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Energy
Networks
Association
Open Networks: Flexibility Consultation Launch16th July 2019
Slido is an interactive platform we are using for our Q&A segments and general feedback. You are able to ask questions via Slido at any point throughout the presentation and we will address as many of them as possible at the end of each session. If you wish to ask a question verbally, please wait until the allotted Q&A segment.
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Event code – #FLEX (non-case sensitive) Login – Full namePassword – ENA (case sensitive)
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Slido
Energy
Networks
Association
Flexibility Commitment: Next Steps for Implementation
Randolph Brazier - ENA
Overview• Our Six Steps for Delivering Flexibility Services outlines how the DNOs, GTC, TOs and the ESO are
committing to make emerging flexibility markets work in practice.
• Offers households, businesses and communities a clear and transparent journey through the
process of offering their services to the grid.
• Builds on the original commitment signed by DNOs, and now GTC, in December 2018.• Commitment to openly test the market to compare relevant grid reinforcement and market flexibility
solutions for all new projects of a significant value.
• This work was key in reducing the costs of new infrastructure investment and laying the foundations for a
new, cleaner, more flexible network.
• We will be building on these steps in flexibility developments within the Open Networks Project.• Networks are working together to deliver the smart grid and harmonise local markets for flexibility services
• With the government now legislating for Net Zero 2050, the steps taken in this commitment
will help deliver a cleaner, smarter energy system that is all inclusive.
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5
You can view the full Flexibility Commitment document on the
ENA website here:
http://www.energynetworks.org/assets/files/ENA%20Flexibility
%20Commitment%20Our%20Six%20Steps%20for%20Delive
ring%20Flexibility%20Services.pdf
1. Champion a level playing field
• Market neutrality is a fundamental principle of operating Britain’s energy network infrastructure.
• We will procure flexibility services in a way that creates a level playing field for all energy
technologies and services.
• ENA’s electricity network members (i.e. all DNOs, TOs, the ESO and GTC) will facilitate and provide
convergence and standardisation for customers in order to support this.
• The level playing field allows everyone access to these new markets, and for all connected
resources.
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2. Visibility and accessibility• We will highlight where and when opportunities exist for flexibility services to play a role in ensuring a
secure, consistent energy supply via electricity networks.
• We will remove barriers and enable all customers to access multiple markets to provide services, for
example where they can earn revenue from both the national balancing services market and local
flexibility services markets.
• This will be undertaken consistently and easily and include sharing data with flexibility service
providers to develop transparent markets.
• Ensures markets are open and transparent for all to participate in, creating new opportunities and
revenue streams for suppliers, aggregators, communities and customers.
• Signposts customers to where services are needed, highlighting clearly where opportunities to
provide services exist.
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3. Conduct procurement in an open and transparent
manner
• We are committed to being open and transparent when deciding how and why services have been
procured from different solutions in order to meet network needs, such as flexibility services from the
market, smart grid solutions and traditional network reinforcement.
• We will define common methodologies for all network operators to follow and be transparent about
the criteria used in decision-making.
• The guiding principle underpinning all decisions is that the solution chosen must be most cost-
effective for consumers, while meeting the needs of all customers, the system and the networks.
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4. Provide clarity on the dispatch of services
• Following transparency in the procurement process, we will take a fair and clear approach to the
dispatch of flexibility services to meet electricity system or network needs by setting out the terms
and methodology adopted.
• This includes any decision-making criteria underpinning the dispatch of services.
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5. Provide regular, consistent and transparent reporting
• Having committed to be transparent in our processes and methods, we will then also provide
regular, consistent and transparent monitoring and reporting to provide confidence to the public and
ensure all parties learn from what flexibility is used, why and how this contributes to running energy
networks in a smarter, more efficient way.
• All decisions and reasoning, such as traditional reinforcement compared to flexibility services
options and cost-benefit analysis, will be clear and readily available. We are committed to sharing
these and best practice across the wider industry.
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6. Work together towards whole systems outcomes
• All ENA member electricity networks will continue to work closely to facilitate coordinated and efficient
arrangements which benefit households and businesses, including activities relating to the
decarbonisation of heat and transport.
