Electricity is difficult and costly to store, meaning that electricity markets are unique in that they require constant and instantaneous balancing of supply and demand (Creti and Fabra 2007; IEA 2004; Roscoe and Ault 2010). This means that electricity security needs to be thought of in terms of different timescales: supply and demand must be balanced over very short timescales to ensure that the electricity is immediately available when and where it is required, as well as securing sufficient overall supplies when averaged over the longer-term (Bolton and Hawkes 2013; Boston 2013; REKK 2009). It must be remembered that most UK citizens are accustomed to constant access to electricity; supply shortfalls in the UK may result in welfare losses and potentially severe consequences for the perceived political legitimacy of the government (de Nooij et al 2007; RAEng 2014). Therefore the system is carefully balanced in order to ensure that supply meets demand at all times. Consumers’ patterns of working and living mean that the electricity system frequently experiences large pickups in demand, for instance on winter evenings when most people come home from work and switch the lights and kettle on.7 Thus electricity security involves ensuring both ‘system adequacy’, i.e. the ability of the system to meet normal variations in demand such
7 The largest of these was in 1990, when the end of the World Cup semi-final penalty shootout between England and Germany imposed a 2800MW pickup, equivalent to around a million kettles being switched on! (BBC 2006).
as those caused by seasons and working patterns, and ‘system resilience’, i.e. the ability of the system to deal with disturbances such as unexpected spikes in demand or sudden losses of supply (IEA 2004; Nedic et al 2005). As well as this, the system must also be able to attract sufficient longer-term investment to ensure that there will be adequate generation, transmission and distribution capacity in the future (Bolton and Hawkes 2013; Creti and Fabra 2007).
2.4.2 Balancing a low-carbon electricity system
Reducing GHG emissions adds additional challenges to the difficulties of balancing the system (Barnacle et al 2013). Some of the most advanced sources of low-carbon electricity such as wind and solar are intermittent, meaning that they cannot be relied upon to be available when they are required. This intermittency means that RES cannot act as a direct watt-for-watt replacement for fossil fuels; in a system with high levels of renewable generation, more resources may need to be available to meet balancing challenges, as explained in more detail in section 2.4.3 (Davis et al 2013; Nedic et al 2005; Ofgem 2012; Paulus et al 2011). Conventional plants may be required to operate at reduced output as they will mainly be used for backup and peaking power (Nedic et al 2005; Paulus et al 2011; Roscoe and Ault 2010). This is illustrated through the use of capacity factors – a capacity factor is the actual power produced over a period of time, expressed as a percentage of the power that could have been produced if the station or array was running at full power for that period of time (for both conventional and intermittent generation). Increased penetration of intermittent sources reduces the capacity factor of the overall electricity mix; as the capacity factor decreases, the average cost of conventional plant increases, and the efficiency of the plant decreases (Paulus et al 2011). These supply-side issues, combined with the challenge of increased overall demand (and possibly higher peak demand) for electricity due to electrification of heat and transport, will represent a significant challenge for balancing the system and integrating high levels of low-carbon capacity.
These difficulties have the effect of reducing the amount of spare capacity which is projected to exist on the system in the future. In 2012, Ofgem suggested that increasing demand and intermittent supply, alongside the closure of some old power stations, could lead to a significant reduction in the overall capacity margin (de-rated to account for
intermittency)8 of the UK electricity system, from around 14% now to around 4% in 2016 in their base case (Ofgem 2012). The Government’s 2012 Energy Security Strategy (DECC 2012a) also noted a tightening of de-rated capacity margins, to around 3% in 2030 in their base case,9 although the report asserts that a tightening of margins is to be expected in a market such as the UK which has in the past had an oversupply of electricity. A recent report by National Grid warns that UK winter capacity margins will be tighter in 2015/16 than they were in previous years, meaning that additional contingency measures (such as those suggested in section 2.4.3) may be required (National Grid 2015a). However, despite several consecutive years of capacity margin warnings and often some rather hyperbolic media reports of a looming ‘capacity crunch’, there have not yet been any instances of supply shortfalls for consumers.
As well as reducing the spare capacity available, increasing demand and intermittent power generation can put a strain on the transmission and distribution networks. Despite all the discussion around primary energy supply, it is pointed out by Boston (2013) and Jamasb and Pollitt (2008) that the vast majority of actual blackouts are caused by failures on the transmission and distribution networks. There are currently bottleneck areas on the UK transmission grid (for instance, between England and Scotland), and dealing with this in the context of increased load on the system could require a reorganisation of how power is produced and distributed (Hammond and Pearson 2013; Martínez-Anido et al 2013). Increased flexible and distributed generation could assist in easing these bottlenecks and reduce the need for network reinforcement (Jamasb and Pollitt 2008; Pudjianto et al 2013; Shaw et al 2009; see section 2.4.3); however, this would require a large-scale
reconfiguration of the grid (Hammond and Pearson 2013). Overall, it is important to recognise that the key negative effect of network reinforcements will be felt via the cost of electricity: network reinforcements or reconfiguration are possible but costly, and the costs will eventually be passed on to the consumer. If the UK is serious about meeting its
decarbonisation objectives, these challenges will need to be addressed. As this section has sought to illustrate, the scale of the balancing challenge means that it is imperative to assess the implications of a low-carbon transition on the overall security of the electricity system.
