The grid in the UK has changed dramatically over the last few decades as the country has moved from large, centralised and predominantly fossil fuel-based generation to cleaner alternatives like wind and solar. With this, sources have become more decentralised and intermittent, and the need to balance the grid increasingly challenging.
A number of solutions have raised their heads, such as constraint management and battery storage among others.
AMP Clean Energy has launched its Urban Reserve project to offer another option for constrained city locations. Current± talked to Mark Tarry, MD of the project, about the importance of decentralised power sources.
Could you tell me a little about AMP Clean Energy?
We're a distributed energy business which funds and develops low carbon heat and power assets. We began life in biomass and are now the market-leading wood fuel supplier for biomass boilers for heat. We have the largest portfolio of heat installations in the UK across a range of sectors including education, hospitality, healthcare and social care.
Two years ago, we established a new business called Urban Reserve, which is focused on generating flexible electricity close to areas of high demand. It's different to the biomass business because it's focused on electricity and is in front of the meter, while the biomass business is about generating heat in situ - “behind the meter” effectively to medium and large end-user customers of energy.
Urban Reserve was launched around the trend of grid intermittency, and to support the growth of renewables by providing power when the wind doesn’t blow or the sun doesn’t shine.
We're in build at the moment on four projects and about to start developing three others, and by June we'll be in build on another 20 projects.
Why did you choose to pursue decentralised power?
All things being equal, if you can build a small plant in the right area, for the same price as a big plant, you should build a small plant because they provide greater benefits to local networks whilst also being able to respond to the same electricity price signals as larger plants.
Simply put, if you generate power locally, that power can be used locally, and it means the distribution companies don't have to spend as much money on their networks. So it’s an alternative to grid reinforcement, and immediately that's expressed in the form of credits that you get from the distribution companies. Increasingly, the DNOs are looking to procure flexibility, again as an alternative to spending money on copper and transformers.
So that's the rationale. The problem is that developing a small 5MW plant is as difficult as a 50MW plant - the contracts are the same, the effort’s the same, the dynamics are exactly the same.
You need to develop a process by which you can have lots of projects, built and developed with the same rigor in order to get scale - so it's a cookie cutter approach.
That's really what we've developed over the last two years with that approach.
Are you finding that people are more interested in decentralised power than they were, say a year ago when you started?
Definitely. The concept of decentralised energy is an established part of the narrative now. The thing that has really changed is this idea of flexibility. What's clear is that as more renewables come onto the system, we’ll need more system resilience and more flexibility. Funnily enough the power cut [in August 2019] - which was to do in a large part with inertia, or rather a lack of inertia on the system - brought home the fact that the network is really changing and becoming more sensitive to sudden changes in frequency.
Whether its greater inertia or flexibility, you can’t turn it on overnight. Projects take time to develop and build and incentives and price signals needs to exist ahead of need. Further, not all projects are created equal. For example, a peaking plant in the north of Scotland has less value than a peaking plant in north London, where the demand profile of the substation is already high and is likely to continue to grow driven by the electrification of heat and transport.
The biggest barrier to the uptake of EVs is often the cost of connecting to the distribution networks because of a lack of capacity in the right areas.
In order for this EV revolution to take place, this heat revolution, and this renewables revolution, you need that fundamental supporting infrastructure.
Often when we talk about flexibility, people will think of lithium-ion battery systems. What's the benefit of going with a flexible generation system like AMP Clean Energy’s instead?
That’s a question we get asked regularly, and there are a number of responses. Firstly if you look at the deployment of lithium today, it's all about frequency. Most of the batteries have a one-hour duration, whereas a gas engine has an infinite duration. If you look at the demand peaks and what the distribution companies need from storage assets, they need them for peaks – for example four till seven pm. That is how the system is sized. So, a battery with a short duration doesn't really load shift or take the pressure off local network peaks. Instead, batteries are providing a frequency service, which is a national network service.
The business model at the moment is better suited, we think, for gas engines.
What’s more, running a battery is quite difficult for a peaking application, because as one of the traders was explaining to me, you might see a spike at 11 o'clock in the morning. But do you know if that's the best spike in the day? Because once you fully discharge your battery, there's not a lot you can do about it.
So, from a versatility perspective, being able to turn on and off infinitely, is really very helpful. Whereas with a battery, because it has a finite capacity, it limits your flexibility.