• This work is being expanded to the wider energy industry, including the gas, heat, transport and waste
sectors, to ensure that changes deliver the best outcomes for everyone on a whole energy system
basis. This applies to all six of the steps outlined above.
• These markets will use the latest smart energy technologies in our homes, businesses and
communities to boost network capacity for connecting renewable energy projects like wind or solar
farms, electric vehicle charging points and heat pumps for decarbonised heating.
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Energy
Networks
Association
Open Networks Project: Project Overview
Randolph Brazier – ENA
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Open Networks – Delivering a Smart Grid
ENA’s Open Networks Project is a major energy industry initiative that will transform the way that
both local Distribution Networks and national Transmission Networks will operate and work for
customers. This is being driven by the 3Ds; digitisation, decentralisation and decarbonisation
The Open Networks Project will help customers connect and realise value; as well as reducing
cost for consumers through more cost effective planning
The Open Networks Project is a key initiative to deliver Government policy set out in the Ofgem
and BEIS Smart Systems and Flexibility Plan, the Government’s Industrial Strategy and the
Clean Growth Plan
Short Animation that can be found at: https://www.youtube.com/watch?v=8GxeWsppmBI
We are taking a ‘learn-by-doing’ approach; we are using innovation funding to trial and test
aspects of the various future electricity system options
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Timeline
DSO definition & improvement
principles
Detailed DSO assessment & improvement development
Support policy decisions and improvement
implementation
Regulatory enactment &
implementation
2017 2018 2019 2019 onwards
Open Networks project is a long-term piece of work that is informing the DSO transition
and is a key forum for addressing challenges around evolving roles and responsibilities in
the short, medium and long term.
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Scope
WS4
Whole Energy Systems
WS1A
Flexibility Services
WS1B
Whole Electricity System Planning & T-
D Data Exchange
WS2
Customer Information Provision & Connections
WS3
DSO Transition
WS5
Comms & Stakeholder Engagement
Delivering benefits in the
short to medium term.
Longer term focus
Energy
Networks
Association
Workstream 1A: Flexibility Services
Sotiris Georgiopoulos – UKPN
17
DSO Services Process for Standardisation & Improvement
• Also developing how we can facilitate other markets in addition to directly procured
DSO services
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Learn-By-Doing: Flexibility Projects
The Open Networks project is taking a learn-by-doing approach
National Grid/UKPN: Power Potential (formerly TDI 2.0)
• Reactive power market from DER for Transmission voltages via DNO
WPD: Flexible Power
• Online platform for procuring flexibility services
Centrica/WPD: Cornwall Local Energy Market
• Virtual marketplace that will provide participants with a platform to buy and
sell energy and flexibility both to the grid and the wholesale energy market
Various: Piclo
• Map based platform for displaying and procuring network constraints
and registering flexibility services
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2019 Deliverables & Flexibility Consultation
WS1A Products Timescale1 Flexibility Market Principles Jan 19 – Jun 19
2 DSO Services – Procurement Processes Jan 19 – Sep 19
3 DSO Services – Dispatch and Settlement Processes
Jul 19 – Oct 19
4 DSO Services – Commercial Arrangements
Jan 19 – Dec 19
5 DSO Services – Conflict Management & Co-optimisation
Jan 19 – Dec 19
6 Facilitation of new markets Jul 19 – Dec 19
Based on stakeholder feedback on our workplan,
we expanded the scope of our consultation to
include these products and the Six Steps for
Delivering Flexibility Services.
This consultation gives the opportunity to industry and
stakeholders to provide early input into the development of
these products and steer the direction of travel.
