Informer Issue 522 - 27/07/2021

This winter is likely to see similar or “slightly lower” system margins than last winter, National Grid ESO has said. After the system operator issued several margin notices last winter it has released an early view of its predictions in its upcoming winter outlook report to help the industry plan ahead. Its base case view of de-rated margin for winter 2021/22 is currently 4.3 GW or 7.3%, slightly lower than last year. “While we remain confident there is sufficient supply to meet peak demand, we should prepare for some tight periods during the winter,” it said. However, it stressed that there is “a well-functioning market that responds to market signals” and that it may need to use its tools including issuing margin notices to manage tight periods. The ESO’s base case forecast for underlying average cold spell peak demand this winter is 59.5 GW. The system operator said the tight margins last winter were down to lower than expected availability of coal and gas plants and volatile wind patterns. Unplanned interconnector outages were also a factor. Read more

The Government has issued a call for evidence about the barriers to the deployment of large-scale and long-duration electricity storage. BEIS said that storage can play an important role in decarbonising the energy system by storing renewable power and discharging it over periods of low wind. It can also help with cost-effective security of supply, reducing the costs of meeting net zero by storing excess low carbon generation for longer periods. However, BEIS said there is evidence that large-scale and long-duration storage “faces market challenges that mean it may struggle to deploy at scale”. It is looking for information on the barriers within the current market, how these might be addressed, and the risks that may be associated with potential interventions. The UK currently has around 4GW of storage in operation, 3GW of which is pumped hydro storage and 1GW of which is lithium-ion battery storage. There is also a large pipeline of storage projects, including around 2GW of pumped hydro and 8GW of battery storage, currently in planning. Read more

Plans for an independent “future system operator” to take over from National Grid ESO have been announced as part of a raft of proposals aimed at revolutionising the grid. The Government said the new body would help ensure climate targets are met at the lowest cost to households and businesses. The plans for a new system operator were announced as part of wider proposals put forward by BEIS and Ofgem aimed at harnessing smart technologies to deliver a much more flexible energy system which could save up to £10bn a year by 2050 and create up to 10,000 jobs. Ofgem Chief Executive Jonathan Brearley said a “revolution” was needed in electricity usage to meet climate targets and that a digital energy system was essential while keeping energy bills “affordable for everyone”. National Grid said the company would work closely with the government and Ofgem on the role of a future system operator, as well as “the most appropriate ownership model and any future related sale”. Ofgem has previously raised concerns over a potential conflict of interest from National Grid because it owns energy networks that could benefit from future investment plans. Read more

Achieving net zero by 2050 will require as much as £125 trillion of investment in clean energy generation and infrastructure globally, according to BloombergNEF’s (BNEF) latest report. The New Energy Outlook 2021 report also highlights several milestones that will need to be met by 2030 to be on track to reach net zero. These include adding 505GW of new wind power each year, 455GW of solar annually and 245 gigawatt-hours of battery storage by 2030. Global energy related emissions need to drop 30% below 2019 levels by 2030, and 75% by 2040, to reach net zero in 2050. BNEF Chief Economist Seb Henbest said “there is no time to waste”. “If the world is to achieve or get close to meeting net zero by mid-century, then we need to accelerate deployment of the low-carbon solutions we have this decade. “That means even more wind, solar, batteries, and electric vehicles, as well as heat pumps for buildings, recycling and greater electricity use in industry, and redirecting biofuels to shipping and aviation.” Read more

Although steady progress is being made in the decarbonisation of the UK’s energy supply it will fall short of the Government’s ambitions without additional investment and policy support, an industry body has warned. The Association for Renewable Energy and Clean Technology (REA), said the sector is being “shackled” by reductions in tariff support and gaps in Government policy. The report said that in 2019, 12.3% of the UK’s energy consumption came from renewable sources. Although this exceeds the interim target set for this period, it warned it is unlikely the UK will meet the 15% target for 2020 set before Brexit, based on recent growth rates. Areas where urgent action is needed include renewable heat where the REA said the reduction of tariff rates under the Renewable Heat Incentive (RHI) and “large gaps” in Government heat decarbonisation policy have stunted growth of technologies. In its latest annual review of the industry’s progress, it also said faster action is needed on green job creation. Dr Nina Skorupska, CEO of the REA, said: “If the Government is serious about reaching their Net Zero ambitions, and about ‘levelling up’, they need to back our sector, remove the barriers preventing the growth of our technologies and help us deliver new jobs and investment. 2021, the year the UK is hosting COP26, must be a watershed moment. The time for rhetoric is over, we need to see action.” Read more