Future of reactive power

To address the challenges we are facing for system voltage control, the NGESO are now using a holistic and interactive approach to exploring potential solutions that could enable more participants across technologies and connection types, to provide reactive power services in the right locations. This aims to maintain system voltage security, and drive down the overall reactive costs to maximise consumer benefits.

The project is now exploring potential solutions to help address the challenges in controlling system voltage. The project is looking to enable more participants across technologies and connection types and is currently exploring the feasibility of introducing -

• A long-term market (Y-4)
• A mid-term market (Y-1) 
• A short-term Day Ahead market (D-1)

Below you can find the latest material from our workshops and webinars.

Reactive Power Market - November 2024

Update on the mid-term reactive power market and launch of RFI

Watch the webinar Watch the Q&A

Download the slides

Reactive Power Market – April 2022 

Project conclusions for the reactive power market.

Watch the webinar

Download the slides

Future of reactive power project – FAQs – April 2022

Download our latest FAQ for the project

Future of reactive power project – February 2022

Watch the recording or download the slides from our February 2022 Commercial and Technical conclusions workshop.

Watch the webinar

Download the slides

Update: December 2022 - Request for Information
Accessing Additional Voltage Capability 2023 - 2026

Earlier this year, National Grid ESO launched a request for information (RFI) to look at accessing additional reactive capability across England and Wales between 2023 and 2026.

We received considerable interest with over 100 solutions and over 8 GVAr volume submitted by providers:

• 58 transmission-connected responses totalling 5.4 GVAr
• 56 distribution-connected responses totalling 2.9 GVAr

Note the above volumes have not been subject to effectiveness studies.

The responses to the RFI have demonstrated that there is considerable additional capability potentially accessible to ESO which is really encouraging. We have also learnt that many parties who have mandated reactive power obligations also have the capability and desire to deliver additional reactive power. The RFI also presented a growing appetite to deliver reactive power capability from units connected at the distribution level which traditionally do not offer such services to ESO, appreciating the challenges around effectiveness.

For distribution-connected submissions, ESO require studies from our Distribution Network Operator stakeholders in order to determine the effectiveness and viability of submissions. We continue to progress these discussions and hope to be able share next steps early in the New Year.

We have been able to make faster progress on the transmission-connected solutions as these types of assets by nature have much greater effectiveness on the network. We are pleased to be able to offer these solutions a new commercial services agreement to cover capability outside of grid code obligations and we will be reaching out to parties shortly to outline how we intend to implement these agreements within our current processes. 

ESO will share further updates and plans on this webpage. We thank parties for their submissions into the RFI and look forward to continuing to progress accessing additional capability within the market.

Any further questions, please contact [email protected] 

Between October 2021 and March 2022, the ESO was allocated Network Innovation Allowance funding to develop potential solutions to reform reactive power services in partnership with AFRY. The project proposed an initial market framework design that would meet system voltage requirements whilst maximising participation from potential providers. The initial market design comprised of three markets running over different timescales: long-term (year -4), mid-term (year -1), and short-term (day ahead). During 2023 there was further work to assess the impact of these markets in unlocking future consumer benefits and identify the order of priority for implementation.  

We have completed our work on the long-term market and plan to launch the first tender when the right opportunity presents itself. Implementing the long-term market will drive locational investment and enable greater competition in the delivery of reactive power service provision. 2029 is the earliest year for which there may be a requirement to be covered by the long-term market, subject to a firm requirement being identified and the long-term market being selected by ESO as the preferred delivery route.  

We continue to assess the consumer benefit that a mid-term reactive power market would provide, with some outstanding design questions that are being analysed. As we develop the design, we wish to hear from industry on the proposed design and whether alternatives merit consideration. 

We hosted an initial webinar on 13 November at 2pm. The purpose of this was to provide a recap of the Future of Reactive Power Market innovation project, with a specific focus on the mid-term market. This included NESO’s current thinking, next steps and how industry can get involved. 

Prior to the launch of any mid-term reactive power market, NESO are seeking industry perspectives on a variety of topics that will help NESO design the mid-term market and decide how to progress with its implementation. The webinar will coincide with the launch of a voluntary Market Engagement Request for Information (RFI).  NESO are particularly interested to hear from parties that can provide reactive power services and are interested in participating in a mid-term reactive power market. Please respond to this voluntary Market Engagement Request for Information (RFI) by the extended date of  5pm on Friday 13 December 2024. Please note, this Market Engagement RFI is a voluntary RFI seeking voluntary views, NESO is not exercising its RFI powers under the Energy Act 2023, but NESO still reserves the right to issue RFIs under this Act.

On the short-term market, further analysis is required to determine the value of a day ahead service. This work will also consider the output from the review of the Obligatory Reactive Payment Service (ORPS). Prior to the introduction of a short-term market, we are continuing the roll out of Commercial Services Agreements (CSAs), providing an option via which generators can receive payment for their additional reactive power capability beyond their mandatory obligations. 

In term of next steps: 

• Future updates on the implementation of the long-term market will be communicated through the Future of Balancing Services newsletter and shared on the Future of Reactive Power webpage. Further industry engagement will be organised should a firm requirement be identified when we would share further details on participation criteria and procurement timescales. 
• Following further review of the Y-1 and D-1 markets, we will update industry through the Future of Balancing Services newsletter and updates to the webpage. 
• For more information on CSAs, please contact our Market Services team.
• If you would like to learn more about the review of ORPS, please contact Market Change Delivery.