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You can view the full Flexibility Commitment document on the ENA website
here:http://www.energynetworks.org/assets/files/ENA%20Flexibility%20Commitment%20Our%20Six%20Steps%20for%20Delivering%20Flexibility%20Services.pdf
Great Summary of all DNO flexibility initiativeshttp://www.energynetworks.org/electricity/futures/flexibility-in-great-britain.html
ENA Flexibility Workstream Consultation Events 10th July (London), 16th July
(Glasgow)http://www.energynetworks.org/electricity/futures/open-networks-project/open-networks-project-stakeholder-engagement/events.html
Interim solution for accessing GB wide DER datahttp://www.energynetworks.org/electricity/futures/open-networks-project/der-information/overview.html
Driving a national approach to Flexibility
Energy
Networks
Association
Introduction to Flexibility Initiatives
James Johnston (Piclo)Ben Godfrey (WPD)Ian Pashley
(NG - ESO)
Power Potential Project
Ian Pashley
National Grid ESO
Glasgow, 16th July
Power Potential Unwrapped
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3
• The Power Potential project is a world first trial in using
distributed energy resources in distribution networks to
provide dynamic voltage control to the transmission system
• A whole-system approach can be beneficial for everyone from
network operators to generators to end consumers
Power Potential - Key facts
Funding mechanism: Ofgem Network Innovation Competition (NIC)
Project Lead
In partnership with:
Start Date: Jan 2017
End Date: July 2020
https://www.nationalgrideso.com/innovation/projects/power-potential
2
4
4
Area of Focus
275 kV
400 kV
Why Power Potential?
Project Ambition
• NG ESO highlighted the need to access new
sources of reactive power for system services
• Power Potential is identifying new and flexible
resources
• Learning from the trails to see how to tran3.s19late into
BaU approach aligned how reactive market develop
• Reactive capability market spend in 2017/18 - £79m
spent on utilisation costs nationally (£100m in total)
Whole-system process and communications
DERMS DER
controller
Platform
for
Ancillary
Services
(PAS)UKPN Network
Management
System
Remote
Terminal
Unit (RTU)
DER substation
Aggregator
CAT 5
DER provision of
REACTIVE POWER
and
ACTIVE POWER
transmission services
Overview of reactive power trials for 2019
Wave 3:Transition to BusinessAs
Usual
Wave 2: price
discovery
Objective:
Establish the
commercial
viability of this
approach
DER will compete
with each other in
day ahead
auctions.
Wave 1: technical
trialsObjective: Demonstrate
proof of concept
DER will receive a fixed
participation payment, in
line with the number of
hours they are available
for during wave 1.
Objective: Prepare
DER for a transition to
current business as
usual operations
DER will compete with
each other and the
mandatory market in
day ahead auctions.
Summary of final payment models for trial
Wave Participation payment
Availability payment policy
Utilisation payment policy
1 Up to £45,000 per site, linked to availability
N/A N/A
2 N/A Driven by market bids Driven by market bids
3 N/A Assessed in line with other options available to the ESO
Reactive Service
Active ServiceWave Participation
paymentAvailability payment
policyUtilisation payment
policy
Competitivebidding
N/A N/A Driven by market bids
Historic value of reactive power
• The current cost to National Grid of procuring reactive
power, comprises:
• The default payment rate (i.e. £/Mvarh)
• Costs incurred in the Balancing Mechanism in order to
access Mvars, including
• Positioning cost (i.e. £/MWh)
• Negative reserve creation cost (i.e. £/MWh)
• The default payment rate usually represents the
minimum cost to National Grid, while the other costs
are additional and sometimes incurred
• Note that this is intended to give an indicative range of
the current value of 1 Mvarh. Power Potential will be a
competitive procurement mechanism where achieved
prices could differ from this value.
£/Mvarh4.34
3.19
1.15
Default payment rate for Mvar
Jan - July 2017 Indicative costs for adjusting
plant output in BM
Reactive power heatmaps
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12
Provision of multiple servicesOther service Reactive Power (MVArs) Active Power (MWs)
National Grid’s Balancing
Services (MWs)
Provision of both Balancing Service
and a reactive power service is
possible, provided the performance
of the existing Balancing Service is
not compromised, e.g. by curtailing
MW availability to provide MVArs
Provision of both services simultaneously is
not possible as the services would counteract
each other. Conditional provision i.e. outside
of any period where the plant is contracted to
provide National Grid Balancing Services is
possible.
Can I Participate?
