The Picture of the Radical Energy Revolution
Energy is the lifeblood of the whole society and a reliable, affordable and efficient energy system is the heart to drive the energy flow through every corner of our life, from lighting our cities to heating our homes.
The surge demand of energy after the pandemic and the recent tense global politic situations keeps pushing the energy price higher and higher and unavoidably increases the cost of livings in the UK. The Government has provided financial assistance to overcome the short-term difficulties caused by higher energy bills and has set the long-term goal to address the vulnerability of the British energy system to international oil and gas prices. The transformation of energy generation from oil and gas to renewable sources is the key to achieve the energy security target. The imperative to limit climate change and achieve the Net Zero emissions targets in 2050 have also strengthened the momentum of the transition from traditional energy sources to renewables. To drive the success of this energy transition from oil and gas to renewable sources, the new Energy Security Strategy has set out the ambitious targets by 2030 to grow up 5 times of the UK’s current solar capacity to 70GW, offshore wind to 50GW and hydrogen to 10GW, etc. A radical energy revolution has already started in the UK.
The Long-Term Pressure on Power Networks to Welcome the Energy Revolution
On one hand, all of the strategies and ambitious targets have drawn a great picture for a radical revolution of the energy structure in the UK. On the other hand, the electricity infrastructure in the UK seems to be struggling to keep up with this rapid change.
The current network has been built to accommodate the centralised energy flow model with electricity being generated at large power stations and transported to wherever required through a well-designed route: the transmission network takes power from large centralised stations and, with high voltage levels over long distance, passes the energy flow to distribution network from where the electricity is supplied to thousands of end consumers. However, most of the renewable generations, especially solar sites and onshore wind farms, are decentralised with small capacity and directly connected into the distribution network, resulting in a new decentralised energy flow model.
The direct impact of the change from the centralised generation model to the decentralised generation model is the limitation to send power via transmission network to remote consumers. In reality, power flow can be reversed to transport electric power from distribution network to transmission network. But the sensitivity and various parameter coordination of protections, the negative impact on transformers and the capacity limitation of power lines have strongly restricted the volume of reversed power flow. Thus, when local demands cannot digest the overwhelmed energy from their adjacent renewable sources and the energy being input to the distribution network is too much to manage, the network will become overloaded and generators will be forced to disconnect. This type of curtailment balancing process has resulted in a negative financial impact on the generators’ business revenue, a restriction of the further deployment of renewable stations and a terrible waste of clean energy. In 2020, approximately 3.8TWh of electricity was lost due to curtailment, £826 million was spent by National Grid to balance the grid mainly to pay wind farms to cease generations. A research result from LCP shows that the curtailment cost will reach £1bn per year by 2025.
Curtailment has become a strong constraint of the development of renewable generations and a big challenge that must be tackled if the UK is to realise its energy revolution targets. Under current price control for the DNOs, RIIO-ED1, there is no direct incentive for how much distribution generation is connected in their networks. Generators have to contribute to reinforcement works, such as new physical infrastructure, to be connected to distribution networks under the current charging methodology. Such arrangement has resulted in an ineffective cost signal and became a barrier to Net Zero. At the same time, DNOs have been implementing on Active Network Management (ANM) system or Distributed Energy Resources Management Systems (DERMs) to connect generators under curtailment. This report will provide supportive information for a better understanding of this problem by focusing on the data analysis of the two important decentralised renewable sources: photovoltaic and onshore wind. We also analyse the battery storage technology which presents a fast-rising trend as a result of fulfilling the need of renewable power balancing management.
The Short-Term Pressure on Connections to Catch up with the Boosting Accepted Offers
The long-term upgrade plan from DNOs is required to adapt to the energy revolution, but a short-term reinforcement plan of the network is needed immediately to catch up with the boiling market. Figure 2 1 shows the ratios of total accepted but not connected capacity in DNOs (excl. SSE and SPEN as explained in Table 2 1) over already connected capacity for different technologies by year. Figure 2 2 presents these ratios utilising cumulative accepted and connected capacity since 2017. For simplicity, we will refer the ratios shown in Figure 2 1 as “yearly ratios” and the ratios shown in Figure 2 2 as “cumulative ratios”.
First of all, we notice the yearly ratios and cumulative ratios were 1.3 in 2017 and 2018, meaning that the capacity accepted in 2017 and 2018 but still awaiting to be connected by now is 1.3x of the capacity connected in these two years. This raises a question: why there is so much capacity that was accepted 5 years ago still cannot be connected and energised? This problem has become more serious now as we can see the yearly ratio of the total capacity in DNOs has exponentially increased and reached as high of 20.9x in 2021 meaning that for every 1MW connected capacity there is another 20.9MW wating to be connected. The delay in connecting the generators and the increasing accepted capacity may result in this multiple being even higher in the next few years. The growth of the yearly ratio has pushed up the cumulative ratio of the total capacity over the period of 2017-2021 to as high of 5.9x meaning that the capacity waiting to be connected is 5.9x of the actually connected capacity by DNOs over the period of 2017-2021. This raises another question: how will the DNOs prepare to digest the high volume of overstocked capacity wating to be connected?
Figure 2-1: Accepted but not connected capacity/ connected capacity by year (excl. SSE and SPEN)
Figure 2-2: Cumulative accepted but not connected capacity/ cumulative connected capacity from 2017 to 2021 (excl. SSE and SPEN)
From technology perspective, the high pressure of connections mainly comes from photovoltaic and battery storage since their yearly ratios have dramatically increased to over 90x and 40x in 2021 and in the meantime, the cumulative ratios have reached nearly 25x and 10x, respectively. Although onshore wind has a high yearly ratio over 80x, its cumulative ratio of 2017-2021 is only approximately 2.5x. The fast-rising yearly ratio did not lead to a high cumulative ratio of onshore wind. This is caused by the downtrend of connections along with an uptrend of acceptances of onshore wind capacity over the years from 2017 to 2021. The DNOs should be easily to deal with the onshore wind connections in time if they wish to reverse the connection trend from downward to upward in the near future. Other technologies have kept a relatively low yearly ratio (~2x) and cumulative ratio (~1x) without putting on further pressure on the distribution network.
This report provides information of detailed statistical analysis and trend predictions of accepted offers and connected capacities in distribution network over technologies, PoC voltage levels and top players, helping the policy makers, investors, equipment manufacturers, developers and planning engineers better understand the industry status as of today, thus be well equipped to drive the energy evolution and realise the Net Zero goal.