The Rocky Road to Smart


This article originally appeared in The Environmentalist in December 2016.

We’re all going to have smart meters installed in our homes by 2020, and then life will be much better for all of us: meter readings will be a thing of the past, homes will be able to monitor and manage their energy use and supply accurately, and beneficial changes such as time of use tariffs for electricity can come in. All potentially very good, but there is, of course, a road to go down to get to that felicitous outcome, which rather obviously involves actually installing all those meters, and setting up a communication system that can deal with all the smart communication traffic that will make the meters work. And a report on the progress of all this, and the cost benefit associated with it just released by the new Business, Energy and Industrial Strategy Department, suggests that this road is becoming an increasingly rocky one.

By the way, the report from the department was completed in August, but is only now [in November] being released after a three-month delay, which rather serves as a leitmotif for the problems of the programme that it highlights. At its heart is the continuing delay in ‘going live’ of the all-important Data Communications Company (DCC) without which up-to-date, interoperable smart meters cannot realistically be installed: and this body, outsourced in its organisation to Capita (of local authority management services fame) has repeated failed to ‘go live’ when it has said it will. Indeed it is now more than a year delayed, and has just staggered into life in only two of the three main areas of the UK (the northern area is still further delayed). When I say staggered into life, it seems that the going-live process itself is still plagued with all sorts of unresolved issues and may not yet be reliable enough to assure the safe rollout of latest design meters.

This is important because no leeway has yet been given by the Government on the completion date for installation. It is still 2020, but is now being compressed into a shorter and shorter timescale of implementation. The installation of more than 50 million smart meters was always going to be a high challenge, but projections from the new report now suggest that the programme will peak now at over 15 million installations in one year in 2019 (an increase of over 2 million on projections just a year ago). This starts to strain credibility, not only about whether such a compressed programme is now technically feasible, but then, if it is, the additional costs of employing all those extra installers and managing a crash programme over a short period, rather than a measured programme over a longer period. It would add still further burdens on an already strained budget: the report indeed already records additional costs to the £11 billion programme (not least to the troubled DCC) and because of wider problems, decreased net benefit to consumers.

I certainly support the aims of a smart meter programme, and I am convinced that properly integrated into smarter grid management they can be of immense benefit not just to consumers, but to the ability of the system to manage itself in a far more energy efficient way and incidentally, to manage much more effectively the low carbon power now coming onto the system. But as matters stand, it is increasingly looking like the smart meter rollout is in danger of becoming a smart meter roll into a ditch.

I have called for a pause in immediate programme implementation to allow for an independent appraisal of overall programme progress and problems to be undertaken. I think this is necessary to ensure that we actually get the rollout right, and do not, as I think we are in danger of doing, resort to ever more counterproductive fixes to keep the show on the road. And if the rollout is completed by, say, 2021 – instead of 2020 – then at least we will know that it really is going to produce the benefits we all want from it, and will not end up as a half formed sub-optimal fudge. Someone (and this means BEIS) needs to get hold of it now.

Time to Celebrate National Battery Day

This piece originally appeared in BusinessGreen on 15 September 2016

Blink and you might have missed it (although BusinessGreen didn’t).

I hope the new ministers in Department of Business, Energy and Industrial Strategy (BEIS) weren’t blinking when the news came out, but what with all they have on the plates at the moment I fear they were.

What is it I’m enjoining you to pay attention to? Well, the announcement at the end of August that National Grid has procured 200MW of battery storage through its first Enhanced Frequency Response tender. When you recover from the crushing sense of anti-climax that this obscure fact is what I’m asking you to attend to, I’ll then tell you what you need to know about this event and why it is (I think) quite significant.

What you don’t need to know is that the tender was to support National Grid’s Frequency Response system aimed at keeping electricity supply at a steady operational limit. Changes in the operational range must be dealt with and with more distributed generation coming onto the grid, changes are more frequent. Hence the tender, which may be just a part of a larger establishment of plants able to provide instant response to frequency difficulties.

What you do need to know is that the tender prices came in at a quite unexpectedly low price – half of what National Grid had anticipated. This means that battery storage has effectively now become competitive on price with other forms of storage and by modest extrapolation can be seen to now be ready to occupy a whole range of important energy niches – not in the medium term, but very soon.

The prospect for inhabiting the Frequency Response system is perhaps limited and there are indeed other forms of storage like compressed air that can provide the speed of response equally well, but the prospects for areas where batteries can really make a mark are much more substantial. For example, operating in conjunction with existing renewables to convert intermittent output into effectively dispatchable output, or load shifting by storing output at low prices during the night and then releasing it at peak hours, which, by the way, has a price range difference currently of about £55/MWh.

Based on the sort of prices now deemed investable by contractors to the AFR tender, the prospect also opens up of battery-based Capacity Market bids for essentially limited amounts of supply each year, coming in when capacity margins are tight. Those contracts otherwise might go either to existing amortised gas plants, or even to new CCGT plants being built largely for the purpose of not actually producing much electricity. The likely price premium envisaged by the Capacity Market to ‘clear’ new capacity is, on the evidence of the prices for supply revealed by National Grid’s tender, well within the margin at which larger battery installations might clear.

