Tag: investors

How artificial intelligence will change energy

20 September 2017

Electrification

At the beginning of 2016, the world’s most sophisticated artificial intelligence (AI) beat World Champion Lee Sedol at a game called ‘Go’ – a chess-like board game with more move combinations than there are atoms in the universe. Before this defeat, Go had been considered too complicated for even the most complex computers to beat the top humans.

It was a landmark moment in the development of ever-more sophisticated AI technology. But the future of AI holds more than simply board game victories. It is rapidly finding its way into all aspects of modern life, prompting the promise of a ‘Fourth Industrial Revolution’.

One of the areas AI has huge potential is in our energy system. And this could have implications for generators, consumers and the environment.

Artificial intelligence playing traditional board game Go concept

The National Grid gets wise

Earlier this year the UK’s National Grid revealed it’s making headway in integrating AI technology into Britain’s electricity system. It announced a deal with Google-owned AI company (and creator of the Go Champion-beating system) DeepMind which is set to improve the power network’s transmission efficiency by as much as 10%.

One of the National Grid’s most important tasks is maintaining the frequency of Britain’s power networks to within ±1% of 50Hz. Too high a frequency and electrical equipment gets damaged; too low a frequency and you get blackouts. Managing this relies on ensuring electricity supply and demand are carefully balanced. But this is made increasingly difficult with the growing number of intermittent renewables – such as wind and solar – on the grid.

The ability to process massive amounts of information from a wide variety of data points (from weather forecasts to internet searches to TV listings) and create predictive models means AI can pre-empt surges in demand or instances of oversupply. In short, it can predict when the country will need more power and when it will need less.

More than this, it can respond to these fluctuations in sustainable and low-carbon ways. For example, it can automate demand side response, where energy users scale back their usage at peak times for a reward. Similarly, it can automate the purchasing of power from battery systems storing renewable energy, such as those connected to domestic solar arrays.

These solutions, which would see AI help to manage supply and demand imbalances, would ease some grid management pressures, while large thermal generators controlled by human engineers back up such automation with their continuing focus on maintaining grid stability through ancillary services.

The role of the smart city

An undoubtedly large factor in the growing sophistication of AI in the energy space is the amount of energy use data now being captured. And this has much to do with the increasing prevalence of smart devices and connected technology.

Smart meters – which will be offered to every UK home by 2020 – such as Alphabet’s Nest smart thermostat, and start-up Verdigris’s energy conserving Internet of Things (IoT) devices are just a few of the emerging technologies using data to improve individuals’ abilities to monitor and optimise their household energy use.

But at scale, information collected from these devices can be used by AI to help control energy distribution and efficiency across entire cities – and not just at a macro level, but right down to individual devices.

The idea of a central computer controlling home utilities may seem like a soft invasion of privacy to some, but when it comes to the energy-intensive function of charging electric vehicles (EVs), much of this optimisation will be carried out in public on street charge points.

As AI and smart technology continue to grow more sophisticated, it has the potential to do more than just improve efficiency. Instead, it could fundamentally change consumers’ relationships with energy.

Changing consumer relationships with energy

Start-ups in the energy space, such as Seattle-based Drift, are exploring how trends such as peer-to-peer services and automated trading can be enabled through machine AI and give consumers greater control over their energy for a lower price.

The company offers consumers access to its own network of distributed and renewable energy sources. Currently operating in New York, it uses AI to assess upcoming energy needs based on data collected from individual customers and location-specific weather forecasts. It then uses this to buy power from its network of peer-to-peer energy providers, using high-frequency, algorithmic trading to reduce or eliminate price spikes if demand exceeds expectation.

Yet to be operational in the UK, this sort of automation and peer-to-peer energy supply hints at the increasing decentralisation of energy grids, which are moving away from relying only on a number of large generators. Instead, modern grids are likely to rely on a mix of technologies, generators and suppliers. And this means a more complex system, which is precisely why automation from a central AI system could be a positive step.

Not only could it bring about optimisation and efficiency, but it could slash emissions and costs for consumers. This silent automation may not have the same headline-grabbing qualities as beating a world champion in their chosen sport, but its impact to the country could be far greater.

