Technical Issues System Integrity Requirements

Security of Supply

Security of supply is a key element of Government energy policy. Indeed, committees in the House of Commons and House of Lords have recently announced their intention to examine energy security. The current transmission system contributes to security of supply by ensuring that demand in a specific part of the country is not solely dependent on the availability of generating plant located within that area. This allows for the opportunity for any available generation, regardless of location, to be utilised to meet demand.

Therefore, the transmission system therefore will be likely to continue to play an integral role in the future electricity system, even with higher penetration of renewables, CHP and embedded generation. But there are examples of embedded generation being used to provide generation reserve to a large interconnected system. In France, EdF can call on 610 MW of distributed diesel generators for such a role (Jenkins et al, 2000).

Existing methods for connecting embedded generation ensure maintenance of the security of the overall network. But this is at a significant cost to developers. Managing the network differently may offer opportunities for amending the methods and recognising that

operation of embedded generation in ‘island mode’ could bring security benefits under outage conditions. ‘Islanded’ operation refers to embedded generators operating

disconnected from the distribution and transmission networks, supporting local supplies in the event of network failure. Such an arrangement, albeit on a localised basis, could significantly reduce frequencies and extent of ’power-cuts’. The maintenance of voltage, frequency and network safety under such operating conditions would likely remain with the DNOs and requires consideration.

EGWG recommended that, in the short term, measures under the existing standards require clarification to allow recognition of the contribution of embedded generation to network security and performance, attaching a target date of January 2003 to such a review (EGWG, 2001). Similarly, EGWG recommended a Health and Safety Executive and

DTI review of the implications of connecting widespread embedded generation for the safety of distribution network operation. With a potentially vast number of generators being connected to the system, safeguards are needed to ensure DNOs can be confident that a particular part of distribution network is ‘dead’ in the event of circuit outages.

Embedded and Renewable Generation and Ancillary Services

Facilitating and encouraging the development of open ancillary service markets that maintain the integrity of the transmission network (Box 6) may be essential in addressing longer-term technical issues that may arise from a larger proportion of wind and other intermittent renewables. The NGC have established arrangements that allow small and decentralised generators to provide reserve and frequency response through the use of aggregating agents. The EGWG suggestion that DNOs should facilitate local ancillary service markets is an important development.

Encouragement should be given to the most cost-effective provision of co-ordinating and controlling the network and ensuring national standards for quality of supply. It follows that this should ensure additional requirements can be provided in respect of reserve and response that may be made necessary to accommodate large amounts of intermittent wind generation. They may also allow the displacement of some of the large grid-connected power stations that currently provide these services without any impact on system security. Local ancillary markets would also provide embedded generation with additional income streams.

It is essential that the continuing availability of ancillary services in the longer-term be ensured as embedded generators progressively displace present providers. The same aggregator agents as discussed above could assist smaller participants to provide such services to the required capacity and levels of dependability. As identified by EGWG, DNOs may in future perform this aggregating role as the facilitator of markets to obtain services directly for the distribution network or to sell on to the transmission network.

Intermittent Generation

The electricity system in the UK consists of diverse generating plants linked by an

interconnected network. This interconnected network is capable of integrating a substantial amount of intermittent renewable generation without adapting operational procedures. For instance, the reliability of existing plant, particularly older generating units, may be more prone to breakdown and delays in start up. The psuedo-intermittent nature of such plant is already factored into the integrated system.

The potential benefits of storage (regenysys, hydrogen, etc.) to intermittency has been discussed previously in Chapter 5. However, some commentators suggest that there is no technical nor economic need for dedicated electricity storage linked to intermittent

renewable capacity because fluctuations of energy output are lower than often assumed (Hartnell, 2000).

For instance, if the wind is not blowing in one location, it is likely to be blowing elsewhere. Thus, geographically dispersed wind generation may resolve overall concerns over

intermittency. But, such impacts may be limited in an individual contract market such as NETA whereby individual generators face the problems of intermittent generation of

individual wind farms. The development of wind co-operatives could be a response to such market exposure. The geographical distribution of intermittent generation may result in more localised impacts on transmission and distribution networks. For example, large off- shore wind capacity in the north of Scotland would have a significant impact on the nature and available capacity of local transmission and distribution networks.

As stated previously, intermittency should not be confused with unpredictability. Studies have been undertaken into predicting wind generation output. Research has shown 95% predictability for output 24 hours ahead, with suggested further gains to come (ISET, 2001).

NGC have examined the interaction of renewables, CHP and other embedded generation with the transmission network and system operation activities. NGC have expressed confidence that transmission related issues will not become a barrier to accommodating the amount of renewables or CHP generation necessary to meet the Government's 2010 targets (HoC Environmental Audit Committee, 2001). They further conclude that,

depending on the location and type of technology, the transmission network might be able to accommodate a greater proportion of renewables, CHP or other embedded generation than that specified in the 2010 targets. NGC do not perceive potential problems with a 10% contribution from wind generation nor insurmountable problems with increased levels (Annex Four).

