Informer Issue 500 - 16/02/2021

Using batteries to help balance the grid could boost resilience of the system and potentially save consumers £195m a year, according to the findings of a study.

A three-week trial was staged by system operator National Grid ESO as it looked at options for more flexibility amid the unprecedented levels of low demand being experienced during the pandemic.

The ‘Reserve from Storage’ study was staged in conjunction with software platform firm Arenko which said the findings showed the savings for consumers could be very significant if the solution was rolled out at scale.

Throughout the trial, batteries largely charged up with wind and solar power were able to provide reserve some 40% cheaper than alternative actions in the Balancing Mechanism. As well as benefits for consumers, battery owners could generate attractive investment returns in a major new market.

Arenko Chief Executive, Rupert Newland said the results of the trial have “huge global significance for the battery industry”. “It provides irrefutable evidence that new battery technologies, operated using intelligent software, can transform the management of the electricity grid to enable the mass deployment of renewable energy, a zero-carbon electricity system and the realisation of huge savings for the consumer,” he said.

National Grid ESO said it was now important to consider the next steps in realising the savings for the end consumer on an enduring basis and wants to engage with the industry through a consultation.

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New low carbon technologies will be needed alongside renewables for Britain to hit its climate targets, according to a report which said 2020 saw the nation edge closer to the power system of the future.

Analysis by academics from Imperial College London showed power from renewables overtook fossil fuels last year and carbon emissions fell by 16 per cent aided by reduced demand due to lockdown measures.

Wind and solar generated 30 per cent of Britain’s electricity, around half the share required by 2025 for the UK to reach its climate targets according to the Climate Change Committee.

However, the report said that achieving the CCC’s targets will also require a range of other technologies, such as bioenergy with carbon capture and storage (BECCS), hydrogen and nuclear.

Dr Iain Staffell of Imperial College London, and lead author of the quarterly Drax Electric Insights report, said: “2020 saw Britain edge closer to the power system of the future with renewables generating more power than fossil fuels. Flexible technologies like pumped hydro storage kept the system stable as supply from renewables increased and demand for power fell."

“The next steps we must take towards a net zero power system will be more challenging – driving out the last sources of fossil carbon will require us to go beyond just having more wind and solar power. New business models, backed by policy and investment, will be needed to bring advanced-but-proven technologies into the mainstream.”

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Reform of the transmission charging regime is urgently needed to help unlock more low carbon generation investment, according to an industry body.

Responding to a discussion paper produced by SSEN on the Transmission Network Use of System (TNUoS) charging regime, Scottish Renewables said the current policy was “out of step” with future ambition and objectives for net zero.

Analysis in the report shows that Scottish renewable generators pay significantly higher costs to connect their electricity to the grid than those in other parts of Great Britain. It cites an example of a wind farm in the north of Scotland paying £5.50 per MWh under the charging system when an equivalent wind farm in Wales would get paid £2.80 per MWh.

Aileen Macleod of SSEN Transmission said: “Our generation customers and wider stakeholders have been consistently telling us that charges for transmission access in the north of Scotland, as well as uncertainty about future charges, are acting as a barrier to the commercial viability of renewable energy projects.”

Claire Mack, Chief Executive of Scottish Renewables said the policies and regulations which underpin electricity transmission should now consider “not just the location of consumers of energy but also the location of the very best renewable resources in order to build out the projects that will take us further and faster towards net-zero”.

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The targets for the next Capacity Markets have been raised in the wake of recommendations by the system operator.

In a letter to National Grid ESO from Energy Minister Anne-Marie Trevelyan, she confirmed that the target for the one year ahead auction (T-1) has been increased to 2.4GW - up significantly from the previous guidance of 0.4GW - “which accounts for a range of non-delivery uncertainties”.

The four-year ahead (T-4) auction target is increased by 0.5 GW to 40.1GW.

The figure for delivery in 2024-25 is down 3.2 GW on the last T-4 auction for 2023/2024 delivery.

The changes come in the wake of a report by the Panel of Technical Experts (PTE) into the system operator’s analysis of the potential effects of the COVID-19 pandemic on their 2020 Electricity Capacity Report (ECR) recommendations.

The last T-4 auction in March 2020 cleared at £15.97/kW/year and the last T-1 auction cleared at £1.00/kW/year.

The next auctions are due to start at the beginning of next month.

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Offshore wind developers will be “dismayed” over delays to the leasing process for projects in Scotland, according to industry body RenewableUK.

The Crown Estate Scotland said that following the “unprecedented outcome” of the offshore wind leasing auction for sites in waters around England and Wales, it was now reviewing the option structure for its ScotWind leasing process.

It said the result of the review is targeted to be completed by 24 March and that the deadline for applications will now be later than originally planned.

RenewableUK’s Deputy Chief Executive Melanie Onn said: “Having spent over a year setting out the process for awarding these new leases and making clear to developers what is required from them, Crown Estate Scotland is now rewriting the rules at the eleventh hour."

“Scotland has a unique opportunity to secure billions of pounds of investment in new renewable energy projects which will support thousands of jobs across the supply chain. Delays and U-turns are bad for investor confidence and for Scotland’s position as a world leader in offshore wind”.

Crown Estate Scotland said the review will help ensure that the offshore wind leasing process attracts major green investment to Scotland by delivering long-term economic and net zero benefits through a competitive and sustainable pipeline of projects.

Successful bidders for the England and Wales leases committed an initial investment of £879m in option fee deposits.

Round 4 was the first time a bidding process to set ‘option fees’ has been used in the leasing process. Previously the Crown Estate had set fixed annual option fees.

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