Inertia: the shock absorbers keeping the grid stable

12 September 2017

Power generation

From the comfort of home, it’s easy to assume Britain’s power is run across a consistently calm and stable system. And while this is for the most part true, keeping it this way relies on a set of carefully calibrated and connected tools.

These include frequency response – which keeps all electricity around the country on the same frequency – and reactive power – the quiet force moving electricity around the grid. But there’s another at play, and at least by name, it’s something you’ve probably heard of: inertia.

System inertia is energy stored in spinning plant that slows down the rate at which frequency changes. Rapid changes in frequency can create instability in the system. Think of it like a car – inertia does the same job as shock absorbers in the suspension, smoothing the sudden bumps and potholes, keeping the wheels on the ground to maintain control.

However, the changing nature of Britain’s energy system is creating challenges in ensuring there is enough inertia available for a stable future grid.

The energy system’s shock absorbers

Inertia describes objects’ natural tendency (whether they’re moving or resting) to keep doing what they’re doing until forced to change. For example, when you kick a pebble, forces like friction and gravity prevent it hurtling endlessly off into the distance.

Electricity generation in thermal power stations such as Drax involves many moving parts, none more important than turbines and generators. In a turbine, high pressure steam hits a set of blades which makes it spin. A little like running a fan in reverse. The spinning motion is used to power the generator which is a rotor wound in electrified copper wire, transforming it into an electro magnet. As this magnetic field passes through copper bars surrounding the rotor it generates electricity.

This spinning turbine has inertia. If the fuel powering it is suddenly switched off it will continue to spin until it is stopped either by friction or by force. Every thermal generator in the UK system spins at 3,000 rpm, has inertia, and generates electricity at a frequency of 50 Hz. In the UK, all electricity is generated at the same frequency and crucially needs to remain stable – even deviations of 1% from this can damage equipment and cause blackouts.

Managing frequency is done by managing generation. If demand exceeds supply, frequency falls; too much supply and frequency rises. National Grid closely monitors frequency across the system and automatically instructs power generators like Drax to respond to changes in frequency by dialing up or down generation.

And ensuring this change in generation is done smoothly and instantaneously relies on using inertia. For example, using the inertial forces of spinning generators, power stations are able to respond instantly to requests to alter generation.

So, inertia is important to the stability of the power system. But because of the changing nature of today’s grid, we are facing challenges when it comes to inertia. Many forms of renewable generation aren’t built around spinning turbines. And this means no inertia.

Future Challenges

Renewable sources like the wind turbines currently operational in the UK and solar PV, alongside energy imported from the continent, do not provide inertia to the grid.

This means as the UK moves to decarbonise the energy system and rely on more intermittent and often embedded renewable energy rather than thermal-generated electricity, questions arise over where the grid will get the inertia needed to remain stable.

One possible solution is synthetic inertia. While wind turbines do not contain inherit inertia, modern suppliers are now enabling the machine’s rotating blades to create synthetic inertia, which can add extra power to the grid to support generation loss. Some regions, including Germany and Quebec, now require inertia-generation in turbines as standard.

This can’t be done with solar PV. However, smart grids and improving storage technologies have the potential to deal with a lack of inertia. Batteries, which can absorb electricity when there is an oversupply and then release it again when demand is high, can respond near-instantly to fluctuations to help maintain the grid’s frequency.

There are, of course, renewable sources that offer natural inertia, including hydro, tidal and biomass generation. But as the UK shifts to more renewable energy sources with no naturally occurring inertia, these turbine-based generation methods will be vital in ensuring wider grid stability.  Gas has an important role too, as a lower carbon alternative to coal power and one that will increasingly shift from being the backbone of Britain’s electricity system to playing a supporting, flexible role.

This short story is adapted from a series on the lesser-known electricity markets within the areas of balancing services, system support services and ancillary services. Read more about black start, frequency response, reactive power and reserve power. View a summary at The great balancing act: what it takes to keep the power grid stable and find out what lies ahead by reading Balancing for the renewable future and Maintaining electricity grid stability during rapid decarbonisation.

The silent force that moves electricity

31 August 2017

Power generation

In the early evening of 14th August 2003, New York City, in the midst of a heatwave, lost its power. Offices, stores, transport networks, Wall Street and the UN building all found their lights and phones cut off. Gridlocked streets and a stalled subway system forced millions to commute home on foot while those unable to make it back to the suburbs set up camp around the city.

