It is Scottish Renewables Annual Conference today, the first since the ‘great’ policy reset. Questions will be many and answers I suspect few. One question you might find yourself asking during the conference is why is a law firm sponsoring the energy storage segment at the conference? This is one question I can answer!
Renewables finds itself at a crossroads, and not just because of the ‘great’ policy reset. There are two other reasons – first, the huge fall in the price of oil and, second, the now urgent need for new reliable generation capacity. Not for much longer can ageing coal power stations be relied upon to provide back up when the renewables are not generating sufficient power.
Let us look first at the impact of the low oil price on the renewables sector. Shale gas and tight oil threaten to extend the hydrocarbon age as fossil fuels tend to become plentiful and new IEA projections forecast considerable growth in both. It means of course that the journey to price parity for renewables will take longer, although this is still a question of when not if, at least for some of the renewables technologies.
However, price parity is not the end of the story. It will not by itself mean the emergence of a decarbonised electricity supply. As we approach the hitherto holy grail of price parity, watch out for renewables being ‘price adjusted’ for system costs. Which may seem, and will no doubt feel, unfair…
However, it is a future renewables must embrace. The question of who is going to provide power at peak demand is one every government must answer. We know roughly speaking when peak demand occurs. It may not last very long but the ramifications of blackouts of any duration are enormous, so it is essential to be able to meet peak demand. Elexon monitors forecast surplus generating capacity over the coming year every week. Last week was the first time (since measurement started) that it went negative – which means forecast demand exceeds forecast supply at times next winter. This doesn’t mean blackouts (yet) but does mean more extraordinary supply side and demand side operations to manage supply and demand.
The power must come from somewhere. At peak demand in the UK it is dark, so no solar (a contrast to the sunbelt countries). Wind is unpredictable. National Grid apply a discount factor to assess the contribution of intermittent generation at peak demand. Wind is assumed to be at 22% (solar naturally is set at 0%). Wind is more reliable than many anti wind campaigners assume but nonetheless cannot be relied upon to provide all the power the country needs at peak times.
So where from then? Shale gas means plentiful, global gas supplies are available for many years. So the new gas fired generation is one answer. It has the benefit of being flexible and shale gas is likely to stop prices rising steeply. It also has the benefit of emitting about one half of the CO2 coal emits. As a replacement for coal it can contribute to a decarbonisation strategy, although of course once new capacity is built there will be pressure for it to operate for a long time.
As a replacement for nuclear of course it is not decarbonising at all, in fact quite the opposite, which leads you to new nuclear. At the moment though, new nuclear looks far from being the answer. It is expensive – who knows what the price of electricity will be in 2060 but we do know that the price of nuclear from Hinkley Point will be £92.50 multiplied by CPI per MWh. It is also inflexible which means that it does not work as back up for renewables when renewables are not generating. So, if you are going to have renewables in the mix, you need another solution for those moments when renewables are not generating.
All of which brings me back to storage. Given the shortcomings of gas fired power and new nuclear as methods of providing power when renewables are not generating, storage is a key component in any system where intermittent generation is prevalent. Since new nuclear cannot seemingly deploy to provide the majority of our power, renewables are the only (current) feasible means of decarbonising our electricity supply. Which leads to the conclusion that, if we are to decarbonise our electricity supply, the development of power storage (both projects and technology) is essential.
This is my rather long answer to the question as to why Brodies is sponsoring energy storage at the Annual Conference. And finally, I have only answered the ‘why’ question. I will discuss (no answers yet I’m afraid) the ‘how’ in a future blog.
On March 1, 2016