COP27: Managing supply and demand

As part of our COP27 series, we have examined the transition to a low carbon economy here in the UK and assessed the changes we will see in how we power our transport and heat our homes. The UK has already made great strides in growing its renewable generation capacity. Capacity rose 12% year-on-year to 2022 and offshore wind grew by 23% in the year. Renewable energy capacity in the UK is now six times greater than it was in 20101. 

And the UK has ambitious growth targets for renewables in the 2020’s. From a current installed wind capacity of 14.6GW onshore and 13.1GW offshore, the government’s British Energy Security Strategy has set an ambition for the offshore wind element to reach 50GW by 2030 – more than enough to power every home in the UK.

However, as we know, renewable energy generation is intermittent by nature. Wind generation (though distributed across the UK and its shores), does fluctuate in its energy production as the weather conditions fluctuate. Solar’s performance changes with the time of day, time of year and weather too.  
With this changing nature of our energy generation, two important concepts will play a much greater role in our energy system.

Electricity storage

Historically, electricity generation has been flexed to meet a variable demand. And at all times the volume of supply and demand has been kept in balance. There has been very limited capacity to store electricity in the system. The only major storage infrastructure has been pumped hydroelectric station at Dinorwig in Wales which opened in 1984. A simple design in a disused slate mine, at times of excess or cheap electricity, water is pumped up to a reservoir over 600m above sea level. And when electricity is most in need, the flow is reversed, and electricity is generated as the water drops 100m to a lower lake.

Significantly greater capacity of electricity storage is needed for our evolving, cleaner energy system. 

One important technology for storing electricity energy is the battery. And fortunately, with the move to battery electric vehicles for our surface transport needs, the quantity of batteries in our energy system will grow significantly in the coming years. 

Wider deployment of batteries is planned, with building stationary batteries and grid-scale battery energy storage schemes. 

A battery storage system is charged by the electricity generated from renewable energy. This energy can then be released from the battery storage system during times of peak demand. The UK government estimated that technology like battery storage systems could save the UK energy system up to £40billion by 2050 and would ultimately reduce people’s energy bills. 

Recently Close Brothers provided a loan to Pacific Green Technologies Group for the construction phase of the UK’s largest battery energy storage systems, a 99.98 MW system at Richborough Energy Park in Kent. 

Demand flexibility

As variability in generation grows, the value of flexing our demand for electricity also grows. Encouraging some of the demand for electricity to move to times when cheap and clean generation is available, helps to maximise the use of this cleaner energy supply.

Forms of demand flexibility have been used for many years – the most obvious being Economy 7. A scheme primarily for off-gas grid housing that encouraged electricity consumption at nonpeak times (typically overnight).  Electricity supplied off-peak was significantly cheaper to the consumer.

Modern metering and controls can enable a smarter demand flexibility to be developed in our energy market.  Consumers (and businesses) will be encouraged to move some of their demand to suit generation availability. And significant consumption loads (such as charging of an electric car) are ideal – since their charging is normally less time sensitive to the consumer.

This week we have seen an exciting commencement of demand flexibility roll out to consumers. Octopus Energy ran their first ‘saving session’ from 17.00-18.00 on Tuesday 15 November. Consumers could earn £2.25 for every kWh of electricity they removed from their typical consumption for that period. And 288,300 of their customers opted in to participate in this first session.  The results are not yet in on the volume of demand this initial pilot removed from the grid at this peak winter evening slot. But more dynamic tariffs in the future, and the use of smart meters, can enable consumers to play their part in managing a new, cleaner grid. And for those consumers, they can choose to consume electricity (for their cars, their laundry or their cooking) at times of cheaper energy.
 

1 Department for Business, Energy & Industrial Strategy – Energy Trends Apr-Jun 2022