System Integrity Methods

Flows between the Transmission and Distribution Networks

If the expectation is for an increasing proportion of embedded generation, electricity flows from the transmission to the distribution networks will likely be reduced. This may delay the need for transmission network reinforcement, although this is unlikely to remove the need for the substations/grid supply points at these transmission-distribution interfaces.

Such interfaces may still be required to balance the fluctuation between generation and demand in specific parts of the distribution network from minute to minute.

There is the potential for embedded generation to contribute to such a level that

distribution networks may be in a position to export electricity to the transmission system. Grid reinforcement would only be necessary at appropriate interfaces should exports to the transmission system exceed the existing transmission capacity or compromise quality of supply.

Bulk Power Transfers

Reduced electricity flows from the transmission to distribution networks as a result of increased penetration of embedded generation development will not necessarily result in a corresponding reduction in the bulk transfers across the transmission network. Bulk transfers are more dependent on the relationship between the location of generation and demand, including base and peak demand patterns.

As discussed in Section 4.4 and shown in Figure 7, existing patterns of generation and demand produce a net north to south power transfer across the transmission network of up to 10,000MW (NGC, 2001). This pattern represents the excess generation capacity located in the north (near coal and gas fuel supplies) relative to demand in that area. Thus, this excess capacity is exported to meet demand in the south. Such bulk transfer patterns are evident throughout the year. As demand falls from its winter peak, it tends to be the output of the more expensive generation units in the south that are switched off first, thus maintaining bulk transfer patterns.

These bulk transfer patterns indicate that new embedded generation units in the north may only serve to displace higher cost generation in the south. This would result in increased bulk system transfers in the same way as new transmission system connected generation in the north. New embedded generation in the south may likely displace older and expensive southern generation leaving north to south bulk power flows unchanged.

NGC suggest that for these reasons, bulk transfers on the transmission system are likely to continue. This situation will remain until such a time that there is a significant shift towards an improved regional balance between demand and generation, whether

embedded or directly connected to the transmission network. Taking the existing situation, such a shift would require a significant increase in generation in the south.

generation, using the transmission system to locate in the south of the country. Despite such incentives, generation continues to locate in the north. Embedded generators are not liable for these charges and have not received a direct incentive to locate in the south. But, embedded generators may enable suppliers to avoid payments of transmission demand- related use of system charges. Such charges are higher in the south than in the north, thus offering an indirect incentive for embedded generators to locate in the south.

In addition, the remote and low demand locations of many of the existing renewable energy technologies, e.g. biomass in the countryside, offshore and onshore wind in Northern Scotland, etc., will maintain the need for bulk transfers at high voltages. Indeed, the NGC are already in discussions with wind developers about arrangements for

transmission connections and charges.

Network Modelling, Management and Control

An increasingly active network with multi-generator connections will require complex modelling and simulation tools to allow accurate evaluation. ETSU has identified the need for network modelling to assess the number of technical issues that will arise in a

decentralised network (ETSU, 2001).

ETSU suggested that in the first instance, effort should focus on integrating embedded plant through the automation. With better modelling to understand the impacts on network operation, intelligent and automated management and control equipment would facilitate the development of embedded technologies. (ETSU, 2001). Automatic adjustments could be made to the network to maintain the system within the required limits, including the dispatch of embedded plant.

Distribution

Development of Active Distribution Networks

The Group review concluded that in the short to medium term, one of the biggest technical issues facing DNOs relates to the development of active, rather than passive distribution networks (Annex Four). Traditionally, DNOs have focussed on passively serving demand, building and maintaining adequate infrastructure in order to receive power from the

transmission network for delivery to customers. The passive nature of distribution networks has been formalised and encouraged through design codes, price controls, incentives and the regulatory environment. The role of the responsive and active management and

matching of demand and generation has been taken by the transmission network operator. However, increased embedded generation would require active management of distribution

networks involving a stepped introduction to adapt to new management, technological and administrative demands. Monitoring and control systems would require development to ensure effective communication and control of fault levels, quality of supply, security of supply and safety aspects. The impacts of a shift from uni-directional to bi-directional electricity flow have raised safety concerns and are new territory for many DNOs. Central to the evolution of active distribution networks remains the market mechanisms and regulatory environment in which DNOs operate. At the distribution level, connection agreements and contractual frameworks need to ensure equitable treatment of embedded generation and central generation alike, truly recognising the cost and benefits of both. In the near future, as networks are designed with a view to increasingly integrating embedded generation, so the degree and benefits of active management will increase. However, to date the DNOs may have stressed the costs and technological limitations of the shift towards active distribution networks, ahead of the potential benefits.

Developing active distribution systems would require Ofgem and Government support. For instance, investment will be needed to reconfigure the distribution network. But there is some debate over the time-scale for the required investment (ETSU, 2001 and Annex Four). Should embedded and intermittent generation expand rapidly, large scale

investment will be needed quickly, whereas incremental investment could be sufficient for a gradual transition.

