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Energy Storage Digital Summit Q&A: Optimising for the multi-market strategy, with EDF’s Chris Regan


SPONSORED: EDF are one of the largest aggregators of distributed flexible assets in Europe with significant presence in the UK, France, Germany and Belgium. Chris Regan, Head of Energy Trading Services, speaks to editor Andy Colthorpe about EDF's view on battery storage and optimisation, the impacts of the pandemic on this market and what the future could look like. 

We heard at the event last month that the energy storage market in the UK is moving towards a merchant model and away from contracted revenues. What does this mean in practical terms to anyone thinking of investing in battery storage?

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The merchant model doesn’t rely on one market, rather it allows investors to gain income from six-plus markets. This multi-market strategy in itself provides a hedge against the value in one market falling away.

These markets include the wholesale traded market which has been used to monetise power stations for 19 years, is deep – unlike Firm Frequency Response (FFR) – and has some predictability. Within EDF we operate the fleet of batteries under our control across all the markets to ensure the maximum returns. Having the largest trading position and optimising the largest volume of batteries means that we can effectively adopt this multi-market strategy as we are always present in all markets.

For example on the recent Bank Holiday weekend in May, we simultaneously had solar generation turning down, batteries in the Balancing Mechanism (BM), batteries NIV chasing (our wholesale performance was  >£90 (US$114.06) per kilowatt annualised revenue for the weekend), battery sites providing Optional Downwards Flexibility Management (ODFM) and batteries providing FFR – this is all alongside operating the UKs largest generation fleet.

This diversity and internal portfolio means that EDF can offer battery price floors, guaranteeing revenue will come from at least one of these sources!

There's a lot that goes on under the banner of “battery optimisation” or even simply “operation”: What sort of services and applications would you be tasking battery storage systems to perform and what are the challenges you face, whether those are technical constraints or perhaps competition in the various markets?

EDF operate within all the major revenue streams that are applicable to batteries, including but not limited to FFR, Day Ahead and Within Day markets, Cashout, the Balancing Mechanism, ODFM and some older services as well.

Whilst the optimisation against the markets is complex, the impact on the storage systems should not be. EDF work in partnership with the asset owner to determine their requirement on battery life management, risk appetite and preference for administered versus traded markets.

Once this is determined we manage entry to all markets and all central operations – the battery simply has to charge and discharge when requested.

We hear a lot about how providing multiple services from a battery asset allows you to 'stack revenues'. How do you manage the complexity of performing multiple applications from a single asset?

EDF has an active presence in countries such as UK, France, Germany, Belgium, Italy, as well as operating batteries in North America.

Much of the complex operation is managed by algorithmic dispatch and automated models that are centrally created for all markets by our R&D teams. The market insight, experience and trader knowledge across these geographies is pooled to create best-in-class algorithms at the heart of our optimisation processes.

‘Always present in all markets’: Chris Regan, head of energy trading services at EDF.

Energy demand patterns have changed quite significantly during the COVID-19 pandemic. Are there any specific lessons you've been able to learn and are there things the energy system can do better when we start to return to normal that battery storage can deliver, that it isn't delivering now?

Really, the energy patterns under COVID are like a peek into the future, as the ratio of renewables to dispatchable generation is much higher than expected. We achieved circa £90/kW on some of the days this bank holiday weekend.

Whilst some assets suffer from low prices, batteries thrive if:

  •     They operate with a merchant model that allows you to swap quickly to the best market at the time rather than adopting a fixed strategy. EDF managed this by providing FFR, cashout, BM and ODFM as best suited our different battery economics  
  •     The optimiser catches market value well  –  the EDF trading desk has 19 years of experience leading in the UK's short-term traded markets  
  •     The optimiser values future opportunity as well as simple spreads, so some opportunities are given up to save the battery for even better markets later – this extrinsic benefit is part of EDFs strategy

During the Digital Series session, you said that batteries have fitted very well into the UK's energy market landscape, partly due to asset operators being able to pick and choose how they dispatch into the market in response to price signals. However, if you could change one thing about the market, what would it be?

I would like to see a coordinated interface of the local Distribution System Operator (DSO) and national Electricity System Operator (ESO) national Balancing Mechanism instructions going to assets that correctly adjusts the metering at a local level to keep the supplier whole – unlike the Trans-European Replacement Reserve Exchange (TERRE) or Virtual Lead Parties (VLPs) – and keeps the customer’s invoice simple!

We are hoping to help deliver this vision as EDF are already active in these markets with our TRADER collaboration through Electron as well as contracts with numerous DSOs.

Are batteries the missing link that means decarbonisation can be good business and renewables can be reliable, or is this too simplistic a way to look at the energy transition?

The endgame for UK decarbonisation is to have a baseload of nuclear output alongside renewable – and variable – generation. The ability to shift generation through storage or to shift demand through smart energy usage will allow this goal to be met. 

Batteries fit this requirement perfectly. 

Cover Image: Inside EDF's 49MW West Burton battery storage facility. 

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