8The de-rated capacity margin is the capacity margin adjusted to take power availability into account, specific to each type of generation (DECC 2011a).
9 The DECC projections are slightly higher because of differences in assumptions regarding imports and exports from Continental Europe.
2.4.3 Dealing with the balancing challenge
Numerous options are available to help deal with the challenge of balancing supply and demand in a low-carbon electricity system. Overall, these options are termed ‘flexible balancing technologies’, a broad group which comprises flexible generation, storage, interconnection, and Demand-Side Response (DSR) (Strbac et al 2012a).
2.4.3.1 Flexible generation
Flexible generation can be provided using any fuel which can be switched on and off relatively quickly and cheaply. At present, the flexible generation in the UK is mostly provided by gas-fired CCGT and OCGT plants, along with some old oil-fired plants. Because of the challenges of intermittent power generation the government suggests that the UK could see the need for between 26 and 37GW of new gas capacity by 2030 (DECC 2012c). However, CCGT plants produce between 380gCO2/kWh and 450gCO2/kWh (ECCC 2010), whereas the UK Committee on Climate Change (2013) recommend that the average emissions intensity of electricity generation needs to decrease to 50gCO2/kWh. It is therefore clear that the gas-fired proportion of the electricity mix will either need to be scaled back significantly, or CCS will be required in the near future. However, CCS is still not operational in the UK, and still does not offer a zero-carbon source of electricity (Froggatt 2013; IPCC 2005). Instead of relying overly on gas, biomass could represent an additional or alternative option for flexible and reliable generation; however, there are numerous issues and questions surrounding the sustainability of biomass production, especially on the sort of scale that would be required to meet a significant proportion of UK energy needs.
2.4.3.2 Storage and Interconnection
Therefore, other options may need to be considered. Electricity storage would assist in ensuring that power can be accessed when required to deal with system peaks. The UK already has four pumped storage facilities in operation for the storage of electricity; currently, these can only generate at full capacity for short periods of time, but in a context of increased renewable penetration they may need to move towards longer running cycles in the future (SSE 2013). Furthermore, newer forms of electricity storage (such as batteries) can assist significantly in integrating intermittent RES and improving system adequacy;
however, although the cost of these technologies has decreased significantly in recent years they are still relatively expensive (Fuchs et al 2012).
Interconnection with Continental Europe and Ireland could also provide a useful means of balancing the electricity system. The UK has three operational interconnectors, with France, the Netherlands and Ireland, with a combined capacity of 3500 Megawatts (MW). Further interconnection is planned or under construction with France (2000MW) and Norway (1400MW), and National Grid is also consulting on plans to connect the UK to Denmark and Iceland. The UK’s interconnectors earn their revenue by auctioning electricity capacity, based on price differences at each end of the interconnector; thus when additional supply is needed in the UK, the price should be higher, meaning that electricity will flow from one or more of the other markets to make up the supply shortfall (National Grid 2013a). However, interconnectors have high capital costs, and there is often high uncertainty over whether the benefits of a proposed interconnector will outweigh its initial costs (Turvey 2006). Moreover, the scale of potential interconnection in the future is highly sensitive to assumptions regarding fundamental supply-demand conditions in neighbouring economies (Strbac et al 2012a).
2.4.3.3 Demand-Side Response
Thus far, various mechanisms for providing flexible supply have been discussed. But one of the most potentially powerful balancing mechanisms exists on the demand side, in the form of flexible demand and load shifting, otherwise known as Demand Side Response (DSR). Managing demand could reduce peak load and thus reduce the requirement for backup generation (Lockwood 2014; Strbac et al 2012a). This can be done by giving consumers the ability to shift their demand away from times when national demand is high. Smart Meters, which communicate consumers’ meter readings directly to the supplier, are due for mass roll-out in the UK from now until 2020 (DECC 2012d; HM Government 2011). In the future, automated systems connected to a ‘Smart Grid’ could mean that devices such as washing machines can automatically shift their use to times of low demand; this tool could
theoretically become even more powerful with electrification of heating and transport, for instance by allowing electric vehicles to charge at times of low demand (Greenpeace 2010b). Various studies have suggested that DSR could significantly reduce system peaks, in turn reducing the costs of managing surplus supply and reducing pressure on the networks (Pudjianto et al 2013; Roscoe and Ault 2010; Strbac et al 2012a). However, the
implementation of DSR for residential and public sectors will rely on either widespread active consumer participation for manual shifting, or automated shifting using technology which is not yet commercially available (such as Smart appliances) and a willingness from consumers to allow computerised control of their home devices. Therefore the use of DSR at scale could open up a raft of ethical and practical concerns (Hoggett et al 2013; Owen et al 2013; Richards and Fell 2013; Stop Smart Meters 2015).
Overall, changes on the demand-side could provide a powerful tool, but cannot provide a panacea. As pointed out in the diversity literature, no single measure is likely to prove sufficient to tackle the trilemma; a portfolio approach, which makes use of a broad range of supply-side and demand-side measures, will be required (Awerbuch 2004; DECC 2012e; Francés et al 2013; Kennedy 2013). For this reason, it is important to look at electricity security from a whole-systems perspective; whilst individual measures and technologies on both the supply and demand side are interesting and important, the full security picture only emerges when a holistic approach is taken.