ELECTRICITY IN A TIME OF RADICAL CHANGE Whole system engineering integration. Grant Spence

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1 ELECTRICITY IN A TIME OF RADICAL CHANGE Whole system engineering integration Grant Spence

2 WHAT WILL THIS LOOK LIKE IN 2030? 2050?

3 KEY THEMES DRIVERS Not just carbon PACE Infrastructure speed versus tech speed ENGINEERING IMPLICATIONS For the whole electricity system CONSEQUENCES for system functionality RESPONSES Technical, commercial, policy

4 WHAT S DRIVING CHANGE? Energy Policy Web Innovation Intermittent Renewables Electrification of Heat and Transport Local Energy Demand Participation Cross Vector Interactions Changing Consumer Expectations

5 PACE CHANGE IN 6 PARLIAMENTS 2000 HPC conversation starting 2015 chartered engineer chose STEM Aircraft, ships, trains built now still running in 2015 is state of the art 2030 HPC still a pretty new asset Child choosing STEM in 2015 gets chartered Aircraft, ships, trains built in 2015 (or even 2000) still in use If Apple still exists we will be on the iphone 14 (roughly) Technology is racing far ahead of physical infrastructure and human processes

6 BY 2020? 2030? WILL MOST CONSUMERS WANT TO Generate their own power? Store their own power? Charge their vehicle? Own their vehicle? Drive their vehicle? Control their energy economy from their iphone 14? Pay less? Feel more in control? Hand over their energy economy to Google? Amazon? Much of society is changing fast, for example many urban young people do not aspire to own a car. They expect everything to work as well as Uber

7 WHO S SAYING THINGS LIKE THIS? From a consumer s point of view, the solar on the rooftop is going to be the baseload. Centralised power stations will be increasingly used to provide peak demand This industry is going through a tremendous transformation. We used to have a pretty good idea of what future needs would be. We would build assets that would last decades and that would be sure to cover those needs. That world has ended. Our strategy is now centred around agility and flexibility, based on our inability to predict or prescribe what our customers are going to want

8 WHAT DOES THIS IMPLY? Significant system changes are anticipated: resulting in a highly distributed and more complex architecture Many are cross-system and not under the responsibility of a single party Growth of sensors, data, automation and intelligence is likely to be high volume and across all voltages from Transmission to Distribution and to Consumers These will need to be seamless, interoperable and secure against adverse interactions, interference, or a system crash Governance today is unsuited to ensuring wholesystem integration, including 3 rd party services/products No one is accountable for whole-system interoperability.

9 DEMAND: REDUCTION VS INCREASE? Demand reduction: Smart buildings Domestic / embedded generation Smart meters Energy efficiency Demand Increase: Forecast increase in usage (population & GDP growth) Electrification of Heat and/or Transport? and Cooling?

10 GENERATION What will low carbon generation look like? how much will it cost?... and will it operate flexibly?

11 NETWORK FUTURE OPTIONS Continuation / Extension of today s Networks? Increase in Community Energy / Micro-Grid Systems Increased Off-Grid Capability? Increased installation (and use) of smart technology Centralised Control versus a multitude of Control Hubs Expandability: increased transport / heating / cooling demand

12 NO GLOBAL CONSENSUS OVER SOLUTIONS? Forecast growth in all technologies to 2040 (except oil). But No one-size fits all No more mega projects? Emissions reduction needed on supply and end-user sides Source: IEA World Energy Outlook 2015 Impact of COP21 on forecasts?

13 NETWORK TECHNICAL CHALLENGES Falling inertia Reducing fault levels Voltage control problems Multiple interacting control loops Lack of visibility of supply side activity Need to revise the system design basis? Or find an alternative means of replication. Source: SOF 2014, National Grid All these problems have causes, and potential solutions in or connected to the transmission, distribution and consumer systems

14 WHERE NEXT? Emerging consensus in government and industry that this problem needs to be taken seriously No consensus yet on whether this requires a policy response or is something that can be delivered by a mix of industry self-regulation and adjustments to existing institutional arrangements Radical change is potentially around the corner?

15 HOW DO WE CALIBRATE A RESPONSE? Smart? How far and how fast? Keeping the lights on throughout To EV or not to EV? when? What about heat? How serious are we about carbon?

16 ENERGY TRILEMMA Security of Supply Carbon Emissions Energy Trilemma Cost of Energy

17 SECURITY OF SUPPLY - GOVERNANCE Privatisation (1989) captured existing Technical Architecture in Grid Code and Distribution Code Change is governed by the Code Panels, with due process oversight by Ofgem Also SQSS, NG Technical Standards etc. Effective in governing incremental change, and in responding to some emergent events Not forward looking Not agile Not whole system

18 COST OF ELECTRICITY - CHANGING REGIME Renewables Obligation / FiT Renewables prioritised in merit order Intermittency cost transferred to fossil plant Cost: / MWh* * Source: Energy UK Wholesale Market Report March 2016 Contract for Difference Merit order with low carbon fossil plant? TBC CfD based on dispatch? TBC Cost: / MWh? We now have an electricity system where no form of power generation, not even gas-fired power stations, can be built without government intervention. Amber Rudd, Reset speech Nov 2015

19 CARBON EMISSIONS Heat accounts for around 45% of our energy consumption and a third of all carbon emissions. Progress to date has been slower here than in other parts of our economy. There are technologies which have great potential, such as district heating, biogas, hydrogen and heat pumps. But it is not yet clear which will work at scale. Amber Rudd UK Energy Policy Reset Speech, Nov 2015 Without a national CCS infrastructure the cost of reaching UK climate change targets will double from a minimum of around 30bn per year Energy Technologies Institute Does CCS still matter in 2016? Without CCS, gas must be steadily phased out over the next 35 years and almost entirely removed by This represents a major challenge in relation to the decarbonisation of domestic heat and potentially undermines the economic logic of investing in new CCGT gas power generation capacity. UK ERC Report The Future Role of Gas in the UK, 2016

