Future energy scenarios without storage - unicorns and rainbows?

National Grid's latest Future Energy scenarios report [1] has four energy scenarios as before, but only one of them meets our climate change mitigation targets and that one seems to be based on unicorns and rainbows. The Gone Green scenario has a similar proportion of renewables to the others, but it uses more nuclear power, more connectivity with Europe, and adds carbon capture and storage to bring down the carbon emissions. Unfortunately nuclear is expensive and CCS for power stations is still not proven on a commercial scale. Adding more renewables instead makes balancing load and demand more difficult. Interconnections with Europe can help but when push comes to shove they are not reliable either. Why doesn't National Grid include more energy storage to help with balancing? Apparently current regulations positively discourage it. We need to fix this now.

Open letter to OFGEM - Where is the market for energy storage?

I just sent this to OFGEM, copied to Amber Rudd. 

Dear OFGEM,

I have been concerned for some time that though our electricity supply market gives reasonable support for renewable energy it gives scarcely any support for energy storage. We need energy storage for energy security without being overly dependent on fossil fuels. Our main low carbon supplies are:

- wind - variable and not dispatchable, fairly even through the year but more in winter than summer, in line with seasonal demand

- solar - highly variable and not dispatchable, much more power in summer than winter, against the pattern of seasonal demand

- nuclear - (as we use it in the UK) not variable but not dispatchable either.

DSR can help but we also need storage over periods of hours, days and, if solar is to be a significant part of supply, between summer and winter.

Financial support in the form of CfDs, ROCs and FiTs are all flat rate - so there is no financial incentive there for matching variation in demand over any timescale.

Also on the demand side most customers pay a fixed price through the day and through the year. The introduction of smart meters brings the potential for more flexible tariffs that could promote use of storage over short time scales, particularly batteries with solar panels, to cover the peak periods. That may help but I fear demand side storage has limited potential in general. Also, demand side storage with renewables reduces the amount of power drawn from the grid which increases costs for everyone else. When storage is added to the  supply side, the costs and benefits are equally shared by all consumers.

The IEA said in their report ‘The Power of Transformation: Wind, Sun and the Economics of Flexible Power Systems (2014) 

'[Variable renewable energy] power plants can contribute to their own system integration. But they need to be asked and allowed to do so. The common view of integration sees wind power and solar PV generators as the “problem”. The solution has to come from somewhere else. However, wind and solar PV power plants can facilitate their own system integration.’

In our market there is no benefit to renewables to be flexible except for the Triad payments system which are minor and, in theory, the capacity market, but that auction is in practice heavily biased towards fossil fuel power stations.

Amber Rudd, Secretary of State for Energy & Climate change, said in her speech to Aviva Conference (https://www.gov.uk/government/speeches/secretary-of-state-speech-on-climate-change)

'By focusing on storage and reducing energy demand, not just generating more energy, we also help to meet our energy security needs.’ 

However, I don’t see any focus on storage in our energy policy. Can you reassure me that there is focus on energy storage as well as generation in our power supply  market? As a consumer I am very concerned for our energy security.

By the way I discuss these issues more fully in my recent blog post: 

http://energy-surprises.blogspot.co.uk/2015/07/where-is-financial-incentive-to-develop.html

Yours

Nicola Terry

Update 14/August/2015
OFGEM's reply has referred me to National Grid's Future Energy Scenarios report. This shows the situation is even worse than I thought. Not only is there no market support for energy storage, the current regulations work actively against it. See Future energy scenarios without storage: unicorns and rainbows?

Update 2/September/2015
I had a reply from DECC, via Amber Rudd. In essence, the DECC Smart Energy team is working with National Grid to understand their assessment, and to investigate the barriers to deployment of storage and how they can be mitigated. The Smart Energy team are also working closely with OFGEM on a new project called the Flexibility Project. This will look at demand side response, storage and distributed generation in general. There will be something published about this at the end of the summer. (Though judging by the recent weather that has happened already). I am not holding my breath on this but it will be interesting to see what the Smart Energy team recommends

In the first version of this letter I unfortunately confused demand and supply side in the paragraph starting 'Also on the demand side...'. I have now amended this.