So I think we might come to see August 29th, the day the tenders were announced, as the day on which batteries really came of age.

That is remarkable in the light of what has been received wisdom over some time that batteries were something for our future mix but not to be seriously addressed for the medium or short term.

The prices show just how wrong that assumption has been, but perhaps underline why the obvious measures that need to be taken to eliminate rule-based distortions in battery deployment have not yet taken place. Distortions like the double taxation of output from batteries depending on whether it is regarded as generation or consumption, or on the restraints on holders of existing licences such as Distributed Network Operators in owning or developing battery-based plants because of the separation of function built into licence provision.

The distortions to batteries operating to best advantage in the market are easy to fix and do not involve new levies or subsidies. It seems more likely that government has been in no rush to sort them out because it is simply felt that they can safely be placed in the long-term inbox because nothing much would be appearing over the next period. Well, all that has changed. Batteries look like they are here now, and with a little regulatory assistance can probably now quite rapidly develop a strong presence on the energy landscape. That prospect looks to be wholly necessary as the revolution in supply and in costs of renewables continues to roll forward. Time for the regulatory environment to get with the programme.

A Tale of Two Islands



Here are two islands. Both are British. Off each island are good quality tidal flows. One island, however, has particularly strong tidal flows, getting on for as strong as one of the world’s strongest flows, in the Pentland Firth in Scotland.

Both islands are now looking to develop marine farms harnessing those flows to produce electricity for the National Grid. Both islands need to connect to the National Grid via a subsea interconnector. One island has an existing but underpowered interconnector: the other is at an advanced state of negotiation to build a powerful interconnector that links the island to France and the UK, and links its tidal stream array programme into the grid in the process.

Both islands have got really good schemes for tidal stream power, but one, perhaps because of the enormous potential of their offshore tidal race, is much larger than the other. In fact ten times as large, with the possibility of a further tenfold increase in capacity.

So far so good, eh? Well here it stops, because one island, because of its location and history, looks like it will be denied access to the Contract for Difference it will need to get its tidal flow scheme under way, even though there looks to be scope in future auctions for ‘further from market’ CfD allocations. The other will not, and I hope it succeeds shortly in gaining a supportive CfD allocation.

Oh all right, that’s the end of the mystification. The two islands are the Isle of Wight, British through and through, and looking to develop a 30MW array 2.5km off the south of the island in a joint development between Perpetuus Energy and the Isle of Wight council. Good for them: it looks like it will work really well.

The other one is Alderney. Alderney Renewable energy are promoting the FAB Link, one of the interconnectors identified by the Government as promoting greater resilience for the UK system, and proceeding well through the process of gaining agreements with Ofgem, National Grid and with their French equivalents. The Link would be from a site neat Cherbourg to Alderney, and then to a landing point near Exeter.  Feeding into this could be the product of the Alderney Race tidal array, initially comprising a consented 150 turbines about a mile off Alderney, and coming to about 300MW but with the prospect of an eventual 3GW deployment – which would be about the installed capacity of Hinkley C power station (if it gets built, that is). In fact, its initial deployment and future potential is in some ways similar to the much more trumpeted Swansea Bay tidal lagoon, which will have an initial installed capacity in the first lagoon of about the same amount, but will benefit from larger and cheaper subsequent installations. And on the basis of the way things are going, and especially if Hinkley C doesn’t get built or is further delayed beyond 2025, we surely need both schemes to get going. Alderney, by the way, could deploy from about 2020, using pretty uncomplicated technology – proven technology turbines sunk on sturdy supports to the seabed.

So what’s the problem? Well I mention the two islands because, as it happens the Isle of Wight is a county authority and really ‘British’ (and therefore gets to bid for a CfD) whereas Alderney, not far away, counts as British but not British, in that it is a ‘crown dependency’, and therefore doesn’t get to bid for a CfD because that privilege is reserved for, well you know, proper British places. In fact, I understand that the Secretary of State has written to Alderney Energy telling them that there is no go at the moment on a possible CfD because of the not-really-British problem. The fact that the development could have a huge impact on the UK’s electricity market and that Alderney WANT the power to go to Britain because they are, well, British as far as they are concerned is, I suppose, beside the point.

I know that DECC have thought for a few minutes about the issue, and indeed, when it appeared that some developments in Ireland might produce captured power for use in Britain (but based on wind blowing in Ireland) they actually wrote a consultative document on it (here), but nothing has transpired and the issue remains in limbo. So much so that there is clear danger that one of the single most potentially beneficial renewable energy projects there is for the UK based on one of the most potent and reliable sources of renewable energy which just so happens inconveniently to be sited off a crown dependency might not happen:  because it is not possible to transport the power of the Alderney race to, say, three miles off the coast of the Isle of Wight.