Firm Frequency Response Yes Yes – Conditional outside of any period where
the plant is contracted to provide FFR
Short Term Operating
Reserve
Yes Yes – Conditional outside of any period where
the plant is contracted to provide STOR
Demand Turn Up Yes Yes – Conditional outside of any period where
the plant is contracted to provide the DTU
service
Capacity Market Contract Yes Tbc – the service is not classed as a relevant
balancing service and penalties could apply
under CM rules
Flexibility services to UKPN Yes – Conditional if Q reduces by
change in active power
Yes – Conditional if there is conflict of
simultaneous signals regarding active power
output
Non-Firm Connections Non–firm embedded providers will be allowed to participate in the Power Potential trial.
Under the active service the project is likely to be requesting a reduction in active power
which is in line with services under ANM.
Piclo Case Study and Demo
Open Networks:
WS1AConsultation Launch
July 2019
We are an independent software company based in London
● Helping System Operators procure locational flexibility
● Completed UK-wide trials with all 6 DSOs in 2018
○ 0.46GW of DSO flex needs published
○ 4.5GW of flexible assets uploaded
○ £450k of flex contracts won in first auction
● Supported by BEIS and private investors
Introducing Piclo®
Flex Providers SystemOperators
GensetsandBatteries
Demand side response
Electric Vehicles andV2G
ElectricitySystem Operator
DistributionSystem Operators
An open and transparent marketplace for buying and selling
all types of flexibility
Our vision
About thisdemo
Detailing the steps of the Procurement process. Further
stages to be developed 2019/2020
1. Self service file upload of competition data via your spreadsheet template (API is available)
2. Flex assetsvisualised on the map with pins for qualifying assets (dots if they don’tqualify)
3. Competition list showsthe number of qualifyingassets
4.Countdown shown for the next action for each competition
3
4
1
2
Visibility
1. Competition boundary and buffer zone automatically created from data
2.Qualifying status and basic asset details provided on all assets
3. MPAN visible if provided for detailed locational assessment
4. Aggregation of all qualifying assets and total MW capacity on offer
1
2
3
4
Competitions
1.Download files detailing all qualifyingassets
2. All basic information and location information provided
3.All technical details for technical assessment provided
4.Company details of the Flex Providers who manage those assets provided in second sheet
1
2
3
4
Qualification
1. Flex Providers place bids per competition area and for each service window
2. Entries limited to eitherthe total qualifying MW orthe total need MW
3.Flex Providers enter the offered flexibility capacity, and the maximum runtime (for the aggregated state)
4.Bids can be split if Flex Providers want to structure their offer in that way
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3
4
Auctions
1. Bids received can bedownloaded for offlineanalysis
2.All bids are anonymised but trackable via IDs
3.Bids can be Accepted or Rejected according to rules set by the System Operator
4. When final status of bids is submitted, competition is closed and automatic emails sent to Flex Providers with competition results
1
2 3
4
Results
Thank you
Get in touch if you have any further questions or to
organise an in person demonstration for your team:
● James Johnston +44788 060 3378
© Open Utility Ltd 2019
Open Networks Flexibility Consultation EventWednesday 10th July 2019
Ben GodfreyNetwork Strategy ManagerWestern Power Distribution
What is Flexible Power?
Flexible Power has been created by Western Power Distribution (WPD) to deliver the procurement of demand response services.
Flexible Power will help us identify, procure, schedule, dispatch and settle any participants who can be flexible with their energy usage or generation assets.
• It enables multiple marketplaces to offer WPD flexibility services and be co-ordinated through a standardised procurement route
• It provides a level playing field for single assets, DER portfolio operators, aggregators and other new entrants to provide services
• It only enables access to distribution flexibility services and relies on aggregators to provide access to wider markets
Participant Portal
Flexible Power has taken good practice from Open Networks on distribution system operation.
Delivering Distribution Flexibility
Network Analysis
Publish Requirements
Engage with market and
potential participants
Assess offered capacity vs
requirementLaunch CMZ
Customer Communication
PortalContractAPI InterfaceTest & Activate
Monitor / Baseline
DeclarationsWeek Ahead Assessment
Accept Availability /
ArmingDispatch
Monitor Performance /
Reporting
Payment Mechanics
Invoice / Approvals / Settlement
SettlementAccount
Management
Launching Zones Enablement System
Flexible Power has taken good practice from Open Networks on distribution system operation and is a comprehensive solution for DNO/DSO Flexibility Management.
