Re-Designing GB’s Electricity Market Design: A Conceptual Framework Which Recognises the Value of Distributed Energy Resources

Thomas Pownall,Catherine Mitchell,Iain Soutar

doi:10.3390/en14041124

Abstract

The design of electricity markets determines the technologies, services and modes of operation that can access value, consequently shaping current and future electricity landscapes. This paper highlights that the efficacy of Great Britain’s electricity market design in facilitating net zero is inadequate and must be reconfigured. The rules of the current electricity market design are remnants of an electricity sector dominated by large-scale, centralised, fossil fuel technologies. Therefore, routes to market for the provision of necessary services to support net zero, not least flexibility, are largely inaccessible for distributed energy resources and, despite their benefits to the system, are thus undervalued. Based upon a review and consolidation of 30 proposed electricity market designs from liberalised electricity sectors, this paper proposes a new electricity market design for Great Britain. This design is presented alongside a new institutional framework to aid in the efficient operation of the market. Specifically, this paper proposes a new local balancing and coordinating market located at each grid supply point (the transmission and distribution interface). This is realised through the implementation of a distributed locational marginal pricing structure which is governed by the evolution of the current distributed network operator, known as the distributed service provider (DSP). The DSP also operates a local balancing and ancillary market for their geographical area. The wholesale market is reconfigured to coordinate with these new local markets and to harmonise the actors across the distribution and transmission network.

Highlights

Since the turn of the century, the electricity sectors of many industrialised nations, including Great Britain (GB), have undergone fundamental political and technological paradigm shifts
As well as requiring new modes of electricity system operation, this enhances the value of decentralised technologies, which—in a departure from traditional load-following principles—can increasingly receive financial compensation for the services that they provide to the system
This paper provides a conceptual framework for a new electricity market design which advocates the introduction of a balancing and coordinating market located at each of the grid supply points (GSP), the physical interface between the distribution and transmission network, located at 132 kV in England

Summary

Introduction

Since the turn of the century, the electricity sectors of many industrialised nations, including Great Britain (GB), have undergone fundamental political and technological paradigm shifts. This is realised through the combination of policy directives in response to anthropogenic climate change and the subsequent technological innovations leading to the displacement of conventional generating units [1,2,3,4]. The rules which govern participation within electricity markets, the market design, are important as they determine market winners and losers by defining the value of services (e.g., of power and flexibility) and the technologies which could provide them [24,27,28,29,30,31]

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Conclusion