It wasn’t just the Big Apple facing blackout – what had started with several power lines in Northern Ohio brushing against an overgrown tree had spread in eight minutes to affect eight US states and two Canadian provinces. In total, more than 50 million people were impacted, $6 billion was lost in damages and 12 deaths were reported.

While a software glitch and the outdated nature of the power system contributed to the disaster, the spread from a few high-voltage power lines to the entire North West was caused by a lack of reactive power.

The pump powering electricity

Electricity that turns on light bulbs and charges phones is what’s known as ‘active power’ — usually measured in Watts (W), kilowatts (kW), megawatts (MW) or in even higher units. However, getting that active power around the energy system efficiently, economically and safely requires something called ‘reactive power’, which is used to pump active power around the grid. Reactive power is measured in mega volt amps reactive (MVAr).

It’s generated in the same way as active power by large power stations, but is fed into the system in a slightly different manner, which leads to limitations on how far it can travel. Reactive power can only be effective locally/regionally – it does not travel far. So, across the country there are regional reactive power distributors servicing each local area (imagine a long hose pipe that needs individual pumps at certain points along the way to provide the thrust necessary to transport water).

But power stations aren’t the only source of reactive power. Some electronic devices like laptops and TVs actually produce and feed small amounts of reactive power back into the grid. In large numbers, this increases the amount of reactive power on the grid, and when this happens power stations must absorb the excess.

This is because, although it’s essential to have reactive power on the grid, it is more important to have the right amount. Too much and power lines can become overloaded, which creates volatility on the network (such as in the New York blackout). Too little and efficiency decreases. Think, once again, of the long hose pipe – if the pressure is too great, the hose is at risk of bursting. If the pressure is too low, water won’t travel through it properly.

This process of managing reactive power is, at its heart, one of ensuring active power is delivered to the places it needs to be. But it is also one of voltage control – a delicate balancing act that, if not closely monitored, can lead to serious problems.

Keeping volatility at bay

Across Britain, all electricity on the national grid must run at the same voltage (either 400kV or 275kV – it is ‘stepped down’ from 132kV to 230V when delivered to homes by regional distribution networks). A deviation as small as 5% above or below can lead to equipment being damaged or large scale blackouts. National Grid monitors and manages the nationwide voltage level to ensure it remains within the safe limit, and doing this relies on managing reactive power.

Ian Foy, Head of Ancillary Services at Drax explains: “When cables are ‘lightly loaded’ [with a low level of power running through them], such as overnight when electricity demand is lower, they start emitting reactive power, causing the voltage to rise.”

To counter this, generators such as Drax Power Station, under instruction from National Grid, can change the conditions in their transformers from exporting to absorbing reactive power in just two minutes.

This relies on 24-hour coordination across the national grid, but as our power system continues to evolve, so do our reactive power requirements. And this is partly down to the economy’s move from heavy industry to business and consumer services.

The changing needs for reactive power

“Large industrial power loads, such as those required for big motors, mills or coal mines, bring voltage down and create a demand for more reactive power,” explains Foy. “Now, with more consumer product usage, the demand for active power is falling and the voltage is rising.”

The result is that Drax and other power stations now spend more time absorbing reactive power rather than exporting it to keep voltage levels down. In the past, by contrast, Foy says the power plant would export reactive energy during the day and absorb it at night.

As Britain’s energy system decarbonises, the load on powerlines also becomes lighter as more and more decentralised power sources such as wind and solar are used to meet local demand, rather than large power plants supplying wider areas.

This falling load on the power system increases the voltage and creates a greater need for generators to absorb reactive power from the system. It highlights that while Drax’s role in balancing reactive power has changed, it remains an essential service.

This short story is adapted from a series on the lesser-known electricity markets within the areas of balancing services, system support services and ancillary services. Read more about black start, system inertia, frequency response and reserve power. View a summary at The great balancing act: what it takes to keep the power grid stable and find out what lies ahead by reading Balancing for the renewable future and Maintaining electricity grid stability during rapid decarbonisation.

