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Capacity future for the UK Power grid

Author : Martyn Young, procurement director at ZTP

21 March 2017

The next 10 years will see a fundamental change in the UK power grid which will impact commercial users and impact decisions of where to locate new investment.

The changes are underway with the UK commitment to hit climate change targets with the move away from coal generation and towards renewables.

Renewables in Q3 2016 accounted for 25% of the total mainland UK generation according to the Department for Business, Energy & Industrial Strategy (‘BEIS’).

It is common knowledge that renewable generation from wind and solar is unpredictable and that more conventional generation needs to be held in reserve to cover for periods where the weather does not oblige.

However it is less well known that where the generation is placed is also critical in future planning, as the transmission networks need to be able to cope with more dispersed generation.

The coal fired power stations, concentrated in the Midlands and the North are being replaced with more coastal generation from offshore wind farms and new nuclear facilities.

There is a need for increased transmission technology to deliver power from the South to the North, especially if the government is to develop a northern powerhouse based upon a resurgence of manufacturing.

Germany has experienced a similar issue with limitations on the transmission infrastructure. In 2016, in periods of high wind, free electricity had to be exported to Poland, while the South of Germany was still paying for generation because their north to south transmission system could not cope.

Aside from laying more UK cable infrastructure there are other initiatives being pursued that will help to reduce the issue. The development of interconnectors between other European countries will help reduce the strain on the grid.

Mainland UK currently has 4Gw interconnector capacity, 2Gw to France, 1Gw to the Netherlands and 1Gw to Ireland. There are projects in place to increase this between 2019 and 2022 by a further 11.3 Gw.

These links however are again coastal by their nature and although very beneficial to energy security, still have the issue of internal transmission. As the interconnector projects improve grid stability of all connected countries it is unlikely that the current Brexit negotiations will impact these investments.

The grid has put financial incentives in place for demand reduction when the grid is in need of capacity. The rewards for not using energy when the grid is in need can be very attractive, and are graded on the speed to react.

High energy users who are able to cut grid use, either by turning off non critical equipment, or by turning on site generation should certainly be looking at the incentives on offer.

Small scale local generation is also taking off in the UK, with virtual networks purchasing energy from small scale producers, typically farmers who have diversified into biomass or solar farm investments, and then selling this generation back to the grid.

Battery storage on a grid scale is in its infancy, but with considerable R&D expenditure, especially in the US, the chemistry is reaching the stage of being able to be deployed. As price falls this will be able to be deployed to support local area of the grid, being charged up when demand is low and feeding into the grid when power is expensive.

These huge batteries will also have the advantage of being mobile, bring possible faster solutions to disaster areas. Teresa May on the Andrew Marr show of 22 January 2017 stated she wanted the UK to be at the forefront of developing this technology.

Smaller scale batteries will also be available on the consumer side of the meter, enabling households and smaller sites to store cheap electricity, say from night usage or solar panels, and then use the stored power at peak rate times.

As the smart grid rolls out and more time sensitive charging becomes the norm, price incentives will reduce domestic peak usage, benefiting the wider consumer base. The lack of capacity in certain areas is driving a move to de-incentivise building owners from not recording a realistic building capacity.

In the past it has been common for building owners to under declare the electricity capacity for a building supply commonly known as the kVa.

To date there has been a financial incentive for doing this, particularly where a building is fully or partially vacant, due to the way this reserved capacity is charged, at a flat rate per day regardless of actual usage.

Indeed Cost Savings Consultants have encouraged this practice as it is easy to reduce the capacity in a part occupied building.

OFGEM modification DCP161 comes into effect in April 2018 which will allow distribution networks to pass excess capacity usage through at a penalty rate, which is projected as three times the normal capacity rate.

This will become a major financial burden in areas where there is not enough substation capacity, as the Distribution Network Operator may want a significant contribution to increasing local capacity in return for increasing the reserved capacity to a realistic level.

As new development will be rightsizing and taking up local available capacity it is advisable for building managers to ensure they check their bills and see if they are using in excess of the nominated figure on a regular basis.

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