National Grid’s new strategy spells SNAPS: let the storage party roll on

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Published June 2017

National Grid’s new System Needs And Product Strategy (SNAPS) for the UK is out. With a title that teases, it offers a cheeky tipple on the future of our flexibility markets. Everoze taste-tests on your behalf.

Has anybody noticed that National Grid’s long-awaited System Needs And Product Strategy spells ‘SNAPS’?*

Yes, SNAPS, as in the strong alcoholic beverage; schnaps if you prefer German.

‘IS THIS A HINT?’, I wondered, as I scrolled down the 43-pager. ‘WHAT ARE THEY TRYING TO TELL US?’.

Now, I’m probably not the best person to decrypt the hidden messages of liquor-laden acronyms; after all, I grew up in a humble Presbyterian farmhouse, where a strong drink meant a lump of sugar in your tea.

That won’t stop me trying. Everoze has taste-tested SNAPS on your behalf – here are our takeaways:

1.      The blended frequency response market is finally coming – cheers!

The next storage party kicks off by March 2018, when the long-awaited  blended frequency response product will be launched. Although this tender will officially be technology-agnostic, National Grid’s desire to attract the most cost-competitive options do rather suggest that the party invitation will favour BYOB: bring-your-own-batteries. For instance, thoughtful shaping of the deadband within the frequency response droop curve could go a long way to ensuring this product is battery-friendly. The key unanswered question, though, is what the optimum battery size will be – SNAPs states that both fast response and sustained response are important, hinting at the importance of MWh capacity.

2.      Basic revenue stacks will soon become fancier cocktails

The storage industry has become used to relatively straightforward revenue stacks: 365-day, 24/7 frequency response plus capacity market, sometimes with a dash of triads-chasing. SNAPS will soon tempt us towards something fruitier. There will be new revenue ingredients to choose from – including reactive power and black start. The promise of moving towards closer to real-time markets will embolden battery asset owners to shake things up a bit, to capture upside opportunities. Seasonal patterns will also become important, with system needs increasing at the extremes, shown in Figure 1 below. One thing is for sure: these revenue stack cocktails will strengthen the hand of aggregators, who will emerge as the suave bartenders, expert at mixing revenues together in just the right risk-reward ratios. Yum.

Everoze Partners SNAPS 1

Figure 1: Growth in balancing services lies at the extremes – the smartest storage revenue strategies will seize on this. Source: SNAPS.

3.      Procurement complexity will continue to leave a painful hangover

SNAPS repeatedly promises to ‘rationalise’ and ‘standardise’ flexibility markets. This is much needed, given topsy-turvy market pricing (see Figure 2 below) – and will ultimately give consumers a better deal. But, let’s face the sober truth: there’s a limit to how much National Grid can simplify the lives of storage developers/investors. Yes, the reformed markets will be more efficient and transparent – but figuring out optimal bidding strategies and the interfaces between revenue streams is inherently complex – and always will be. Drink some water, go back to bed and accept it.

Everoze Parteners SNAPS 2

Figure 2: Ancillary services market pricing has been topsy-turvy, with some products hugely subscribed, and others neglected. Source: SNAPS.

A toast! 

So – is SNAPS your tipple of choice? I look forward to reading your own thoughts (, whether you’re teetotal or totally trolleyed. In the meantime, let’s raise a glass to our fast-growing flexibility markets. With SNAPS in hand, not only are our cheeks a little flushed, but we finally have a direction of travel mapped out, and a timetable for getting there!

Even I’ll drink to that.

*Full credit to eagle-eyed Christophe Banos for this acronymic observation.

Felicity Jones - Partner at Everoze Partners Ltd