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Managing Flexibility Whilst Decarbonising the GB Electricity System

Background

The amount of intermittent generation connected to the grid is expected to increase significantly over the next couple of decades. This, alongside significant changes to the generation portfolio, is likely to have significant impact on the role and operation of all generation plant. There is likely to be an increased demand for ancillary services such as reserve, response and inertia whilst traditional providers retire from the market place. The project examined the entire market for ancillary services including the need to maintain firm capacity to provide security.

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The project undertook some modelling and analysis of the GB electricity system in the light of the carbon targets set by the Committee on Climate Change. Firstly a brief examination was made of the German and Irish markets with the hope of learning from their advanced penetration of variable renewables. Secondly a new model, BERIC, was written to simultaneously balance the need for energy, reserve, inertia and firm capacity on the system and its findings compared with simpler stacking against the load duration curve. The intention was to assess the need for flexibility on the system but some broader conclusions also emerged:

Conclusions

A system with weather dependent renewables needs companion low carbon technologies to provide firm capacity. This firm capacity could be supplied by a number of technologies such as nuclear, biomass or fossil CCS.

Policy makers and system operators need to value services that ensure grid stability so new providers feel a market pull. Currently some necessary services are provided free or as a mandatory service. However traditional providers (fossil plant) are disappearing at the same time that demand is growing. New providers can’t develop in the absence of a market signal.

A holistic approach to system cost would better recognise the importance of firm low carbon technologies and the cost of balancing the system. The value to the system of a technology is dependent on the existing generation mix and the services which that technology can provide. This means that a technology cannot be characterised by a single number such as levelised cost of energy.

Recommendations

A much deeper examination of the issues raised here is needed but must employ a whole systems approach.

New zero carbon firm capacity is essential to decarbonisation but leading technologies such as nuclear and CCS require long lead times so meeting 2030 targets requires action today.

DECC and National Grid should consider how new providers of ancillary services can be given the financial comfort needed to underpin their development and deployment before traditional providers disappear.

This work supports some key recommendations from the European Commission’s Smart Grid Task Force, in particular:

  • Equal access to electricity markets for all providers
  • Contractual simplicity and transparency
  • Standardised measurement of flexibility
  • Incentives to grid operators to enable flexibility for meeting 2030 targets rather than focussing on short-term optimisation
  • Improved price signals for providers of flexibility

Follow-up activities

A workshop was held in November to test these initial conclusions. Further work and modifications to the modelling will take place in response to that. Talks have also been given to the 14th Annual APGTF Workshop, the Gas to Power UK Forum 2014 and the IChemE workshop at the Grantham Institute for Climate Change.

Working Group

Project Chair:

Peter Emery – Drax

Steering Group:

  • Phil Lawton – National Grid
  • Nick Bevan – DECC
  • Nick Eraut – ETI
  • Ed Sherman – BIS
  • Alexandra Malone – SSE

Steering group advisor

  • Dame Sue Ion – RAEng

Further Information

Please contact  ERP .

International Abatement Opportunities

The International Emissions Abatement Project sought to assess the UK’s carbon abatement trajectory relative to those of Germany, Japan, US, China and India. The work analysed contextual energy related issues within a consistent framework of analysis, emission abatement trajectories and implementation strategies of these nations relative to modelled generation mixes to 2020.

From this, assessment of opportunities that other nations emissions trajectories may present to the UK from a technology transfer, collaboration and business value creation perspective have been made.

Background

In the ERP-DECC meeting of 30th November 2010, Greg Barker raised the concern that there was a perception the UK was lagging other countries in its ability to implement carbon abatement applications and technologies.  Specifically, that the UK was focused on capital intensive supply side solutions whilst other countries, for example Germany, were addressing demand side issues negating the need for large scale capital expenditure.  This resulted in the development of the International Emissions Abatement Opportunities project.

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Key Insights

Key insights of the review include:

Abatement Trajectories for Respective Nations.

  • All the nations in this review, with the possible exception of the US, will become increasingly energy insecure to 2020 and 2050.  The deployment of renewable and nuclear power is seen as a way of addressing energy security concerns as well as fulfilling respective environmental agendas.
  • The UK is pursuing similar abatement programmes to the other countries in this survey – switching from coal to gas, maintaining nuclear (except in Germany) and with regards to renewables generation, predominantly deploying wind, biomass and solar technologies.
  • All nations both in the OECD and rapidly emerging economies have energy efficiency and demand side management (DSM) programmes to reduce capital build requirements although these vary widely in scale, potential and ambition.

Capital Intensity of UK Power Generation Capacity Development to 2020.

  • Despite the energy efficiency and DSM programmes, all nations have highly capital intensive generation build programmes.  In terms of net capacity build to 2020, as a function of present capacity, the UK’s projected increase (17%) is on a par with the US (12%) and Japan (10%) and substantially less than Germany (26%), China (91%) and India’s (123%) – though in absolute terms China’s addition of 840 GW is the largest outlay of generation capacity.
  • In terms of value capture opportunities based on the deployment activity, the UK needs to consider how best to establish energy research and industrial policy frameworks to help grow, and capture value within international (low carbon) industrial value chains where the competitive advantage for process innovation will almost certainly lie in Asia.

Collaborative Opportunities based on National Deployment Rates and Patterns.

