UK Struggles With Sagging Power Demand and Surging Renewables

Smart electric vehicle charging and other flexibility services could have saved British ratepayers £133 million ($104 million) this summer, power companies claim, as the U.K. grapples with surging renewables output.

Low electricity demand during the COVID-19 lockdown and ever-increasing wind and solar capacities have seen U.K. power prices collapse this year — and curtailment costs soar. A pair of public holidays in May exacerbated the problem, sending power demand even lower.

National Grid ESO, the U.K. system operator, expects to spend an additional £500 million to balance the grid over the course of this summer, much of it in the form of payments to wind farms to stop generating. In total, National Grid expects to spend £826 million to balance the grid in the period May to August.

A host of power companies, including major suppliers Centrica and E.ON, sent an open letter this week calling on National Grid to accelerate the deployment of smart EV charging infrastructure, energy storage and other flexibility services, allowing homeowners to make their own contribution to the energy transition and perhaps share in the profits along the way.

The companies are also pushing for consumer bills to reflect energy use at times of higher or lower demand.

In the letter, sent to Ofgem CEO Jonathan Brearley, the power companies estimated that a fleet of 6 million electric vehicles operating with smart infrastructure could have cut £133 million from this summer’s anticipated grid-balancing bill.

“The COVID-19 situation has shown what unmanaged net-zero looks like,” said Simon Daniel, CEO of energy storage specialist Moixa, whose company signed the letter to Ofgem. “We’re interested in what getting to net-zero in a managed way looks like — by halving the amount of carbon in the transport and electricity sectors each decade,” Daniel said in an interview.

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Despite its high and ever-increasing renewables penetration, the U.K. has no subsidies or tax incentives in place to encourage consumers to use renewable electricity. Energy storage has no support, in contrast to rebates offered in Ireland or the cheap loans available in Japan.

“We are at an inflection point in history,” Daniel said. “The climate movement has been calling out for trillions of dollars of investment. The recovery packages are trillions of dollars.”

The U.K. has a number of options for addressing its current reliance on renewables curtailment, from long-duration storage to industrial-scale demand response. EVs, smart electric heaters and home solar batteries “could all be providing services at this time if the right signals and instructions were being administered,” the energy companies wrote in their letter.

“Flexible technologies and storage assets will be needed to integrate a higher level of renewable generation onto the system to produce carbon savings. Harnessing the potential of these technologies is critical to ensuring green energy supply isn’t unnecessarily wasted,” the letter says.

The high renewable mix in the U.K. and other European markets is a sign of challenges to come as the energy transition rolls ahead.

“We need to fix this, fast,” Greg Jackson, CEO of energy supplier Octopus Energy, said in a statement.

“The bank holiday weekends have been a wakeup call,” Jackson said. “With a flexible, digital grid, cheap renewable power would have saved households money. Without it, they will be forced to pay billions in infrastructure upgrades and compensation payments.”

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Brearley, previously head of systems and networks at the regulator Ofgem, took over as CEO in February.

Jackson told GTM in a statement that it is time to rewrite the rules. 

“To drive that change, Ofgem will need to change regulation so that instead of a fixed poll tax, every green electron traveling a short distance down an empty wire is cheap. Customers should be rewarded for consuming when there is plenty of wind and sun, for using energy from local sources, and for plugging in electric cars and heating systems — millions of big batteries —to help manage local pinch points,” he said.

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