20 EXISTING INFRASTRUCTURE: CONSTRAINT and/or ENABLER? RISK OF STRANDED ASSETS?

21 ELECTRICITY INFRASTRUCTURE: The idea of baseload power is already outdated. I think you should look at this the other way around. From a consumer s point of view, baseload is what I am producing myself. The solar on my rooftop, my heat pump that s the baseload. Steve Holliday, CEO National Grid Sept 2015 Community led / user innovation continues? Some centrally dispatched generation is still likely to be required to economically balance energy needs (Could be offshore wind, nuclear power or gas?) Transmission & Distribution grid still needs operated & maintained. Exists in the background : Who pays? Changed T&D network design basis? Allocation of physical / intellectual infrastructure costs New governance structures need developed

22 Increased uncertainty, risk & cost? ELECTRICAL SYSTEM MANAGEMENT: 1. Continue Business As Usual (BAU) - Transmission system design basis retained - New generation is largely conventional plant + CCS? - Least uncertainty? 2. Variation on BAU - Transmission system design basis retained - Delivery via existing & increasingly new technology (FFR / energy storage / synthetic inertia) - Increased uncertainty? Especially through transitions. 3. Brave New World - New transmission system design basis required - Highest level of uncertainty? - Highest system performance risk vs BAU TRAJECTORY IS TOWARDS A BRAVE NEW WORLD?

23 WHOLE SYSTEM DECARBONISATION FUTURE TECHNOLOGY & INFRASTRUCTURE TENSIONS Electric vs hydrogen vehicles Electric vs hydrogen vs district heating networks - District heating with electric element? - And/or CCS? CHP vs heat pumps CCGT and/or SMR supporting district heating? OUTCOMES ARE UNCERTAIN: SINGLE WINNER VS SHARED SYSTEMS?

24 SCOTLAND ENERGY ISSUES NOW: Large growth in renewable generation in remote locations requires connection to a low-capacity / sparse electrical transmission network Potential limitation on exporting electricity into England across National Grid boundaries 50% of energy consumed is used to heat / cool buildings and processes Approx. 75% of Scotland s GHG emissions are CO 2 related (in MtCO 2 e) Source: National Grid / Scottish Government

25 SCOTLAND SECURITY OF SUPPLY Black start capability? Generation surplus Limitations on export? Some fossil plant necessary for system stability / operability? MWe Existing pipeline Possible pipeline Brae/Miller (Storage & EOR) Existing Miller pipeline St Fergus? North East Scotland 3.3Mte/yr Peterhead New or existing onshore line New offshore line Longannet Central Scotland 13.2Mte/yr Cockenzie Grangemouth

26 SCOTLAND COST OF ENERGY There were an estimated 940,000 households living in fuel poverty in Scotland in 2013, equivalent to 39% of all households. The Scottish Parliament, March 2015 A CO 2 tax for companies should be the foundation of the imperative renewable energy revolution. This is a major missed opportunity Wouter Last, President of Hint (Dutch Plant IT and Engineering Specialist) [It was concluded that] the additional system costs imposed by intermittent generation would be relatively modest, adding around 5-8 per MWh to the cost of the renewable electricity generated. This did not envisage more than 20% of electricity to be sourced from intermittent renewables. UK ERC Report, 2006 The least well off are likely to be worst hit by future increases in electricity / energy costs Low carbon energy has a cost premium The risk of fuel poverty rises sharply as household income falls

27 SCOTLAND CARBON EMISSIONS CCS is a key technology to cut industrial CO 2 emissions Industrial processes have inherent formation of CO 2 CO 2 capture is the only option for avoiding emissions Existence of Power Sector CCS infrastructure reduces Industrial CCS costs Otherwise adverse impact on the Scottish economy: Lost jobs / exports / revenue? Source: SCCS. Annual CO 2 Emissions per Cluster

28 A TIME OF RADICAL CHANGE - OVERVIEW Legacy generating plant largely retired within 10 years Renewables solutions cannot continue to rely on unabated fossil plant to provide electrical system balancing services Community / user led innovation continues (But only if supported / promoted?) Smart grid technology revolutionises electricity consumption Decarbonisation solutions need to enable / empower future decarbonisation of heat & transport to meet UK COP21 goals The UK should avoid increasing the cost of carbon - if it only outsources our carbon emissions elsewhere A clear vision, accompanied by strong risk and transition management, is needed to achieve decarbonisation goals

29 A TIME OF RADICAL CHANGE - SUMMARY Deliverability of UK transition to a low carbon economy is key But this does not necessarily mean a return to the CEGB! Continued promotion of innovation is essential including the enabling environment which allows it to thrive Support required up-front for enabling infrastructure (Which)? Significant uncertainty of commercialisation of technical solutions (especially in terms of cost / market readiness) Higher level of direction necessary in the short term? Flexibility / low carbon generation tension needs resolved Security of Supply is the most binary of trilemma issues? POLICY CHANGES THEN TECHNOLOGY ANSWERS... BUT SYSTEM TRANSITIONS ALSO NEED TO BE MANAGED

30 BUT GOVERNMENT GETS THE BLAME IF IT GOES WRONG!?

31 USING OUR INGENUITY TO CREATE LASTING VALUE FOR ALL