The chaos wrought by COVID-19 on the UK’s energy distribution network demonstrates just how urgently a new approach is needed, explains Louis Burford, head of Solution Sales & Optimisation at Centrica Business Solutions.
When National Grid announced in August that the bill for balancing the energy grid in response to COVID-19 was £718 million, it was not just a symbol of the unprecedented times in which we are living, but also a clear sign that the way power is distributed in the UK is no longer fit for purpose.
It demonstrates that there is nowhere near the level of flexibility in the system that will be needed if we are to achieve net-zero as a nation by 2050.
For that target to be possible, the vast majority of our energy will have to be supplied by renewable sources like wind and solar power, and that means that large fluctuations in supply will be the norm. It’s something that the grid will need to be able to cope with as standard.
Flexibility is the future
The UK’s electricity system suffered a historic plunge in demand during lockdown. Meanwhile, during the same period, output from renewables rose to record levels as a result of increased capacity and favourable weather conditions.
This saw coal power generation remaining offline for the longest continuous period since the start of the industrial revolution – an important milestone in the UK’s journey towards reducing its emissions levels. But it wasn’t just coal power that was disabled, it was renewable energy too.
Unable to utilise or store the excess energy being generated from renewables and with demand at its lowest level of usage in nearly 40 years, National Grid was forced to pay generators such as power plants and importantly, wind farm operators, to lower production in order not to overwhelm the grid.
This means consumers, having paid the subsidies for encouraging the growth of renewable power, now faced the prospect of paying the cost of curtailing it.
What this shows is that there is still a lot to achieve when it comes to making the energy grid fit-for-purpose as part of a net-zero future.
Going forward, renewables should be treated as a precious resource and never have to be taken offline. Instead, we must encourage the use of flexible technologies such as demand-side response and battery storage to ensure that energy can be banked and used when demand returns.
As renewables come to dominate the energy mix, it will be vital that the system can operate flexibly to manage the peaks and troughs associated with renewable generation, particularly as the demand on the grid increases as society increasingly electrifies by switching to electric vehicles and heating.
This can only happen if the way consumers – both homeowners and business – view energy fundamentally changes.
Currently, for most consumers, energy is purely a purchased commodity – they use as much as they need and pay the bill. This mindset is not compatible with net-zero, which will only be achieved if consumers themselves become generators, storers and traders of renewable energy.
But, if on-site generation is to be widely adopted, a flexible market that provides real incentives for investment in distributed zero-carbon generation, alongside technologies that build flexibility into the system will be essential. Only with a combination of widespread demand-side response and battery storage will renewables be able to deliver reliable energy for all.
And flexibility doesn’t just benefit the grid – it will also provide cost and reliability advantages to those businesses that can adopt new energy management approaches and technologies.
A good example of flexibility already in action is the Cornwall Local Energy Market (LEM), a pioneering flexibility trading scheme trial that we helped to establish working with the University of Exeter.
One success story to come from the trial was a Cornish business which supplies ice to trawler fishermen and which we helped to join the scheme.
The company’s energy-intensive refrigeration system, when running at full capacity, consumes as much energy as 300 homes – enough demand for it to require an independent electricity supply from Western Power Distribution.
But the company is also perfectly suited to working within a flexible market because the system can be switched on at any time and operations can be planned around a week in advance.
To ease pressure on the network, the LEM platform alerts local businesses, allowing them to shift production to times when supply significantly outstrips demand and is therefore cheaper.
By tailoring its operating hours to these requirements and maximising the cost benefits, the business has managed to reduce its overall energy spend by 35%.
If the UK is to stand any chance of achieving net zero by 2050, increased flexibility is vital.
Naturally, bigger energy consumers will play a major role in this, and many companies, including Centrica, are already supporting their customers in evolving their energy strategies.
Ultimately, however, change must be driven by government policy and the right incentives and schemes must be put in place nationwide.
That’s why we are calling for functioning local flexibility markets to be in place by 2023, and we believe the government should use the forthcoming Energy White Paper to set out the policy objectives to make this a reality.