The UK electricity system is in flux. The Climate Change Committee has recommended that it fully decarbonise by 2035 with this entailing a transformation in how power is generated and managed at the same time as electricity demand increases.

Electricity generation is decentralising^[1], balancing costs are increasing (from £506m in 2015 to £1.3bn in 2020^[2]) and there are increasing opportunities for distributed potentially flexible demand. This, among other reasons, has brought attention to the need to intelligently manage distribution networks and local energy resources. Local trading platforms are being explored as a potential means to facilitate trade at the distribution level with the opportunity to also bring wider benefits.

The TraDER project sought to demonstrate new market design potential by introducing a flexibility exchange, operated on a neutral market platform, that layers multiple value attributes (potentially by multiple procurers) in the same time period. It trialled this exchange on Orkney due to the high levels of curtailment of renewable generators. The trading platform enabled trading between buyers and sellers using real assets for two products.

The project was funded through the Flexibility exchange demonstration competition (FleX); a competition funded by BEIS seeking to support the development and demonstration of innovative energy flexibility exchange solutions. There is considerable interest in flexibility exchanges as marketplaces for energy system flexibility assets (such as energy storage, demand-side response, demand reduction, and generation) enabling access to the full value of distribution connected assets. This competition looked to fund research as to this potential.

Electron set out to work with the ESO, DNOs and other market stakeholders to develop, integrate, and scale a flexibility market with the aims to:

• Level the playing field for distribution and transmission connected assets to participate in multiple markets;
• Accommodate participation by a range of different technologies, including large and small-scale generation;
• Minimise administrative and technical burdens to participating in new markets;
• Facilitate engagement in markets by small flexibility providers by removing existing barriers.

This led to the project developing two products for the platform:

1. Demand Turn Up (DTU) – the DTU product is a local product, the trading of which enables curtailed generators and demand assets in the same region to contract with each other, thereby reducing the generator’s curtailment and either acting as a revenue stream for demand assets or providing them with low cost electricity.
2. ANM Flex – this national product aims to enable wider participation of distribution level assets in providing downward flexibility to the ESO thereby improving asset revenues and increasing market efficiency and liquidity. The ESO currently prohibits assets in ANM zones from contracting to provide ancillary services, as the ANM system and constraint could prevent an asset from providing that service. TraDER developed mechanisms for enabling these assets to access ancillary services. This could be very important for the business models of distribution connected assets as the number of ANM-based non-firm connection are set to become the default scenario.

These products were ‘first-of-their-kind’ in delivering:

1. distribution level price signals in real time to avoid curtailment of renewable generation; and
2. enabling DERs in ANM zones to take part in a national market.

Key points

The trial achieved the following key outcomes:

• TraDER is a first working example of a DNO/DSO-enabled market that was operated by a neutral market facilitator and not a DNO/DSO.
• The project provided a first example of a DNO operating an ANM system enabling a market by providing network security against flexibility non-delivery (as an alternative to prevention of market participation due to exclusion of ANM-located DER for some ESO products/markets).
• Through the development of the local constraint product (DTU), TraDER has successfully demonstrated trialling of a trading platform hosting a real-time peer-to-peer market trading physical energy. This could be a world first and is certainly a major step forwards for transactive energy.
• TraDER has proved that the alleviation of constraints can be handled by market solutions via trading platforms.
• TraDER has shown that trading platforms can increase access to revenue streams for distributed energy resources, particularly those located in front of or behind transmission constraints. Such actions were largely not permissible before the project.
• The TraDER project has increased the TRL of market platforms. The project has improved the knowledge and understanding of how these may operate in the future, the value they could add and the current barriers to their operation. This has started to have impact across the project partners. For example:

• • Elexon stated that their upgrades for settlement processes will be better future proofed due to the understanding they have gained from the project.
  • SSEN’s new ANM upgrade will be better suited to future trading platforms due to the work the project has done with them to create an ANM technical specification which fits their needs. This technical specification could be a starting point for other DNO ANM upgrades.

• The TraDER market platform has helped minimise the administrative and technical burdens of participation for flexibility services, particularly for smaller market participants.

[1] National Grid’s Future Energy Scenarios (FES), published in 2020, showed installed decentralised capacity reached just over 31GW in 2019, but it is expected to rise to between 45.5-56GW by 2030,  59-95GW by 2040 and 69-126GW by 2050, depending upon potential pathways. https://www.nationalgrideso.com/future-energy/future-energy-scenarios

[2] Source: Elexon