The Informer

This week's energy news headlines: The system operator is confident winter power demand will be met despite cutting its margin forecast; A report says a faster shift to renewables could see electricity costs fall dramatically; Industry leaders call for the upcoming CfD auction pot to be doubled in the push for net zero.

  • ESO lowers winter supply margin forecast

    Electricity margins are expected to be tighter than originally forecast this winter, but the system operator has stressed it is confident the lights will stay on. National Grid ESO’s latest Winter Outlook report forecasts a margin between supply and peak demand of 3.9 GW for this winter – equivalent to 6.6% – after provision for outages and breakdowns. This is lower than the 4.3% forecast in July with the reduction due to issues such as a fire hitting interconnector capacity to France. It compares to 4.8GW, or 8.3%, last winter Fintan Slye, Executive Directive of ESO, said: “The Winter Outlook confirms that we expect to have sufficient capacity and the tools needed to meet demand this winter. Margins are well within the reliability standard and therefore we are confident that there will be enough capacity available to keep Britain’s lights on. In a separate winter gas outlook, National Grid said Britain has enough gas supply capacity to meet demand as well as gas in storage and tools available to manage times of acute gas demand. Meanwhile, reports say Business Secretary Kwasi Kwarteng has asked the Treasury to support firms hit by rising energy costs which could see loans of hundreds of millions of pounds. Ofgem Chief Executive Jonathan Brearley last week told an Energy UK conference that changes to regulation in the market were needed as he predicted more small suppliers would fail. “We will need to regulate the energy market differently. When gas prices hit, many suppliers simply couldn’t cope with such a sharp, sustained shock,” he said. Read more

  • Power generation costs could fall 50% if renewable push accelerated

    Electricity production costs could be reduced by up to 50% by 2050 if countries adopt 100% renewable systems faster than currently planned, a report has claimed. Technology group Wärtsilä said significant cost reductions can be achieved by front-loading the deployment of renewables, mainly wind and solar photovoltaic, and by utilising the technologies needed to balance their intermittency. The report, produced ahead of the COP26 climate summit, said carbon neutral systems can provide cheaper electricity compared to current fossil fuel-based systems. Wärtsilä’s President Håkan Agnevall said the report should “act as a wake-up call for leaders”. “Our modelling shows that it is viable for energy systems to be fully decarbonised before 2050, and that accelerating the shift to renewable power coupled with flexibility, will help economies to thrive. We have all the technologies that we need to rapidly shift to net zero energy. “The benefits of renewable-led systems are cumulative and self-reinforcing – the more we have, the greater the benefits – so it is vital that leaders and power producers come together now to front-load net zero this decade.” Read more

  • Government urged to double CfD pot

    An industry body has urged the Government to double the capacity of onshore renewables supported in the forthcoming Contracts for Difference (CfD) auction from 5GW to 10GW. Regen issued the call in response to the Government’s commitment to fully decarbonise the electricity system by 2035. It said the CfD auction due in December is an opportunity to “quickly start to deliver on the new target”. “The low cost of new solar and onshore wind projects means the government could be much more ambitious on the amount of renewables it awards CfDs to at no cost to the bill payer,” said Regen. “The auction is also an opportunity sitting right in front of us to hedge against rising power prices quickly and effectively. CfDs are an excellent energy price hedge: in return for revenue certainty, generators pay back to the public purse when prices are high – directly reducing electricity bills.” Regen’s analysis suggests that there are plenty of projects in the pipeline eligible to compete for CfDs, with 10GW of onshore wind and solar with planning permission, a further 9 GW in the planning system, and another 20GW in the wider pipeline of projects that have secured a grid connection. Read more

  • Energy storage market set for surge in demand

    The global energy storage market is set to enter a prolonged period of growth with annual installations reaching more than 30GW globally by 2030, according to analysis. IHS Market said storage continues to prove resilient to the impacts of the pandemic and supply constraints for Li-ion batteries. It forecasts that the energy storage industry will experience rapid growth in 2021, with installations reaching over 12 GW – an increase of over 7 GW from 2020. This will mark the start of a period of continued expansion, with annual global installations set to exceed 20GW in 2024 and 30GW by 2030. Although there are risks of supply shortages as EV manufacturers also ramp up demand, the research group expects that disruption will ease within 12-18 months. “Delays associated with supply tightness have not yet led to any significant reductions in the outlook for the industry and we still expect installations to grow strongly as global supply of Li-ion batteries expands to meet demand,” says George Hilton, Senior Analyst at IHS Markit. Read more

  • Offshore wind could form 150GW energy backbone

    The UK electricity system could handle up to 150GW of offshore wind if hurdles around technical integration and market reforms are overcome, according to a new report. The analysis by Energy Systems Catapult argues offshore wind could be the “workhorse of the power system in the coming decades”. Achieving net zero by mid-century will likely involve integrating very high levels of renewables into the wider energy system. particularly offshore wind generation. Although this poses a “considerable and multi-faceted challenge” the report said it is achievable if the right technical and market reforms are put in place and policymakers need to think carefully about how to unlock a diverse generation mix. “Significant back-up plant, in the form of clean thermal generation, is required at high levels of offshore wind penetration to cover rare, protracted winter periods of low wind,” said Guy Newey, Energy Systems Catapult’s Director of Strategy and Performance “Extensive storage and flexibility is also required, with electric, thermo-mechanical, thermal and gaseous storage all being deployed alongside interconnectors. Demand side management is important from domestic and district level thermal storage, as well as hydrogen production and storage.” Read more