• Recognisable branding for potential participants• Developed from Open Networks good practice• Procurement compliant services• Tool set for managing the operation of DSO Flexibility• Web based customer interface• Highly automated processes incorporating paperless billing• Hardware independent communications• Comprehensive and transparent documentation library• Contracts for direct and via 3rd party service providers• Integrated into operational control room • Ongoing development continues to add features and
capabilities
Flexible Power Products
Our Restore service supports power
restoration following rare fault conditions.
No availability payment, instead it offers a
premium utilisation payment.
RestoreDynamicSecure
Restoration Support
Our Secure service is used to manage peak
demand loading on the network and
pre-emptively reduce network loading. It offers a higher
availability payment and lower utilisation
payment.
Our Dynamic service has been developed to support the network in
the event of specific fault conditions, such as during maintenance
work. It offers a low availability
payment and higher utilisation payment.
Pre-Fault Constraint Management
Post-fault Constraint Management
Industry Aligned
Secure Dynamic Restore
Advance Payment Arming Availability None
Utilisation Medium High Premium
Declaration Notice Week Ahead Week Ahead Week Ahead
FP Accept / Reject Week Ahead Week Ahead Automatic Accept
Dispatch Notice Week Ahead 15 minutes Immediate
Seasonal Requirement
All Summer All
Site Type Half Hourly Metered Half Hourly Metered Half Hourly Metered
Generation
Load Reduction
Flexible Power Coverage
In the second half of 2019, Flexible Power is seeking 184MW across 17 Constraint Managed Zones. This represents around 10% of our network area.
• 17 active CMZ locations totalling 184MW. www.flexiblepower.co.uk/our-schemes
• 11 additional zones signposting future requirements.
• Our online postcode checker will help you determine if you suitable have sites within our CMZs; www.flexiblepower.co.uk/postcode-checker
On average, participants can make between £1,500 - £6,000 per MW they make available over the course of a year.
Performance YTD
56.8contracted flexibility (MW)
>80active dispatches
25%flexibility needs met
6active constraint zones
170MWhenergy dispatched
Summer ‘19 Only
Energy
Networks
Association
Q&A
Energy
Networks
Association
Lunch
Energy
Networks
Association
Product 1: Flexibility Market PrinciplesSteve Atkins – SSEN
WS1A Consultation Event: WS1A P1: Flexibility Market Principles55
WS1A: Product 1 – PID Extract
WS1A Consultation Event: WS1A P1: Flexibility Market Principles56
Flexibility Market Principles
A principles based approach should:
• Enhance confidence and grow industry trust
• Provide certainty and consistency
• Facilitate innovation and enhance competitiveness
• Reduce perceived conflict
• Define regulation for the future
WS1A Consultation Event: WS1A P1: Flexibility Market Principles57
Flexibility Market Principles
Principles should:
• Rely on Broad-based Standards• High level
• Qualitative not quantitate
• Purposive
• Broad application
• Largely behavioural
• Focus on Outcomes
WS1A Consultation Event: WS1A P1: Flexibility Market Principles58
Flexibility Market Principles - Key Themes
WS1A Consultation Event: WS1A P1: Flexibility Market Principles59
WS1A: Product 1 – Approach
WS1A Consultation Event: WS1A P1: Flexibility Market Principles60
WS1A: Product 1 – Approach
WS1A Consultation Event: WS1A P1: Flexibility Market Principles61
Advisory Group Questions
After reviewing the content we asked them to consider the following questions:
• What is the single most important principle you would like us to capture in this
work?
• How can we best engage with stakeholders?
• What key areas or participants should we be addressing?
• Are principles sufficient?
• Is there a requirement for a code of conduct?
WS1A Consultation Event: WS1A P1: Flexibility Market Principles62
Stakeholder Workshop Attendees
• Advisory Group
• Electron
• Centrica
• Piclo
• Carbon co-op
• Nord Pool
• BEIS FleX Distribution List
63
Consultation questions
• Q4 - Do you agree with these six principles underpinned by simplicity and if not, please provide uswith any rationale?
• Q5 - Are there any other principles that you believe we need to encourage more participation inflexibility?
