Revolution
The Department for Energy Security and Net Zero (DESNZ) has launched the biggest energy shake-up for years. Clean Power 2030, or CP30, is to be delivered by DESNZ’s newly-formed Mission Control, led by Chris Stark. Chris was previously head of the Climate Change Committee, which turned the legal commitment to decarbonisation into calls for specific action; this means he now has to do the homework he himself set. Emma Pinchbeck, who this week took over Chris’s old job at the CCC, is unlikely to be accepting excuses.
Also newly formed, the National Energy System Operator (NESO) was tasked with working out the feasibility and the pathways to decarbonise electricity by 2030. NESO’s report came out last week. So you want a revolution? Well, you know…
Can’t Touch This
About a dozen years ago, baseload gas and coal generators noticed they were being pushed out of the market by wind power. Run hours were falling, and the generation companies started closing the older stations. The situation was characterised in two completely different ways. The press had access to headlines like “Blackout Britain” and “Capacity Crunch”, which they loved. Between industry, government and regulator, however, the buzzphrase was “the missing money problem”. The question the generators asked was: how do you expect us to remain open or build new stations if we can’t sell enough electricity to pay our fixed costs?
The solution was the Capacity Market, or CM. The CM provides a fixed income, set at auction, to stations just for being there. Together with demand-side flexibility and batteries, generators in the CM can go and sell as much as the market wants to buy. Each participant can take their own view of how much they will make from energy, and work backwards to determine how much they need from the CM.
NESO has captured a new version of the missing money question within CP30, though hasn’t answered it. NESO wants to keep most of the existing gas-fired capacity available even after 2030, which implies something like the CM. The difference is that CP30 needs these stations to run only during the tightest conditions, bringing an end to unabated baseload gas. The CM, as it stands, doesn’t do that.
What will happen? One of the original alternatives to the CM, called Strategic Reserve, has been suggested. That involves booking some capacity “outside the market” – it’s a contract to be available while remaining aloof from the energy markets. One could also imagine an explicit restriction on run hours at unabated fossil generators (there is precedent for this) leaving them to make up their shortfall by bidding the CM auction price up. The potential for anomalies, confusion and fights over “grandfathering”, is high in any scenario. Given the time it took to design the CM (many of us remember meetings stretched over two years in Whitehall dungeons) this is one to tackle soon. NESO has bipped it over to Government. But an answer is needed.
There’s another facet to this. As the large gas stations lost generating hours to wind, many of them also lost reliability. During a cold February in 2012, Britain came perilosusly close to blackouts, as baseload generators tried to operate as peakers. That’s not their happy place. NESO thinks 35GW of unabated gas capacity must be retained – in other words, most of it. Whatever mechanism pays for this must also meet the cost of ensuring it’s reliable. There’s no point in replacing the missing money without securing the service you’re paying for.
Norwegian Wood (This Bird Has Flown)
The choice at the heart of NESO’s CP30 report is between more weather-driven renewables backed by storage and flexibility, and more “dispatchable low carbon” generation. By the latter, NESO means large projects involving hydrogen-to-power, gas with carbon capture and storage (CCS, or CCUS if you’re also using some of the carbon dioxide), and biomass (which may also have CCS).
Nearly all of the biomass-generated electricity in Britain today comes from remaining half of Drax power station in Yorkshire, which was originally built to burn coal. Under current subsidy arrangements, Drax is incentivised to run the biomass units as much as possible. Delivering fuel to Drax is a major international operation. It is not controversial to say that this has been controversial.
NESO stays as far away as it can (or perhaps slightly further) from this debate, but notes the importance of low load factors, in order to “make the best use of the limited sustainable biomass resource”. It also makes reference to DESNZ’s own work on biofuels, “which emphasised the importance of sustainability”. What that entails is left as an exercise for the reader. Taken in the widest context, which includes international shipping, competition for agricultural land, and the size of the bet which air transport may place on “sustainable aviation fuel”, we can be assured of a long and intense debate. That could easily keep us occupied until 2030.
Does it matter? Zooming out, it becomes clear that biomass capacity just isn’t one of the key numbers. The differences between “Further Flex and Renewables” and “New Dispatch” are in other areas – how much gas with carbon capture, and how much offshore wind. The difference in the offshore wind projections is greater than the total projected for biomass. That difference is still only 15% of the offshore wind potential. Incidentally, the amount of gas CCS in the dispatch pathway is smaller still. The point is clear: the credibility of Clean Power 2030 is not hanging on whether or not there is a sustainable source of wood to burn in power stations.