What hot weather means for electricity

29 August 2017

Power generation
Power boost, Fan pics

During the penultimate week of June 2017, temperatures of thirty degrees Celsius or more were recorded across the UK for five days straight. It was the hottest continuous spell of weather in the country since the 70s. And while this may sound like a minor headline, it’s evidence of an important fact: the world is getting warmer.

According to the Met Office, experiencing a ‘very hot’ summer is now likely to occur every five years rather than every 50. By the 2040s, more extreme heatwaves could become commonplace, and this could have serious consequences.

The extreme heatwave that hit Europe in 2003 led to a death toll in the tens of thousands and placed extreme strain on the continent – not only on its people, but on its infrastructure, too. If this weather is set to continue, what does it mean for our electricity network?

Electricity in extreme weather

In hot countries, electricity use soars in times of extreme weather due to increased use of cooling devices like air conditioning. One US study predicted an extreme temperature upswing could drive as much as an 7.2% increase in US peak demand.

In Northern Europe including the UK, where air conditioning is less prevalent, the effects of heat aren’t as pronounced, but that could change. In France, hot weather is estimated to have contributed to a 2 GW increase in demand this June.

The UK, which has traditionally only seen demand swings due to cold weather, is also beginning to feel the effects of extreme heat. According to Dr Iain Staffell of Imperial College London, for every degree rise in temperature during June 2017, electricity demand rose by 0.9% (300 MW). For example, on 19th June, when temperature averaged 21.9 degrees Celsius demand reached 32 GW. On the 25th, when temperatures dropped to an average of 15.9 degrees, demand shrank to 26.6 GW.

In the very hottest days of summer this can mean the grid needs to deliver an additional 1.5 GW of power – equivalent to the output of five rapid-response gas power stations or two-and-a-half biomass units at Drax Power Station.

And while heat’s effect on demand is considerable, it’s not the only one it has on electricity.

The problem of cooling water in hot weather

Generating power doesn’t just need fuel, it’s also a water-intensive process. Power stations consume water for two main reasons: to turn into steam to drive generation turbines, and to cool down machinery.

Both rely on raising the temperature of the water. However, this water can’t simply be released back into a river or lake after use – even if nothing has been added to it – as warm water can negatively affect wildlife living in these habitats. First, it has to be cooled – normally via cooling towers – but in hot weather this takes longer and, as a result, power production becomes less efficient and in some cases, plant output must be dialled back.

This had serious consequences for France’s nuclear power plants during the 2003 heatwave. These plants – which provide roughly 75% of the country’s electricity – draw water from nearby rivers to cool their reactors. During the heatwave, however, these rivers were both too hot and too low to safely provide water for the cooling process, which in turn led to the power stations having to either close or drastically reduce capacity.

Coupled with increased demand, France was left on the verge of a large-scale black out. Situations like this are even more critical when considering heat’s effects on electricity’s motorway: the national grid.

How the hot weather impacts electricity

When materials get hot, they expand – this includes those electricity grids are made from. For example, overhead power transmission cables are often clad in aluminium, which is particularly susceptible to expansion in heat. When it expands, overhead lines can slacken and sag, which increases electrical resistance in the cables, leading to a drop in efficiency.

Transformers, which step up and down voltage across grids, are also susceptible. They give off heat as a by-product of their operations. But to keep them within a safe level of operation, they have what’s known as a power rating – the highest temperature at which they can safely function.

When ambient temperatures rise, this ceiling gets lower and their efficiency drops – about 1% for every one degree Celsius gain in temperature. At scale, this can have a significant effect: overall, grids can lose about 1% in efficiency for every three degrees hotter it gets.

As global temperatures continue to rise, these challenges could grow more acute. At UK power stations, such as Drax, important upgrade and maintenance work takes place during the quieter summer months. If this period becomes one in which there is a higher demand for power at peak times, it could lead to new challenges.

Investing in infrastructure and building a power generation landscape that includes a mix of technologies and meets a variety of grid needs is one way in which we can counter the challenges of climate change. This will mean we can not only move towards a lower carbon economy and contribute towards slowing global warming, but respond to climate change by adapting essential national infrastructure to deal with its effects.