  • Different opportunities will arise in different phases of abatement technology development, necessitating different types of collaboration.  Based on national deployment agendas (TRL 9), this work has identified, at a high level, indicative areas that the UK would be in a position to collaborate and the type of collaboration, on a sectoral basis within this group of countries – this is detailed in section 4 of the report.

Follow-up activities

The review has fed into the following areas of government engagement:

  • A policy note to government.  A policy briefing summarising this work was sent to Greg Barker on 20th July 2011.
  • Feeding into the Global Strategic Trends 5 (2014) publication on Energy Technology Development to 2045.  The Futures Team, Development Concepts and Doctrine Centre, MOD Shrivenham requested input to sections on energy and transport technology for the Global Strategic Trends 5 publication based on the material in this review.  The Global Strategic Trends 5 publication maps global macro-drivers upon which the MoD and other government departments base their strategic planning; the next publication makes forecasts to 2045.
  • Feeding into the ERP International Engagement Project.  The ERP International Engagement project seeks to improve the resolution of the collaborative component of this work by matching up UK capability to develop technologies, the relevance of the technologies to energy systems and the potential for business to exploit the technology to provide a comprehensive assessment of areas where the UK should engage with other nations for business value creation, technology transfer and/or collaboration. Material from this review will assist in that work.

Working Group

  • Project Chair: Tom Delay – The Carbon Trust
  • Richard Neale – Atkins
  • Duncan McLaren – Friends of the Earth

Further information

 

IEA Energy Technology Perspectives

Grantham Institute for Climate Change

UNEP: The GAP Report

Industrial Energy Efficiency

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Background

The world’s energy systems are fundamentally inefficient – as little as 11% of primary energy may end up in useful product, such as materials, heat, light and motion. Industry has a key role, not only to improve its own use of energy, but also deliver more efficient products and materials. Industry is responsible for 18% of final energy demand in the UK and about 32% of its total greenhouse gas emissions. However, projections indicate that cutting carbon emissions from industry will be harder than in most other sectors leaving it as one of the biggest emitters in 2050.ERP undertook a study to understand the potential to improve the use of energy across industry.

Tackling industrial energy use has tended to focus on de-carbonising energy supplies and CCS, to reduce carbon emissions. This study focuses intentionally on energy efficiency, not carbon efficiency. Energy efficiency delivers both cost savings to industry and a reduction in carbon emissions. Many of the technologies are already available and could be implemented over the next 10-15 years, cost effectively.

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Conclusions and Key Messages

Companies may appear to be economically rational, and hence that value adding actions to improve energy efficiency would already have been adopted; our study reveals that this is often not the case. Without energy efficiency measures industry will become increasingly dependent on a low carbon electricity infrastructure and on alternative carbon reduction measures such as biomass and CCS, which present uncertain costs and in the latter case reduce the efficient use of energy.

The key messages and recommendations emerging from the study are:

Improving energy efficiency is not only good for industry but also addressing climate change targets. Despite delivering emission reductions at low cost, energy efficiency projects are less tractable than other low-carbon options. Greater emphasis is needed on energy efficiency not only in industry but how it interacts with the wider energy system and economy. To deliver this requires:

  1. Levelling the playing field between low carbon energy supply and energy use by introducing a package of policy measures that incentivise energy efficiency projects.  These should take account of the differing needs of industry sectors factoring in size and energy intensity.
  2. The UK working with manufacturing industries to reduce the risks of manufacturing off-shoring and increasing global emissions through carbon leakage.
  3. Encouraging companies to share and adopt best practice, through measures such as:
    • Setting Board level targets
    • Appointing a senior manager with accountability for energy efficiency
    • Changing the hurdle rate of return for energy efficiency projects to fully account for the benefits from energy efficiency projects.
    • Monitoring energy use to ensure benefits of energy efficiency projects are recognised.
  4. Further research is required to understand how energy moves through the entire system and where losses occur, particularly heat and energy embodied in materials.

The key messages from the study was published in November 2011, which emphasised the need for a greater focus on energy efficiency to deliver low cost carbon reductions.

Steering Group

This report has been prepared by Richard Heap in the ERP Analysis Team, with input from ERP members and their organisations.

Steering Group chair

  • David Eyton – BP

Steering Group Members

  • Graeme Sweeney – Shell
  • Tony Iles – Atkins
  • Ben Curnier – Carbon Trust
  • Bob Sorrell – BP
  • Sam Balch – DECC

The views are not the official point of view of any of these organisations or individuals and do not constitute government policy.

Further Information

Any queries please contact Richard Heap, ERP Analysis Team.

Public Engagement Workshop, 10 May 2013

As part of ERP’s public engagement project a workshop was convened on 10th May 2013 to help inform the work. The workshop brought together a cross section of academics and public and private sector colleagues with a range of experiences in public engagement.

The purpose of the workshop was to:

  1. Consider the different types, levels and meanings of Public Engagement & how best to choose which engagement process(es) to use, with whom and when;
  2. Understand concerns and barriers around the (wider) use of Public Engagement regarding energy-related policies, projects or technologies and how these may be mitigated;
  3. Identify areas for further research or exploration around energy related policies, processes or technologies, where Public Engagement can add value and better informed choices;
  4. Actions, Evaluation & Way Forward

It was chaired by Ron Loveland and facilitated by Sciencewise, with Lord Jenkin of Roding providing the closing remarks. Details of the meeting, presentations and outcomes can be found below.