• Q6 – Is there anything in these principles that you think would compromise your ability toparticipate or should these principles be applied differently from the way set out in our paper?
• Q7 – We will apply these principles to all of our future development work – do you believe that thereare any elements that are not covered by Open Networks Project developments or elements thatshould be prioritised?
WS1A Consultation Event: WS1A P1: Flexibility Market Principles
Energy
Networks
Association
Product 2: Procurement Processes
Ian Pashley – National Grid ESO
WS1A Consultation Event: WS1A P2: DSO Services – Procurement Processes
What will we discuss today?
1. An overview of work done in 2019
2. Procurement Process (2019) – overview and key findings
3. Development Process (2019) – overview and key findings
4. Consultation questions
65
WS1A P2: DSO Services – Procurement Processes
66
An overview of work done in 2019
DNO Network Needs
DSO Services Procurement
WS1A Consultation Event: WS1A P2: DSO Services – Procurement Processes
2018 Process Informs
Procurement
Procurement Informs 2019
Process
67
OperateStakeholder Engagement
Registration of Interest
Procure
Identify and Communicate Procurement Requirement
Other non-flexibility solutions
Not suitable
Successful
Signpost Future
Requirements
Inform potential future
service provision
Potential to combine these steps as process matures
Procurement start
Procurement Process (2019) - Overview
WS1A Consultation Event: WS1A P2: DSO Services – Procurement Processes
…to be developed in
Q3/4 2019
68
OperateStakeholder Engagement
Registration of Interest
Procure
Identify and Communicate Procurement Requirement
Other non-flexibility solutions
Not suitable
Successful
Signpost Future Requirements
Inform potential future service
provision
Potential to combine these steps as process matures
Procurement start
Procurement Process (2019) – Key Findings
WS1A Consultation Event: WS1A P2: DSO Services – Procurement Processes
Requirements
Articulation of Needs
Consistent approach across DNOs
Communication of Requirements
Scope to align across wide range of outlets
Stakeholder Engagement
Breadth of Stakeholders
Wide range of potential providers to engage
Mechanisms for Engagement
Group vs Tailored approach
Ongoing Support Need to ensure simplicity
Procurement
Contract Structure
Common approach preferred by providers
Pricing; Duration
Balance between network needs and investor certainty
Branding Common approach preferred by providers
69
Identify Network
Limitations
Service Development
DNO & SO Coordination
Engage with potential providers
Final DSO Service Design
Significant change
Review
Procurement stage
Development Process (2019) - Overview
WS1A Consultation Event: WS1A P2: DSO Services – Procurement Processes
70
Procurement Process (2019) – Key Findings
WS1A Consultation Event: WS1A P2: DSO Services – Procurement Processes
Service Development
Service definition Balancing network needs with bank-ability
Consistency and Transparency
Sharing service development information between DNOs
DNO & SO Coordination
Interactions Use of ‘Coordinated Services Development’ process
Outputs Level of consistency to support engagement by smaller parties
Engage with Potential Providers
Articulation of service needs
Ensuring service requirements can be readily understood
Refinement of service design
Incorporating provider feedback to maximise participation
Identify Network Limitations
Service Development
DNO & SO Coordination
Engage with potential providers
Final DSO Service Design
Significant change
Review
Procurement stage
71
Consultation questions
• Q8 - Do you agree with the learning and ‘good practice’ highlighted in the report and can youprovide any suggestions for any additional points to be considered and/or steps to implementation?
• Q9 - What would be your preferred mechanism for engaging with DNOs for specific DSO Servicedesign activities and/or procurement events?
• Q10 - In addition to the data set out in Appendix 2, what extra information might DER or marketplatforms require to support their involvement in the procurement of DSO Services?