All Day and All of the Night
What we really need to talk about is Dunkelflaute. Or, in a further neologism kindly provided to me by a German-speaking relative, Dunkelflautenpanik. That is, fear of periods of little wind and little sunshine sustained over many days.
It was previously the case that Dunkelflautenpanik was a useful lobbying tool to slow the development of renewable generation at scale. It has come unstuck more recently, as wind and solar energy have hammered home their most obvious advantage: they are now the cheapest resources, and they stay cheap in times of global conflict. With negative renewable subsidies now a common feature of Contracts for Difference, many developers prefer to have no subsidy at all. Trying to scare people away from cheap green energy is, thankfully, futile.
Instead, Dunkelflaute has become an analysis case. It is used to determine the nature and duration of alternative resources which are to be used when wind and solar energy are at their lowest. NESO has its residual 5% of unabated gas-fired output specifically for this purposes, helpfully plotting charts of typical weeks illustrating how that fits around renewables.
Where NESO’s report is arguably at its weakest is in its relatively narrow view of the options here. To be fair, the objective was to figure out whether Clean Power 2030 can work (yes it can), and whether it will break the bank (no it won’t). Beyond that, the report is conservative about several of the technical options. Despite noting the potential role of long duration energy storage (LDES), NESO did not make much of it, stating that many of the candidate technologies are relatively new. Some are, but some aren’t, and one of them – thermal storage – is as old as fire itself. It’s also really simple: you could build a passable heat store from things you might find in a skip. Done with more finesse, thermal storage is a brilliant contributor to decarbonisation.
NESO is to be applauded for emphasising that Clean Power 2030 is not a “reductionist” target; I have heard them say that from the top table eight times (and counting). DESNZ and Mission Control are similarly clear on this point, which is that we aren’t going to try to hit CP30 by cutting back on the electrification of heat and transport. We are going all in. Thermal storage is central to heat decarbonisation, and electric vehicles are (obviously) batteries on wheels. But NESO’s report skipped over demand turn-up, that is, consuming energy early when wind and sunshine make it abundant and cheap, and storing it for later release. Thermal storage and electric vehicles are highly effective ways to do that at scale, at low cost, and inside the CP30 timelines.
Yes Sir, I Can Boogie
The beat running through the whole report is just this: 2030 is very close, and we need to get on with it. We need to proceed now with technologies and projects that are ready for scale. So who’s up for this?
For renewables, we have an answer. The dramatic improvements in both capability and cost of grid-scale batteries have demonstrated their ability to solve the short-duration operability challenges posed by wind and solar; the technical needs that remain are well covered by synchronous condensers. The big stuff is ready.
Breaking news: the small stuff is ready too. Last week, just as a crucial new change to market rules went live (for geeks, it’s P415), Flexitricity submitted its first tranche of paperwork to qualify under these new rules. Alongside everything we already do, we will soon take home and business energy resources into the on-the-day wholesale markets, where they can earn value by responding flexibly to conditions on the day, regardless of who they buy their electricity from. That means electric vehicle chargepoints grabbing cheap solar energy when it’s sunny, heat pumps charging the heat store when it’s windy, or businesses pausing manufacturing processes when prices spike. To be clear, we’ve been doing versions of this for longer than anyone else in Britain, and we’re good at it. What’s new in this latest change is optionality: energy resources can come and go, offering flexibility on an ad-hoc basis, and withdrawing it when they have other priorities. The EV chargepoint that’s getting a car ready for a long journey isn’t flexible. The one that’s just fuelling a normal week’s commute can be very flexible indeed.
We’ve been arguing for ad-hoc flexibility for years, and are delighted to see it finally come together. We’ll be leading this one from the front. As we do so, we will be inking in the details that NESO’s generally thorough and well-researched Clean Power 2030 report couldn’t include. This will cover heat, transport and grid-scale batteries, but also thermal storage, hydrogen electrolysis, novel LDES technologies, heat decarbonisation at every scale, and industrial processes. Much of this we already do, and the rest is committed. However DESNZ chooses to solve the remaining puzzles set for it by NESO, we know our answer. Yes, we are up for this.