Implications of Trading of 24/7 Carbon Free Energy (CFE) on Electricity System Operation
This study, commissioned by the National Energy System Operator (NESO) and led by AFRY in collaboration with Granular EnergyExternal link, opens in new window. External link. and Nord PoolExternal link, opens in new window. External link., explores the operational and market implications of transitioning to 24/7 Carbon Free Energy Attribute Certificates (CFE EACs). These certificates aim to match electricity consumption with carbon-free generation on an hourly basis, offering a more transparent and credible alternative to the current annual matching system
The report outlines how 24/7 CFE EACs could accelerate decarbonisation by incentivising demand-side response, storage investment, and flexible clean energy generation. A trading pilot demonstrated the feasibility of hourly certificate markets, revealing price signals that could reshape investment and consumption behaviours. Modelling results suggest that such a market could support the UK's 2030 clean power goals, enhance system flexibility, and improve carbon reporting standards.
BID3’s, power market model, comprehensive capabilities allowed for detailed simulation of electricity market dynamics to simulate various 24/7 CFE trading scenarios. BID3’s capability in assessing asset-level impacts ensured that the findings were grounded in realistic system behaviour and credible market responses.
Key findings include:
- 24/7 CFE trading is viable and could scale rapidly with growing corporate demand and evolving GHG reporting standards.
- Time-matched EACs provide stronger incentives for storage and DSR than electricity prices alone.
- A zonal market design could amplify benefits by encouraging regional investment and reflecting local CFE availability.
- NESO would benefit from early engagement in market design and monitoring to ensure system stability and maximise benefits
The study also concludes that while some implementation challenges remain, early adoption of 24/7 CFE EACs is mostly beneficial for the system operator, delivering both significant system and climate benefits.
>> Download full report [PDF] - external link External link, opens in new window.
>> Download full report [PDF] - internal link pdf, 1 MB, opens in new window.
