Renewable power generation has grown in the UK from 3% of energy supply in 2000 to currently more than 20%. With the ongoing retirement of high carbon sources of generation, this proportion is set to increase to more than 30% (see the graph below). The Government has committed to closing all coal-fired power stations by 2025, while new gas and nuclear generation is at least 10 to 15 years from coming online.
As the UK’s power generation mix shifts away from fossil fuels and becomes increasingly reliant on renewable sources, energy supply becomes more irregular: wind is an intermittent source, while solar energy is generated predominantly in the summer months, when least required. Balancing supply and demand is consequently an increasingly challenging, yet vital component of the energy supply market.
The UK energy market is experiencing reducing capacity margins, i.e. the difference between peak electricity demand and the capacity available to meet this. For last winter, National Grid had forecast a buffer of just 6%, equivalent to 3GW, although the mild weather alleviated any operational pressure on the system. Continuing high renewable deployment rates, the planned closure of coal generation and the aging condition of a substantial part of the UK nuclear industry, combined with expected delays in the delivery of flagship nuclear projects, suggest that operating challenges will worsen.
The system operator, National Grid, is responsible for ensuring that the UK electricity system has sufficient supply to match demand. Since power cannot readily be stored in sufficient quantities as yet, matching must be done in real time. Small imbalances in supply and demand lead to frequency distortions, which are critical for many technologies connected to the system. Larger imbalances may lead to brownouts and blackouts.
National Grid classifies the capacity it makes available to address imbalances into four categories
National Grid has also requested notifications of interest in a new service called Enhanced Frequency Response, for very rapid response such as could be provided by battery storage units. Battery storage remains markedly higher cost than other short-term generation solutions and has technological limitations. As a result, this new market is thought likely to complement, rather than remove demand from existing frequency response markets.
In addition, energy balancing, using existing capacity in the main balancing market and involving demand reduction, also takes place across all time zones, although is used particularly in the 20 minutes ahead of the demand point.
In the context of the fundamental changes to the UK energy sector outlined above and the resulting challenges, flexible power generation plays a vital role in supporting the pillars of the UK’s energy strategy.
In contrast to large power stations, which connect to the high voltage transmission grid, most flexible generating assets connect directly to regional distribution networks. Such power generation is known as embedded generation, and enjoys several advantages that result in lower bills for consumers, as well as generators earning a premium over wholesale electricity prices. The benefits derive from three sources:
Finally, embedded generation generally reduces the volume from balancing energy and hence can reduce the cost of balancing the system on a half hourly basis. Controllable plants such as generators also facilitate management of intermittency at a local level, allowing greater deployment of intermittent assets than would otherwise be viable.
The operational benefits and cost efficiencies in the form of avoided charges are typically shared between suppliers and the local producers they contract with, and ultimately benefit consumers through reduced energy bill