Provision of Electricity System Operator auction procurement services

1. Detailed Descriptions:

NGESO procure ancillary services to ensure that the security and quality of electricity supply across Britain's transmission system is maintained. NGESO have a license obligation to minimise costs to the end consumer whilst undertaking these activities. NGESO are seeking to improve the procurement processes across several of our ancillary services markets by introducing a consistent buying experience. We believe this can be achieved through the right auction-based capability that will enhance functionality and automation throughout the procurement process and enable, for example, closer to real time procurement and improved user experience.

A goal of the delivery of this project will be to enhance the transparency of our procurement activities and deliver economic and efficient markets, providing clearer market signals and increased access for participants. We view this solution as a key development in continuing to drive consumer value across the markets which we operate.

NGESO seeks to select a strategic partner who can offer the right capability that will form a longer-term solution/service for many of the appropriate markets which we operate. Initially we anticipate these to be our reformed response and reserve markets.

Many of the markets we currently operate are procured at various times through different formats and technologies. NGESO are seeking to utilise a consistent procurement route that creates a uniform submission capability making it easier for providers to participate across multiple ancillary service markets. The vendors capability will need to be able to ensure appropriate data sharing with a new Single Markets Platform (SMP) that will improve the user experience and flexibility around tender submissions and overall automation.

NGESO is seeking to work with partners to deliver, as a minimum, the following core capabilities:

• Strong knowledge sharing partnership to offer auction expertise to develop and improve functionality over time. Continuous improvement is an important philosophy in our market reform ambitions and evolving energy landscape.
• Development of a robust delivery plan which understands the challenges around the large-scale changes underway in the ancillary services reform work, ensuring flexibility and a proactive approach to service developments.
• Demonstrate expertise in a range of auction structures with the ability to co-create the optimal solution. Experience across a range of economic welfare scenarios with the ability to articulate the optimal options for ESO's obligations and commitments.
• Consultancy style support in delivering the development and implementation across our markets in a partnership approach.
• Ability to provide either integrated algorithms, end to end market operator solutions or a hybrid approach.
• Strategic input and guidance in an auction/procurement landscape
• Flexible and configurable solution to support multiple assessment algorithms across multiple markets
• Ability to deliver a modular solution that interfaces with other NGESO systems/data sets under development that provide support functions (e.g. settlement, provider onboarding, etc.)
• Support a variety of auction clearing methodologies (e.g., pay as bid, pay as clear)
• Adaptable to facilitate the addition of new markets in the future with minimal disruption and lead times
• Robust, intuitive user experience for both NGESO and industry users
• Flexibility to support procurement at different granularities, for example Electricity Forward Agreement (EFA) blocks or more granular time segments, such as settlement periods
• Leverage experience and functionality to unlock co-optimisation opportunities across multiple markets
• Track record in running/operating/designing multiple markets and projects in parallel
• Capability and experience of running/developing algorithms for complex auctions
• Experience and expertise in shaping market structure/rules with clients and industry users
• Ability to support the running of day ahead auctions with the capability to offer within day progression
• Ability to operate/configure multiple markets with large volumes of bids and participants
• Strong system integrity, security and processes
• Energy (specifically electricity) market experience and knowledge would be highly beneficial due to the complex nature of the landscape ESO operate
• Capability to support the development of solutions to enhance automation within our short-term trading teams auctions. Experience in removing human decision points and interaction with a range of influential data sets would be beneficial

Additional information can be found within National Grid's "ESO RIIO-2 Business Plan Annex 4 - Technology investment report", section 3.8 on the commitments made under our business plan regarding developments to the way in which we procure our services. Further information can also be found in this section regarding the SMP.

www.nationalgrideso.com/document/158071/down… ↗

2. Technical & Delivery Considerations:

We anticipate that vendors will be able to provide either a Software as a Service (SaaS) or a managed service to deliver these requirements. Our architecture will be Application Programming Interface (API) driven and so we will be seeking vendors views on how their solution will support this approach as part of the tender. The proposed service will need to integrate with our future SMP, as well as our digital front-end services platform, to provide a seamless end to end user experience for market participants. Vendors will be expected to outline how their solution can integrate into digital platforms using open standards and API's.

NGESO will be seeking to provide access to the auction capability in several ways:

i. Exposing APIs for consumption in our web applications

ii. Exposing APIs for use directly by market participants (third parties) or

iii. Directly via a customised user interface provided by vendors

In addition…