WS1A Consultation Event: WS1A P1: Flexibility Market Principles
Energy
Networks
Association
Coffee Break
Energy
Networks
Association
Product 4: Commercial ArrangementsAlex Howison – SSEN
WS1A Consultation Event: WS1A P1: Flexibility Market Principles74
WS1A: Product 4 – PID Extract
R
e
f
Product Timeline /
Resources
Consult SG
Review
AG
Review
4 DSO Services – Commercial Arrangements
a) Undertake review of current flexibility service
agreements across DNOs, identify good
practice and a staged approach to achieving
commonality in flexibility service agreements.
b) Identify requirements and develop
implementation plan for taking forward the
staged approach to achieving commonality.
c) Develop good practice for alignment across
DSO and NGESO services in terms of
procurement timescales, service windows and
contract terms (to include the applicability of
‘exclusivity’ terms and scope to participate in
multiple markets).
d) Consider mechanisms for a consistent and
effective review/validation of service provision
and feedback loop for service providers – e.g.
consequences of defaulting under contract.
Identify rights and obligations for driving
contract performance that can consistently be
used across DNOs.
Jan 19 – Dec 19 a) Jan 19 – Mar
19 b) Mar 19 –
Jun 19 c) Jul 19 – Sep
19 d) Oct 19 –
Dec 19
Could be consulted on if there is appetite from Stakeholders
Review as required
As required to support development
75
Commercial Agreements – Current Output
Report on Commercial Agreement Good Practice was finalised and published in June 2019.
• Identified 36 specific points of good practice for adoption
• Identified that some variance must remain in terms of service location, type and value/payment structures as well as company specific references, i.esafety rules.
• Acknowledged and recommended common ‘standard’ agreement approach across DSOs/ESO
WS1A Consultation Event: WS1A P1: Flexibility Market Principles76
Commercial Agreement – GP Examples
1 General A glossary/definition of legal terms should be
compiled and adopted by all DNO’s which can be
universally applied/utilised across flexibility service
agreements to support agreement utilisation.
All
2 General All DSO’s should agree on the unification of role
terms within service agreements, i.e. ‘the customer’,
‘the supplier’, or ‘the company’, ‘the provider’, etc.,
as multiple variances are apparent across (and
even within single) agreements.
All
3 General The utilisation of web pages/portals to present a
wide array of supporting documentation, schedules
and agreement examples enables a far higher
accessibility vs the specific issue of documentation
within single tender exercises.
WPD/UKPN
WS1A Consultation Event: WS1A P1: Flexibility Market Principles77
Commercial Agreement – GP Examples
11 Agreement
Variation
Short-term variations, resulting from
marginal, infrequent, one-off and time-restricted
changes (e.g. sporting events, unseasonal weather,
national events such as elections) should be
allowed and requested only if a) there is no change
to the overall agreement value and b) the variation
doesn’t result in additional or extra service
requirements which should be the subject of new
procurement processes.
N/A
12 Agreement
Variation
Providers must advise of any change in registered
DER subject to existing service agreements, change
includes an increase/decrease in capacity, type or
technology changes.
ALL
13 Agreement
Variation
Agreements should also allow the ability for a
contracted provider to change DER within the
service zone, effectively the agreements award the
‘capacity required’ and not the specific DER. This
enables suppliers to change the source asset(s) of
the service as their capabilities change and more
DER comes online, providing the new assets
continue to meet the requirements of the
agreements.
UKPN
WS1A Consultation Event: WS1A P1: Flexibility Market Principles78
Commercial Agreement – GP Examples
19 Optional
Services
Variation terms which include provision for optional,
premium valued additional or optional services
should be adopted across service agreements.
These terms offer a preferable alternative to varying
service requirements, which outside of a cap or limit
could be considered anti-competitive.
UKPN
20 Optional
Services
The product team also highlight the approach of
DERs/Providers being signed up to ‘optional’
emergency response flexibility service type (as an
additional service, not a variation or specific
‘optional services), this should be included as an
example of best practice. This addition enables
DSO’s to call on all DER available should an
emergency situation occur, while leaving the option
to respond to the providers. To offer a simple
example, in this approach DERs/Providers
contracting with service ’A’ automatically agree to
be contacted for service ‘B’ which looks to provide
network support in emergency situations.
WPD/UKPN
WS1A Consultation Event: WS1A P1: Flexibility Market Principles79
Commercial Agreement – GP Examples
21 Performance
Obligations
The use of schedules to ringfence system, service
and performance requirements is widely apparent
and allows the simple cross-referencing between
simple but specific contractual obligations and more
detailed technical requirements. This is seen as an
example of best practise and if fully applied should
further reduce complex and often repeated clauses
within agreements.
