Implications of trading of 24/7 Carbon Free Energy (CFE) on system operation
24/7 (hourly) matching of Carbon Free Energy (CFE), is a significant change from the status quo, of only matching CFE on an annual basis.
24/7 matching can empower consumers to meaningfully reduce GHG emissions in real time. Consumer demand for more granular matching and regulatory changes mean that 24/7 matching of CFEs could rapidly begin at scale. This will have significant implications for system operation, market design and dispatch patterns.
In April 2024, AFRY began working with National Grid ESO to better understand the implications for system operation, which arise from the development of 24/7 CFE trading. The study will consider the ESO roles and interactions with system objectives including coordination of CFE instruments, treatment of CO2 emissions, and management of transmission constraints. The project will deliver valuable insights into how 24/7 CFE trading influences the market and its integrity. Specifically, the project will evaluate its impact on system operation.
The project was publicly launched with a webinar in May 2024 and we followed up with a webinar in both July and September. Another webinar will be held later in the year. The slides and recordings are available below.
AFRY is working with Granular Energy and Nord Pool on this import study.
- Granular Energy provides an all-in-one software tool for green energy and energy certificate management for energy companies.
- Nord Pool offers day-ahead and intraday trading, clearing and settlement services and data services with around 400 customers from 20 countries trade on Nord Pool’s markets
The project will be run in two phases. Phase 1 ran from April to July 2024, and involved the development of scenarios and case studies, informed through stakeholder engagement. Phase 2, was launched in August 2024 and is planned to run until Q1 2025.
The project team recognises the importance of collaboration. Stakeholder engagement has been used to inform scenarios regarding shape of demand, uptake by sector and rate of adoption.
Granular Energy and Nord Pool, have scoped and agreed draft market trading arrangements using feedback from surveys. A trading pilot began in September 2024. The pilot is designed to:
- Prove that a market signal can arise and learn about the price dynamics of this market
- Define and trial different options for exchange rules
- Assess interest of participants in traded products
The 24-7 CFE matching project represents a significant step toward a more efficient, responsive, and integrated energy market. The over-arching goal of the trading pilot study is to accelerate the transition to clean energy by closing the gap between traditional power markets and certificate markets. The goal of the study is to enable National Grid ESO to better understand the impact of and then maximise the benefits associated with growing demand for 24/7 CFE matching, to support efficient system operation.
Want to be involved or have questions on the study? Please contact the project team 24-7CFE@afry.com.
