Limejump gets all clear to chase Big Six in UK grid balancing market

UK regulator Ofgem has granted Limejump permission to participate in the Balancing Mechanism Market (BMM), using its distributed Virtual Power Plant (VPP). This will be the first aggregated system to compete here, going up against conventional power generation assets with a VPP, assembled from multiple smaller generation systems working as one.

The BMM is worth around £1bn annually, and typically consists of the ‘Big Six’ energy suppliers and some other larger platers. Limejump is hoping to use its system to create an aggregated VPP, via incentivizing owners of solar panels, batteries, or even wind turbines, to join the Limejump platform.

That model lets Limejump act like a conventional generation firm, even though it is radically different. “This move means that a farmer with a solar installation or a supermarket with excess energy from its cooling units will be on the same footing as a giant power station,” said Limejump CEO Erik Nygard. “Just as importantly, our move increases competition, enabling a cleaner, more sustainable energy future that benefits both the environment and the end consumer.”

The BMM announcement follows the news that Limejump would be operating 30% of the Firm Frequency Response (FFR) tender in the UK – another grid services project for National Grid, accounting for around 89MW of electricity. The company says that’s the largest single share of the FFR contract, which will see Limejump providing reserve capacity to help stabilize the grid when needed – bringing voltage to within the required tolerances, similar to BMM.

To that end, Limejump secures demand-response agreements with customers, wherein it can adjust their real-time electricity consumption levels, to either increase or decrease. This allows it to aggregate those customers and dynamically control them, so that it can function like a reserve generator or an emergency backup, and even offload surplus electricity where needed. Its customers get paid for participating, and Limejump gets to keep the profits.

Broadly, the FFR devices are typically HVAC systems, manufacturing equipment, or renewables, stepping in when the frequency variations cross an agreed-upon threshold. The BMM is more like an auctioning system, for longer-term projects, although it does have intraday capacity too, where National Grid looks to avoid blackouts. Both are handled as part of Limejump’s VPP system.

Founded in 2013, Limejump is headquartered in London. It has raised £4.4m in funding, securing a £3m Series A round in 2017, and has around 50 staff. Currently, Limejump manages 150MW of battery storage, which it can use as part of that VPP alongside its handful of renewable assets. The startup says it has north of 250 customers, listing Anesco, Biffa, UK Power Networks, SmartKlub, SnowDome, Malaby Biogas, and Wainwright.

Companies like Limejump demonstrate the value of IoT connectivity in established industries. Systems like the VPP simply couldn’t work in an unconnected manner, and the series of sensors and actuators that enable the likes of Limejump to remotely monitor and control a battery or solar panel have been transformational.

However, they are still in the early days of competing with the entrenched providers. For energy startups like Limejump, the task of dethroning the incumbents will take a long time, but early wins such as the FFR contract show that it is not an insurmountable task.

The new BMM approval could open the floodgates for smaller companies to attack the incumbents. New smart grid technologies appear to have slashed the barrier to entry, and it is something that the established providers need to be wary of. Many in the industry are experimenting with their own in-house teams, with some going as far as setting up dedicated smart grid and renewable subsidiaries, so in this regard, you can’t quite accuse the energy industry of sleepwalking.

In fact, the more powerful brands of the incumbents could prove a significant advantage. For companies like Limejump, they can only aggregate distributed assets by convincing the asset owners to sign up to their programs. This can be hard work, especially to scale things up to the gigawatt level, but for an incumbent energy provider, that sales process could be as simple as sending an email or letter to an existing customer.

Consequently, the startups will be able to snap up a lot of early partners, as low-hanging fruit, but once the utilities wise-up to the opportunity, things will get a lot tougher for the likes of Limejump. This will likely lead to some consolidation in the industry, both at the lower levels, where startup absorbs startup, and at the higher level, where the utilities snap up the most promising startups.

Of course, it is still a little early to be picking winners and likely purchases, but Limejump is off to a good start in the UK. With those 250 customers, it claims to have 300MW of power purchase capacity, and 168MW of active battery capacity. Those account for some 800bn collected annual data points, or nearly 2.2bn data points each day.