Where is the financial incentive to develop energy storage capacity in the UK?

Storage is vital for energy security but our renewable subsidies work against it 

The ability to match power demand and supply is vital for our energy security but integrating larger proportions of low carbon energy makes this more difficult. Renewable energy can be made more grid friendly in various ways such as incorporating storage - but flat price subsidies don't encourage them to do so.

The problem is balancing power supply and demand while weaning ourselves off fossil fuels:

• Power demand is variable (daily and seasonally)
• Most renewable energy is variable and/or not reliable
• Nuclear power is reliable but not variable, at least not without extra cost (see Nuclear power is not just for base load)

The solution to this problem has to include storage, because there isn't enough biofuel to keep us going through periods when the weather is against us. Theoretically, this doesn't all have to be integrated into the grid - some could come from domestic and commercial consumers, given appropriate incentives. However in practice the supply side has greater potential.

Would you like to save energy - and money - without having to think about it?

A survey conducted by UCL has found that more than a third of us would agree to letting energy companies adjust the thermostats in our homes remotely if we had reductions in our bills in return [1]. This option was the most popular of five, including having a 3-level time of use tariff (peak, mid-range, off-peak) at fixed times and another 3-level tariff with varying times depending on the weather. The reason would appear to be that the remote control tariff is the easiest to use. We wouldn't have to think about it at all.

The perversity of the capacity market

Power generating companies received nearly £1 billion in the first capacity auction. In return they promise to supply power when the usual market fails [1]. Germany has already seen coal power stations closing because of competition from renewables and the same will happen here as renewable capacity increases [2]. Renewable power isn’t always available so there needs to be some kind of backup – but what kind of backup do we want and is the capacity market giving it to us?

Solar electricity is like ice cream

In the UK our peak electricity demand is in the winter. Solar PV panels deliver 6 times more power in the summer than in the winter. Solar PV delivers carbon-free electricity with little environmental impact and helps mitigate climate change but it doesn't help 'keep the lights on' in the winter unless we have inter-seasonal energy storage as well. Last year the government gave out £2 million to 16 projects for innovative energy storage solutions - of which £40,000 went towards one project with the potential to deliver inter-seasonal storage [1][2]. This is a paltry sum compared to the many £millions/year paid out in subsidy for PV panels. So why aren't we doing more?

What do IPCC emissions budgets mean?

The new IPCC synthesis report recommends we use total greenhouse gas (GHG) budgets instead of emission targets. This is better because it turns out that the global warming we can expect is more or less a linear function of the total GHG emissions we produce, regardless of when it happens. For a 66% chance of keeping below 2C warming we get a total emissions budget (since 1870) of 2900 Gt CO2e. We already emitted 1900 Gt up to 2011 so we have 1000 Gt left in the budget. The current rate of emissions is about 45 Gt/year. At this rate we would use our whole budget by 2033 - but it is supposed to last us forever. At the moment we are increasing emissions not decreasing them but at some point we have to reduce our net carbon emissions to zero. The later we leave it, the faster we will have to reduce. [1]

Will the lights stay on over the winter? Comparing capacity and demand.

There have been a number of unplanned power station shutdowns recently for various reasons - bringing the prospect of black outs, or maybe brown outs, over the winter ever nearer. How close are we? I have been looking at the figures for plant capacity and power demand, to see how tight the situation really is.

How to avoid brown-outs this winter

Since four EDF nuclear reactors are likely to be shut down until next year the chance of brown-outs this winter is looking increasingly likely [1]. There just isn't enough generating capacity on the grid to allow for any more problems. However, there are only a few hours a day when electricity demand is at its peak. Is there something we can do about this?

The cost of keeping the lights on at peak times

Ofgem announced recently that we have just enough electricity generating margin to keep us going over the next few years [1]. However the risk of interruptions to peak power supply is obviously being taken very seriously, judging by the effort going in to manage it. There are initiatives to:

• pay power generators to have capacity available
• pay companies to reduce power demand when requested
• fund energy efficiency improvements that will reduce demand at peak times

Under the new capacity market, the first two of these compete directly with each other. It will be interesting to see which is cheaper. However, these are like sticking plaster whereas the last option offers more long term relief.