Net-metering and Smart-metering

‘Net-metering’ can be defined as using electricity networks as a kind of battery with fair prices in both directions to improve the economics of small plant (Financial Times, 10 August 2000). Net-metering allows customers to offset their electricity consumption originating from the transmission and distribution network by selling their own generated electricity to the network. Box 14 provides details of a net-metering case study involving TXU Europe and Greenpeace.

Small-scale generators can sell back to the distribution network. The payment they receive should reflect the costs of operating the distribution network, distribution losses,

information management, co-ordinating supply and ensuring quality of supply, and the benefits, e.g. removal of need for network reinforcement, provision of local ancillary services. The potential costs associated with the metering and charging alternatives need to be established. These include installation, meter reading, developing and implementing new demand profiles for domestic and micro-scale generation, bi-directional metering,

implementing half-hourly metering, and addressing the stranded costs of existing metering assets.

Box 14 Net-metering Case Study – TXU Europe and Greenpeace

A children's adventure playground in East London, powered by solar photovoltaics, has entered into a groundbreaking deal put together by Eastern Energy, a TXU company, with the support of Greenpeace. The Eastern Energy agreement means that the playground can be paid the same price for the surplus electricity they 'export' to the national grid during daylight hours as they pay for any conventional electricity they 'import'. The playground will be paid 5.51p a unit for the electricity it exports via Eastern Energy and received £250 in compensation, as it did not receive any payment from its old electricity supplier for power previously exported.

Net metering works by the customers' standard electricity meter being modified to record the number of exported units. When the meter is read, imported units are charged for, and a rebate is paid to the customer for units that are exported, at the same unit price.

The solar net contract is open to the first 1000 domestic customer applicants who either have existing solar panels or who wish to install them. Through the contract, TXU agrees to pay the customer the same unit price for the exported electricity as that charged per the tariff type and payment method used to purchase electricity from Eastern Energy. This price match will initially be offered for a five-year period to April 2005.

Source: TXU Europe, 2001

Metering should be economic to install and be linked to tariff arrangements that allow all the parties concerned to measure or estimate with confidence the information they need. The tariff level is an important factor for domestic feeds into grid. Although there are a number of potential methods, it is essential to ensure that domestic generators get paid. Metering options include (EGWG, 2001):

• The retention of one way meters linked to tariffs based on demand profiles that estimate typical flows in both directions. Although this would minimise installation costs, administration costs may be high and profiling may not encourage reductions in energy consumption once the profile has been established

• Bi-directional meters that operate with a net energy tariff or a profiled tariff which could estimate typical energy flows in both directions

• Import-export meters that provide measurable information on power flows in both directions thereby reducing the reliance on estimated demand profiles.

Some have suggested that not including legislation to encourage net or dual metering in the Utilities Act 2000 was a missed opportunity to encourage the development of domestic micro-generation technologies (Fabians, 2001). Nevertheless, the TXU case study (Box 10) shows the construction of net-metering arrangements is possible in the current commercial and regulatory frameworks.

Domestic and Micro-Generation and ‘Plug and Play’

The development and application of technologies such as photovoltaics, fuel cells, micro turbines and Stirling engines is expected to lead to a significant growth in domestic and commercial generation. Such domestic or micro generation could meet most of a typical household demand.

The impact of widespread micro CHP or PV systems on the demand and generation profiles of distribution networks would be significant. A distribution network may have no net electricity flow over certain times of the day, its role reduced to balancing the networks and providing the appropriate level of backup capacity and security. Such a development would have implications, not only for DNOs, but also for suppliers, generators of all sizes, and the transmission operator.

That said, the development of domestic and micro generation is not without its pitfalls and complications. A number of technical and financial decisions will need to be addressed. For instance, simpler and transparent connection and payment structures need to be established in a manner that is appropriate to micro-scale generation technology. Payment mechanisms, via metering, profiles and fixed charges, for use of the distribution system, selling exports and buying imported electricity must be developed (see above).

Most forms of micro-generation must comply with strict engineering standards that were designed for larger generation plant. Work needs to be initiated to construct and apply appropriate yet simpler engineering standards for micro-generation (3rd _{I-P M, 2001). Such}

standards would need to be suitable for mass produced equipment and take fully into account important security and safety issues. Producing such standards would aid the development of what have been termed ‘plug and play’ small-scale generation units. 6.4 UK ESI Strengths and Weaknesses

Work undertaken by ETSU has identified a number of strengths of the UK ESI relevant to the development of embedded generation, many of which are equally relevant to

renewable generation technologies (Box 15). However, as identified within this thesis and by ETSU, there are a number of weaknesses across the UK ESI that, if not addressed, may seriously limit options for the development of embedded and renewable generation

technologies. These weaknesses may also limit the ability of the UK ESI to take advantage of the considerable UK and overseas business opportunities.

Box 15 Embedded Generation and UK ESI Strengths and Weaknesses Strengths

• Strong expertise in small gas turbine and generation technologies

• Strong science & technology and consultancy base

• Internationally recognised university departments in power engineering

• Internationally recognised consultancy in commercial and technical issues associated with embedded generation

• A large number of experienced project developers

Weaknesses

• Limited number of UK manufacturers of network hardware

• Limited ESI research capability in the UK (Section 6.1)