and external factors this is not currently possible.  Major contributory factors were:

  • There are no significant spare assets at the disposal of the generator owners in the winter months. This significantly changed the financial position in terms of the project’s viability when comparing the installation of generation to the capital cost of installing additional or larger transformers;
  • The value that a generator owner/operator attributes to the certainty of revenue in terms of the length of the contract to secure their assets’ connection to the electricity network. The lack of security in financial return meant that a larger return was sought for the time the generation was installed; and finally
  • During the lifetime of this project there was a significant reduction in both the availability and utilisation rates offered by National Grid as part of their STOR contracts. This reduced income revenue meant that aggregators/generators were looking to gather the same income, meaning that the costs to WPD, or any other DNO looking to employ seasonal generation, were increased. The aggregators/generators were not willing to reduce their income stream in line with the current STOR market.

The key learning here is that reliance on other mechanism co-funding an alternative to grid reinforcement carries risks beyond the direct control of the DNO.    Further to that, emerging markets for aggregator and demand response services are still highly volatile making them potentially unsuited for use as long term investment alternatives. Therefore, for a successful trial to take place the STOR rates for both availability and utilisation would have to stabilise and, in most cases, increase for aggregators and/or generator providers, who are looking for a secured level of revenue on their assets.

Full details of the Seasonal Generation Deployment project, including detailed learning from the project are published in the Seasonal Generation Deployment Close-Down Report (see documents).

 

For more information on this project please contact us at wpdinnovation@westernpower.co.uk  01332 827446

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