Why Russia needs Ukraine

Gas pipeline

Ukraine is critically dependent on Russia for its gas supplied but Russia is also dependent on Ukraine for the majority of its exports, as gas flows though pipelines across Ukraine into Western Europe via Poland, and via Romania to Bulgaria and Turkey [1]. Here are some figures:

What will an energy price freeze achieve?

Ed Milliband's announcement that he will freeze energy prices for 20 months after the next election if Labour wins has received many different responses. Consumers groups love it, the energy companies hate it and their share price has dropped which suggests investors are worried. What do I think?

Why are we even thinking of fracking?

Our prime minister says he is keen for us to develop our shale gas resources in order to bring down our energy bills [1] and the Church of England urges us to consider seriously any measures that will help relieve fuel poverty [2]. In the USA, massive investment in shale gas has lead to a big drop in price: wholesale gas now costs only half what it did in 2007 and domestic retail prices have dropped by 20% [3]. In evidence to parliament in 2011, gas drilling company Cuadrilla said shale gas 'has the potential to lower natural gas prices (tending to reduce electricity prices)'. However in June this year a representative from the same company, Mark Linder commented on the subject: 'We've done an analysis and it's a very small…at the most it's a very small percentage…basically insignificant' [4]. How can this be - and if it is why are we fracking at all?

Energy crunch time for the UK

Last night I listened to Alistair Buchanan, chief executive of OFGEM, giving a talk using a presentation written in November last year called "Will GB's lights stay on and will the gas keep flowing: a look at the next decade". You can download the slides from OFGEM here. Alistair is standing down in June this year after 10 years; he declined an offer to extend his contract by two years and I can't help wondering if this is because he doesn't like his medium term forecasts of plummeting levels of spare capacity almost certainly leading to an increased dependency on gas and higher prices. The crunch arrives in 2015/2016.

Worried about gas wells leaking methane

Even without fracking, gas wells can leak methane. Some surveys have found high methane levels close to wells but unless you have a baseline reading before the well was drilled you can't be absolutely sure it is caused by the well. However, it only takes leakage of a few % to make 'clean' gas as bad as coal for greenhouse gas emissions. Energy companies are in denial over the issue and there isn't enough good data to evaluate the magnitude of the problem.

What's wrong with fracking?

Picture from Accenture [7]

Oil and gas reserves in the North Sea are dwindling but it is claimed that there are vast reserves of shale gas under our feet which can be accessed using a new technique called fracking. In the USA fracking has transformed the oil and gas industry to the extent that production is rising and gas prices have gone down [1]. Should we go for it too or not? There are concerns about the environmental impacts of fracking and uncertainties about the size of reserves. Is gas from fracking a useful transition fuel or should we invest exclusively in renewable energy starting now. The UK government has recently allowed drilling to continue in Lancashire which had been suspended due to earthquakes. Developing a local gas production industry would be good for our energy security and good for our balance of payments - imported energy is expensive. So how bad is fracking anyway? In this post I summarise the issues.

Should we be worried about energy security?

Over the weekend I was on a stall in a shopping centre discussing energy issues with the general public, and judging from the surveys we did, very few people know what 'energy security' means, although when prompted, most people were aware that increasing amounts of our gas is imported. Here are some facts which you may or may not find concerning.

How to balance electricity supply and demand using renewables (in the USA)

The National Renewable Energy Laboratory in the USA has published a study [1] showing several scenarios in which 80% of their electricity consumption comes from renewable sources by 2050. This is the most detailed plan I have yet seen: they modelled how demand could be met from a mix of mainly renewable sources from hour to hour using statistical models of regional weather patterns. It is interesting to look at the mix of renewable technologies they have selected, how they allowed for the intermittent availability of wind and solar power, and whether or not the same strategies could work here.