WPD, ENWL,
SPEN, UKPN
22 Performance
Obligations
Importantly, ensuring schedules are aligned in name
and within the core of the detail across all the host
DSOs and the SO will be a core output of sub-
deliverable b and will ensure that commonality is not
applied to the standard template at the expense of
applying increasing variance to the schedules and
supporting documentation.
ALL
WS1A Consultation Event: WS1A P1: Flexibility Market Principles80
Commercial Arrangements – Scope Change
During the finalisation of the P4 report, it was agreed that a scope change to P4 could provide far greater value to stakeholders;
• Remove requirement to develop a plan for implementation across 7 separate organisations and subsequent absorption of GP points.
• Using the outputs of the GP report, instead produce an industry standard template which all organisations can adopt
• Define impact to sub-deliverables c & d and revise scope
WS1A Consultation Event: WS1A P1: Flexibility Market Principles81
Commercial Agreement – Scope Change
Construct a ‘standard’ flexible services agreement based on the commonality and good practice points identified in sub-deliverable a, and an implementation plan for all UK DSOs . (May 19-Mar 20)
Inclusions
All points identified in sub-deliverable a
Planned adoption or implementation across DNO’s for contracting flexibility
Capability within DNO’s (legal, commercial) to adopt common approach
Recommended timeline and implementation plan based on core service provision
Exclusions
Innovations projects looking for non-standard contractual relationships with DER providers
Assumptions
All DNO’s will have a strategy for contracting flexibility albeit these are likely to be at different stages of maturity
Constraints
Commercial and legal support (in house or project based) in the review, recommendation and implementation of a common approach. For example liabilities and contract terms will be related to
individual organisations risk appetites driven from network conditions and the services required to manage them, it will be extremely difficult to define a common approach/methodology for this
across different organisations.
Live contracts which extend beyond the duration of the project will need to remain outside of the proposed changes, as such implementation plans are likely to be staggered for each DSO.
Final DeliverableStandard agreement template for the contracting of flexibility services in the UK by DSOs.
WS1A Consultation Event: WS1A P1: Flexibility Market Principles82
Commercial Agreement - Considerations
Points of consideration;
• Incremental development is needed – Structure, Content, Review, consult, Revise, Refine and Finalise.
• Will retain elements of original sub-deliverables c & d with others pushed back to 2020 WP.
• Will define ‘ownership & change process’ as specific sub-deliverable
83
Commercial Agreement – Revised timeline
June/July
• Finalise revised Scope, timeline and provisional dates
• Produce initial template agreement structure
Aug/Sept
• Circulate revised template for review/approval
• Commence drafting of GP informed clauses and agreed use of schedules, consult on outputs/progress
Oct-Dec
• Review, refine and finalise template agreement
• Define ownership & change process for future changes
• Consult on finalised template
Jan-Mar 2020
• Submit final template for approval
• Produce implementation plan for adoption
84
Commercial Principles – sli.do questions
Sli.do questions
1. Do you agree that a standard contract template for DSOs & ESO will bring benefits to
the industry?
(Yes, No, Other – please explain (free type comment)
2. If you have read the P4 GP Report, do you agree the good practice points identified
are specific enough across the whole contract to inform fully a standard contract
template?
(Yes, No, Other – please explain (free type comment)
3. What element of the contracts would you most like to see consistency across?
(free type answer - Price, Insurance/Liabilities, Timing, requirements, contract length)
Energy
Networks
Association
Q&A
www.spenergynetworks.co.uk
ScottishPower HQ, GlasgowTuesday 20th August
Energy Networks Association, LondonThursday 22nd August
Visit www.spenergynetworks.co.uk/pages/fusion for more info.
SP Energy Networks are exploring the
suitability of the USEF framework for the GB
network via Project FUSION.
Join us at our consultation events to learn more about USEF and to help
inform the future of the flexibility markets.
Energy
Networks
Association
ConclusionsJason Brogden – ENA
Energy
Networks
Association
Afternoon Tea & Networking1-on-1: Stakeholder Response Session with Product Team
