Enhanced Frequency Response results announced

United Kingdom

A total of eight storage projects have been successful in the inaugural Enhanced Frequency Response tender (“EFR”) run by National Grid, which awarded contracts to a total combined capacity of 201MW.

 EDF Energy Renerables 49
 Vattenfall 22
 Low Carbon 10
 Low Carbon 40
 E.ON UK 10
 Element Power 25
 RES 35
 Belectric 10
 Total MW 201

The EFR tender was hugely popular, with 64 companies pre-qualifying over 1.2GW of projects. Whilst the new service is technology neutral, the process attracted significant interest from developers of energy storage solutions. This is due to the characteristics of the new ancillary service, which requires the service provider to deliver output within 1 second (or less) of registering a frequency deviation.

National Grid imposed a 50MW cap per bidder in order to ensure a competitive market develops for EFR. As part of the assessment criteria, bidders were required to provide details of the site location, provide a programme of works, demonstrate a valid connection offer for the site (with a connection date no later than 18 months from contract award), demonstrate an option, a lease or a freehold interest in the site, demonstrate that financing was in place (either internally or by way of a letter of intent from a funding party) and demonstrate that it had either contracted with or received bids from an EPC contractor or equipment manufacturer.

In total, National Grid received 37 bids by close of bidding on 15 July 2016. In a press release, National Grid confirmed that of 64 unique sites that participated in the tender, 61 were for battery assets, 2 from demand reduction and one from thermal generation.

The EFR contract provides service providers with availability payments for provision of the EFR service for four years from satisfaction of the conditions precedent, which include passing a commissioning proving test. The successful projects will need to meet their post-tender milestones (including obtaining planning permission and other consents, securing land rights, signing its connection agreement, ordering long lead items and entering into an EPC agreement or equipment supply contract) by 28 February 2017. The latest services start date is 1 March 2018.

A further two EFR tender rounds, each for an additional 200MW of capacity, are currently expected.

As predicted in our previous Law-Now, the current ongoing review of embedded benefits has impacted on the results of this tender, as National Grid has stated that six companies chose to withdraw tendered options from ten sites that had opted out of the typical TRIAD times in their EFR bids.