London — Limejump has had to pick up its game -- the Shell-owned UK virtual power platform operator is facing fierce competition from a wave of new entrants at a time of unprecedented power price volatility.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
All of which makes its start to 2021, adding over 200 renewable energy sites to its platform to take its portfolio to 1.35 GW, an encouraging one, Limejump CEO Catherine Newman told S&P Global Platts on March 4.
"We integrated our trading desk with Shell's midway through 2020. It has been a huge success, bringing together short- and long-term views with much stronger forecasting capability. It has enabled us to capture the volatility we have seen, which on tight days can move [monthly forward contract] prices by as much as GBP5/MWh," Newman said.
With over 30 flexible contracts with battery and gas assets for dispatching on its books, reliable forecasting was central to Limejump's success, she said.
"Our weather forecasting comes from so many different sources now. It is the classic German problem emerging here. As soon as it gets cloudy and the wind drops, you get a massive short. We are already seeing signs this year of how much more adaptable we need to be as renewables grow."
The company has over 38,000 hours of experience in optimizing flexible assets, more than any other aggregator in the UK market, Newman said.
"There is no doubt we have made mistakes over the last five years, but we have learnt from them. We are not in [new ancillary service] Dynamic Containment yet because I want to look more strategically at how we stack revenue opportunities. Yes, DC is attractive at around GBP17/MWh but it is a partial product for now. We are focused on making sure we can deliver the full product from the outset."
Getting the mix of revenues right for a battery asset was a complex challenge, potentially moving an asset from one job to another every four-hour Electricity Forward Agreement block.
"The example I give is EFA block one might be Dynamic Containment, EFA block two might be Firm Frequency Response, blocks three and four we bid you into the wholesale market, five is going to be a triad, and six something else. It is not an easy problem to solve, hence why our 24/7 trading desk works alongside our AI tech platform making additional decisions in real-time," Newman said.
In the next few weeks, Limejump is preparing to take on Penso Power's 100 MW Minety battery storage project in Wiltshire, the UK's largest such development to date. Penso is extending the project by 50 MW.
The project was enabled by an offtake agreement with Shell Energy Europe, while Limejump has the contract to optimize and dispatch the asset.
That, plus the boost in renewable capacity on its books, would provide greater insight into the market for Limejump, Newman said.
"We also have the engineering piece, putting in technical hardware and helping with new site development and metering design. That supports regular, detailed reporting to the owner, ensuring for instance we don't over-cycle a battery."
UK asset owners are testing virtual power platform providers, seeing who performs best. Assets are being moved around the market, with Limejump losing and winning back customers over time, Newman said.
Having Shell as an owner, meanwhile, was proving beneficial in building confidence.
"With COVID-19 there is some nervousness about smaller company credit. The splitting of the day-ahead market [with N2EX and Epex Spot settling at different times] required a lot of extra cash to be put down. Not everyone has the ability to do that," she said.
Shell was helping Limejump get involved more in structured products, while expanding in similar businesses abroad that offered collaborative potential.
In late February, the oil major announced the acquisition of Cologne-based virtual power plant operator Next Kraftwerke.
Next Kraftwerke manages over 10,000 decentralized assets across eight countries in mainland Europe with a total 8.45 GW of capacity with 15 TWh of power traded.
"It is a fantastic portfolio and I am really excited to work with them at some point. These are different markets, but with a lot of the same fundamental challenges," Newman said.
The disruption caused by COVID-19 last year ushered in a period of hectic market activity that, on balance, had been positive, Newman said.
The introduction by the system operator of Optional Downward Flexibility Management and Dynamic Containment were two initiatives sprung on the market at short notice, testing operators' ability to adapt.
"Limejump had the first solar assets to be turned down [under ODFM] by National Grid last summer, with COVID accelerating some long-overdue changes. It's been slightly chaotic at times, and the regulatory piece is now a full-time job for two people at Limejump," Newman said.
It has just responded, for instance, on National Grid's ODFM consultation for this summer, advising for the need to bring forward the notification point from the current 6 pm deadline on the day before delivery, and urging the system operator not to approach managed asset owners directly.
Meanwhile, the company was looking forward to National Grid releasing its Reserve Reform, which was expected to detail enduring requirements for reserve products.
"We need these products to enable more renewables, more batteries. The demand is coming now -- large consumers want the full, 24/7 power package -- renewables under a PPA, batteries, EV chargers, carbon offsets," Newman said.
While smaller renewable energy assets continued to sign short term PPAs, larger renewable generators and storage asset owners were seeking revenue certainty over longer periods, she said.
And over the longer term, Newman remained convinced automation would be at the heart of the UK's distributed energy future, with asset and IT technology ensuring the integration of solar, battery and EV resources.
"These are the building blocks we want to put in place. We are all talking about it within Shell's portfolio businesses -- us, Sonnen, New Motion, and now Next Kraftwerke. It is what we are all working towards," she said.