Most battery storage owners and operators already know that value stacking is the key to profitability. Batteries are costly assets, but they can recoup their costs in more ways than one—and using a battery system for multiple applications can greatly improve the asset’s return on investment. 

Plus, there is one particular area that batteries excel at: providing ancillary grid services such as frequency response, which help keep the electricity network working as it should. There are numerous types of ancillary service, each of which can deliver incremental revenues for battery operations. 

However, there is currently one type of ancillary service in the UK that battery operators do not yet seem to have fully latched onto. 

In February this year, the grid data provider EnAppSys reported that a new ancillary service category known as dynamic containment “remains undersubscribed more than four months after its launch but is showing its potential as a useful new revenue stream for battery projects.”

UK electricity system operator (ESO) National Grid ESO launched dynamic containment in October last year as “a fast-acting post-fault service to contain frequency within the statutory range of +/-0.5Hz in the event of a sudden demand or generation loss.”

The service is intended to kick in “quickly and proportionally” but is only active when frequency moves outside of its operational limits, which on the UK grid is 0.2Hz above or below the standard 50Hz level. 

National Grid ESO said it was hoping to ultimately purchase up to 1 GW of capacity in either direction, on a day-ahead basis, but was expecting around 500 MW to begin with. But EnAppSys’s analysis shows National Grid ESO has struggled to meet this target. 

Average dynamic containment volumes last October were just 197 MW. And by January, when National Grid ESO was hoping to be buying between 600 MW and 800 MW of dynamic containment capacity a day, the average daily level had only risen to 333 MW.

A shortage of dynamic containment offers

Unsurprisingly, National Grid ESO was keen to take almost all the capacity that was tendered. Only 1% of daily capacity was rejected for being too costly, and EnAppSys said National Grid ESO was paying around £17 per MWh of capacity. 

That meant companies tendering dynamic containment capacity were being paid a premium of around 40%, or £10 per MWh, compared to the amount they were getting for other weekly and monthly frequency response services. 

The lack of capacity being tendered might have been due to technical requirements that one market participant described as “pretty brutal.” 

But National Grid ESO appears to be working on making things easier. In March, for instance, the ESO issued an update with an illustrative calculation and a connectivity FAQ to help with performance monitoring. 

And in April National Grid ESO said it was planning to procure dynamic containment in a more granular way, based on Electricity Forward Agreement blocks, which divide the day into six periods of four hours each. 

Procurement would be through a pay-as-clear auction platform from the summer, the ESO said. Most recently, National Grid ESO opened up a consultation on dynamic containment procurement, lasting until May 27, 2021.  

Given the ESO’s challenges in procuring dynamic containment capacity and the high prices the capacity commands on the market, this would seem like an ideal target for battery system owners and operators. 

Furthermore, according to EnAppSys, “by operating as a day-ahead auction, it allows participants to take a view of alternative markets and opt in or out of them to maximise revenue.”

Multiple reasons to participate in the market

To cap it all, in January National Grid ESO allowed dynamic containment services to be stacked alongside balancing mechanism bids. 

The ESO uses the balancing mechanism to make sure electricity supply matches demand in real time, and batteries can play an important role in it by either discharging extra power or absorbing it depending on the requirements of the grid. 

By allowing battery operators to participate in both markets, National Grid ESO effectively made it possible for asset owners to get paid for discharging batteries to serve the dynamic containment market and be paid again for recharging as part of the balancing mechanism. 

Given these obvious benefits, the next question for UK battery asset owners should be: how can I take part? 

As mentioned above, the technical requirements can be daunting: to take part in the dynamic containment market, battery operators must give the ESO operational metering data on a second-by-second basis, as well as hourly performance reports at 20Hz resolution. 

However, these technical requirements are well within the capabilities of current power plant controller technologies. 

The Inaccess Unity storage power plant controller (S-PPC), for example, meets all the requirements of the dynamic containment market and is already being used daily to participate in auctions. 

The Unity S-PPC is a vendor-independent, modular system that complies with any grid code requirements and is scalable from a few hundreds of kilowatts tokilowatts of up to hundreds of megawatts. It also integrates with any battery technology, management system and inverter model.

Choosing the right power plant controller

For UK battery operators, another attraction of the technology is that it offers DC capabilities and so can participate in active and reactive power markets, adding another potential layer of revenue to the value stacking equation. Other advantages of the Unity S-PPC include the ability to:

• Offer a wide range of services, from dynamic containment to firm frequency response.
• Coordinate active power control, frequency services and state-of-charge management.
• Get schedules from operators, traders or other third-party systems. 
• Use custom and industry-standard interfaces for aggregators. 
• Optimise battery use and limit daily cycling. 
• Automate service and revenue stacking.
• Retrieve market or aggregator signals.
• Schedule charging and discharging. 

The Unity S-PPC’s versatility makes it an excellent technology choice for battery operators looking to take advantage of dynamic containment. And even for battery operators not currently contemplating this market, it is worth keeping an eye on the potential for revenue from services such as this. 

Currently, the UK is a hot market for ancillary services because it faces severe grid constraints as baseload generation is replaced by intermittent renewables and interconnection capacity remains low. 

This has turned the country into something of a testbed for new ancillary services, of which dynamic containment is just an example. National Grid ESO is also readying to launch two other response services, called dynamic moderation and dynamic regulation, before the end of March 2022. 

Similar services could be sought by ESOs in other markets as they run up against the kinds of grid constraints that the UK is seeing as a result of the energy transition. These will doubtless lead to growing opportunities for battery owners and operators.

But it is important to remember that these market opportunities will not last forever. There is only so much balancing that a grid will need, and early movers will have the greatest chance of capturing high-value applications. 

Over time, this will likely make it even more important for battery asset owners and operators to seek new applications that can be added to their service stacks. And for this, it will pay to have power plant controller technology that is as flexible as possible.

Want to know how Inaccess can help you with Dynamic Containment?