Gas-fired peaking plants, often known as peak-lopping or peaker plants, are power plants designed to balance the fluctuating power requirement in the electricity network and operate during periods of high level demand for electricity or shortfalls of electricity supply.
This demand and supply variation is due to the increase in renewable energy sources (wind and solar) connected to the electricity grid as part of the UK’s effort to cut CO2 emissions. As such, these intermittent and unpredictable renewable sources of power pose a risk to increased fluctuations in energy supply.
The Digest of UK Energy Statistics (DUKES) recent report published and updated in 2019 by the Department for Business, Energy & Industrial Strategy states that renewables’ share of UK generation was at a record level of 33.0 per cent, up from 29.2 per cent in 2017. This has grown significantly since 2000 when renewable generation was just 2.6 per cent.
Peak-lopping power plants provide important balancing services where weather conditions prevent output either when the wind isn’t blowing or the sun isn’t shining.
Peaking plants address this imbalance and reduce stress on the electricity grid, providing power stability – to potentially avoid blackouts and maintain the security of electricity supply.
Unlike base load power plants, reserve peak-lopping plants operate in standby mode when not in use and are called to operate by the electricity grid when there is a demand to supply electricity.
Payments are made to either generate in periods of high electrical demand or reduce electrical load to balance the electricity grid.
Demand side response (DSR) mechanisms like the Short Term Operating Reserve (STOR) and the Capacity Market are designed to level out imbalances in power supply and demand.
During periods of peak power demand, or to guard against supply disruption or grid instability, the National Grid makes use of DSR programmes. These include STOR and the Capacity Market.
STOR mitigates the effects of short term volatility by securing additional generation or demand reduction.
When instructed by the National Grid, STOR providers can start generators or cut electricity demand to a pre-agreed level. In return, providers receive availability payments when they are ‘on call’ during contracted availability windows. They also receive utilisation payments when their service is delivered to the grid.
To participate in STOR, organisations need to be able to provide a minimum of 3MW of generation or steady demand reduction and be able to sustain it for at least two hours. Because it is a short term reserve system, providers must also be able to respond quickly to instructions from the grid, ideally within 20 minutes.
The Capacity Market is another demand-side response mechanism that pays organisations for providing reliable, low-carbon capacity to meet future demand forecasts.
This is more of a long-term balancing mechanism and offers financial incentives to ensure that generators are kept on standby and ready to provide back-up electricity when demand is required.
Capacity agreements are arranged four years in advance at special auctions, which potential suppliers must qualify for.
The UK Capacity Market has recently been reinstated following a 12-month suspension to enable the European Commission to investigate whether the scheme contravened State Aid rules. In November 2019 the suspension was overturned when investigators confirmed that the scheme is necessary to guarantee the security of electricity supply in Great Britain, is in line with EU energy policy objectives, and does not distort competition in the Single Market.
If you are interested in learning more about the Peaking sector or looking to develop a site capable of utilising MWM gas engines to maximise the trading avenues, we have a wealth of knowledge and support to guide you through the process to help mitigate risk and unexpected costs and deliver a support solution to meet your strategic requirements. If you would like to discuss your peaking project, please contact us.