A major breakthrough on the path to a more flexible and responsive electricity grid has been reached in Cornwall, as part of Centrica’s ground-breaking Local Energy Market trial.
For the first time anywhere in the world, the local Distribution System Operator (Western Power Distribution) and the Transmission System Operator (National Grid ESO) are both procuring flexibility simultaneously via a single third-party platform - Centrica’s pioneering auction-based marketplace.
The LEM programme, part funded by the European Regional Development Fund, and delivered by Centrica Business Solutions, has been operating since 2017, and has seen solar and battery systems installed into 100 homes across Cornwall. In addition, more than 125 Cornish businesses, including Carbis Bay Hotel and Goonhilly Earth Station, have had a range of flexible, low carbon energy technologies and monitoring equipment installed.
The LEM platform seeks to benefit each of these participants, and the grid more widely, by providing a mechanism for the system operators to indicate when they will need an increase or decrease in generation or consumption to balance the grid or manage a local network constraint. These needs can then be met by the homes and businesses on the LEM, in return for a financial reward – creating significant opportunities for energy users who are able to be flexible with their usage or call upon smart energy storage solutions.
Centrica’s ground-breaking LEM platform allows buyers (Western Power Distribution and National Grid ESO) to place bids for flexibility services, which are then matched with offers by sellers (homes and businesses) through auctions that run from months ahead all the way to intraday. The platform manages the process for both sides from contract creation all the way to baselining and settlement, making it easy to trade flexibility.
At the heart of these auctions is a clearing engine built by N-SIDE, the Belgian advanced analytics company that provides the matching algorithm for the European Day-Ahead power markets. The engine takes bids and offers and finds the optimal clearing solution, taking into account grid and asset constraints to ensure feasible contracts.
Critically, the LEM portal and clearing engine enables the transmission and distribution (T/D) networks to co-ordinate their procurement to avoid conflicting signals. This combination of T/D co-ordination and grid-secure contracts will be key to unlocking flexibility from Distributed Energy Resources in the future. And, because LEM auctions result in geographically located clearing prices, price signals for flexibility can emerge at various points in the Cornish grid.
This fully automated end-to-end solution delivers optimal value for the whole energy system. By reducing grid constraint and offering a means to dynamically manage the network, the LEM is helping to make energy markets more efficient and reduce the costs of accommodating further distributed renewable generation across the network.