The future of the grid: Is COVID-19 a crystal ball?
In January this year, electricity prices were on average half that of January 2019 due to the unseasonably warm weather. Since then, as a result of COVID-19, the grid has continued to be exposed to abnormal events; the disappearance of the difference between weekday and weekend daily profiles and demand spikes following our “clap for carers” on a Thursday evening to name just two.
With lockdown restrictions being relaxed at pace and recent transport stats showing signs of life returning to normal – will the grid also return to normal or has it given us a glimpse into what we might carry over to our new lives?
A gas bridge to nowhere
The first quarter of this year saw renewables make up 47% of the electricity mix – up from the previous record of 39%. Solar had its best ever month in May and as costs continue to fall and routes to market grow, renewable capacity will climb. The question remains over non-renewable sources. It’s clear the reign of coal has ended with 67 consecutive days of no-coal generation seen in 2020 already. Gas had been lying in wait, but has its moment already passed?
Gas is often hailed as the bridge fuel to our low carbon future, but it looks as though it’s becoming a bridge to nowhere. Gas’s prominence on the system has declined year on year already – at a time when fuel costs are low this is wholly unexpected. Despite the rise of gas peakers helping to offer flexibility to the grid, they won’t be running at full load, full time so will be unable claw back some of the losses from traditional, baseload gas generators. has suggested by 2030 it will be cheaper to install and run renewables and storage – a sure sign that the gas bridge is quickly running out of ground. We may very well have already seen our last new combined cycled gas turbine.
How low can it go?
It’s no secret that renewables are intermittent. This lack in constant output has in part been the reason behind greater price volatility over the past few years. A case in point: over the late May bank holiday, unusually low demand met with the perfect conditions of a windy and sunny day to plunge prices negative. Although not the first time this has happened, the day ahead prices for 23rd May saw 16 consecutive hours of negative pricing – reaching a low of nearly -£55 per MWh.
This highly unusual quirk of the system saw Great Britain exporting electricity and some customers paid to consume – when usually we rely on importing around 7-10%. Demand side response is crucial during peaks in demand, but there’s been a subtle change. We’re now seeing National Grid ESO more frequently pulling levers to encourage people to consume electricity; this reached new territory when customers on Octopus’ agile tariff were paid to consume electricity on a domestic tariff.
There’s no doubting the industry will increasingly move to prices more reflective of real-time costs. The question will become how much of the savings will be passed onto consumers and how this is arranged. As demand creeps back up, extended periods of negative pricing are unlikely but until we create a demand profile that mirrors our generation profile, we’ll keep seeing prices dip negative.
Despite the headline grabbing detail of negative wholesale prices, the cost of balancing the grid has soared during lockdown. While National Grid had been developing products to help from 2025, it chose to launch one sooner than planned due to the unusual events: Introduced in May 2020 through the Balancing Mechanism, Optional Downward Flexibility Management (ODFM) tackles the unusually low lockdown demand by paying distributed energy resources to turn down. While a smart move to keep the grid in check, this is another cost that must be borne by consumers.
Like a visit to a clairvoyant, the start of this year has given us a glimpse into the grid of 2025 when renewables will take up the lion’s share. Questions remain to what extent heat will be electrified or decarbonised through hydrogen moving forward, and the impact of vehicle-to-grid charging. But COVID-19 has shown for certain how flexible the grid can be. The energy transition is well underway in the power sector, with the many tests of 2020, and the many records being broken, this is a glimmer into the grid of the future.
Hydrostor receives $4m funding for A-CAES facility in Canada
Hydrostor has received $4m funding to develop a 300-500MW Advanced Compressed Air Energy Storage (A-CAES) facility in Canada.
The funding will be used to complete essential engineering and planning, and enable Hydrostor to plan construction.
The project will be modeled on Hydrostor’s commercially operating Goderich storage facility, providing up to 12 hours of energy storage.
Hydrostor’s A-CAES system supports Canada’s green economic transition by designing, building, and operating emissions-free energy storage facilities, and employing people, suppliers, and technologies from the oil and gas sector.
The Honorable Seamus O’Regan, Jr. Minister of Natural Resources, said: “Investing in clean technology will lower emissions and increase our competitiveness. This is how we get to net zero by 2050.”
A-CAES has the potential to lower greenhouse gas emissions by enabling the transition to a cleaner and more flexible electricity grid. Specifically, the low-impact and cost-effective technology will reduce the use of fossil fuels and will provide reliable and bankable energy storage solutions for utilities and regulators, while integrating renewable energy for sustainable growth.
Curtis VanWalleghem, Hydrostor’s Chief Executive Officer, said: “We are grateful for the federal government’s support of our long duration energy storage solution that is critical to enabling the clean energy transition. This made-in-Canada solution, with the support of NRCan and Sustainable Development Technology Canada, is ready to be widely deployed within Canada and globally to lower electricity rates and decarbonize the electricity sector."
The Rosamond A-CAES 500MW Project is under advanced development and targeting a 2024 launch. It is designed to turn California’s growing solar and wind resources into on-demand peak capacity while allowing for closure of fossil fuel generating stations.
Hydrostor closed US$37 million (C$49 million) in growth financing in September 2019.