Policymakers should reject calls for the UK to return to double digit margins of power capacity over demand and let flexible plant and agile companies deliver a leaner electricity system, a new report suggests.
The Energy & Climate Intelligence Unit (ECIU), a non-profit thinktank funded by climate and environment bodies, suggests that National Grid’s Supplemental Balancing Reserve (SBR), put in place to shore up thin capacity margins ahead of launch of the capacity market, was a £180m waste of money.
It argues that the fact SBR was not once called upon over three years underlines the reliability of the UK power system. Now the capacity market is up and running, “that should be the final nail in the coffin for blackout fears in the UK,” states the ECIU, pointing out that the chances of the grid totally failing are remote.
“A reliability of 99.999993% corresponds to a less than one-in-ten-million chance of the grid failing to deliver power, roughly equal to the chance of winning the lottery in each UK draw,” states the ECIU. “It is also around a thousand times less likely than asteroid 2013 TV135 – which would cause an explosion 50 times more powerful than the most powerful nuclear bomb ever used – hitting the earth.”
The thinktank believes storage, interconnectors, demand-side response and peaking plant can deliver a leaner, more responsive power system that will cope with ever thinner margins as older plant retires.
“The new [decentralised] system would operate more like a traditional market, where demand can flex to supply as well as vice versa,” it suggests.
That view appears to be gaining traction at both government and regulatory levels. BEIS and Ofgem recently issued a call for evidence on the shift towards a smarter power system, and the regulator’s most senior networks partner Andrew Wright has consistently stated that the value of flexible kilowatts will increase significantly over the coming years.
Meanwhile, traditional utilities, rather than committing to large new power stations, are in the main developing smaller plant to capitalise on peak prices.
However, to significantly scale demand-side response participation from UK companies, it may be that price signals will need to be sharpened.
Download the report here.