Redispatch Contract in Development: A More Feasible Approach to Energy Storage

Energy Storage NL has worked with grid operators and other market participants to further develop the current mandatory bidding contract. During three sessions—on May 29, June 19, and September 7—challenges were discussed and proposals were developed for a more practical contract. The proposed new version will be called the “redispatch contract” and must be finalized by November 1.

What is the redispatch contract?

In the redispatch contract, you set forth agreements regarding your participation in the redispatch market and your provision of flexible capacity when requested by the grid operator. This allows the grid operator to know how much flexibility it can count on to help prevent local overloads on the power grid.

This contract is a further development of the current mandatory bidding contract. Because the existing agreements entail risks and limitations for project developers in practice, grid operators and market participants are working together to develop a more practical version.

Energy Storage NL Offers a Perspective on Energy Storage

During the three working sessions, Energy Storage NL presented the storage sector’s perspective. A key point was that the contract must not only be feasible for grid operators but also provide sufficient scope for a viable business case and manageable risks for storage projects. This approach builds on the joint further development of the capacity management contract (CSC), to which Energy Storage NL and other market participants contributed between January and April. In that process as well, collaboration led to clearer and more balanced contract terms.

These are the most important developments

• New name: The mandatory offer contract is now referred to as a redispatch contract. The name better reflects its purpose: to establish agreements regarding the offering and deployment of flexibility for redispatch.
• Prospects for faster treatment: The signing of the contract should help ensure that projects in the queue can be processed more quickly. Furthermore, the flexibility of the project can create opportunities for other parties in the queue. This can offer particular opportunities for standalone and co-location storage projects, as these assets can be managed flexibly. For industrial companies without storage, the obligations and risks may be more difficult to bear.
• More flexibility in the bidding: Grid operators are considering eliminating or raising the maximum bid specified in the current contract. This would remove a significant barrier for market participants.
• Practical Handbook: In addition to the contract, a manual will be provided explaining the practical application of the redispatch contract.

The goal is to finalize the new and improved version of the contract by November 1. After that, the redispatch contract will replace the current mandatory bidding contract.