The people-powered renewables revolution

24 August 2017

Sustainable business

For decades the electricity system was relatively straightforward. Power was generated by utility companies, then sold and supplied to consumers and businesses. But this is changing and the power industry may be on the verge of a revolution.

The falling costs and ongoing innovation around technologies like rooftop solar panels and domestic battery storage is enabling the rise of so-called ‘prosumers’ – individuals, businesses or institutions who not only consume electricity, but produce it too.

According to the National Grid’s 2017 Future Energy Scenarios report, this could lead to an almost entirely decentralised, cleaner energy system.

But for this to happen, prosumerism needs to be adopted at scale, and this relies on technological innovation and changes to attitudes and behaviours.

The technology powering prosumers

The biggest barrier to large-scale adoption of prosumerism is technology. Although research and innovation pounds, dollars and euros have been pouring into the technologies that make decentralised power generation possible, there are still developments to be made.

Solar is one of the most prominently used renewables by prosumers thanks to the relative affordability of rooftop solar systems. Even home-interior giant IKEA now offers solar panels and battery systems through a partnership with the UK’s largest solar company, Solarcentury.

But like wind turbines (a more cost-prohibitive solution) solar is an intermittent energy source, which means domestic users may still need to access the grid to fill gaps in their own generation. That is, unless battery technology advances to a point where it can store enough solar- or wind-generated electricity to fully power homes and businesses affordably – all-year round, including in the dark, still days of midwinter.

Until then, a prosumer who wants to have a reliable, flexible self-supply of energy needs to be able to call on a mix of renewable technologies – just as the national system does. Hamerton Zoo in Cambridgeshire, for example, generates its own energy via a mix of solar, wind and biomass. It then sells its excess electricity to an energy supplier.

There are signs that battery technology is starting to take off as an option for powering homes and businesses. Tesla’s Powerwall is currently the closest home battery system to breaking through to mainstream consumers and many firms are following its lead. For example, in the UK, Elon Musk’s company faces new competition from Nissan, which is partnering with US power firm Eaton to build and sell home batteries in the UK. That two electric car manufacturers are in on the act is no surprise – it will be another revolution, that of electric vehicles (EVs) usurping the dominance of petrol and diesel models that is set to bring the boon that batteries need to become a popular choice for prosumers.

The government is also pushing innovation in the space with business and energy secretary Greg Clark announcing plans to invest £264 million into research in the sector over the next four years.

Energy ownership

But what could this mean for the business of electricity? The National Grid report suggests multiple ‘commercial models’ will operate together to facilitate a decentralised, prosumer-based energy system.

These would include homes and businesses who wholly own their energy systems, as well as systems owned and operated by third parties such as aggregators managing energy or solar-rental schemes.

Community-owned projects could also play a role, with small renewable energy facilities supplying residents, such as the wind turbine in the Cambridgeshire village of Gamlingay. Excess energy could also be sold back to the grid with any money earned reinvested in the community, or in its renewable infrastructure.

Similar schemes are already in place in both the business and consumer retail markets. In 2016, for example, Opus Energy – a Drax Group company supplying energy to UK businesses – bought almost 1 TWh of power from over 2,000 small renewable generators who use technologies such as anaerobic digestion, solar, onshore wind and hydro. Opus Energy then sells that power onto its predominantly small and medium-sized enterprise (SME) customer base. This allows it to offer innovative tariffs such as the 100% solar power deal enjoyed by restaurant chain LEON this summer.

Haven Power, the Drax retail business specialising in electricity supply for large corporate and industrial clients, sells on power from over 20 small renewable generators – and it has a number of large clients such as water utilities who self-generate a lot of their own power and work with Haven Power to help manage their self-supply against their demand from regional electricity distribution networks (and further upstream, National Grid and power stations).

For large power generators, an increase in prosumerism in the energy sector could mean likely overall demand may decrease, which would mean a scaling back of operations. However, the increased volatility of the grid will give rise to the need for flexibility and for additional ancillary services like frequency response, which ensures the country’s electricity is all operating at the same frequency.

This would most likely be delivered by flexible generators (such as gas and biomass), which would also be required for winter demand, when more electricity is required and there is less wind and solar generation.

The role of government incentives

Another key part of the rise of consumer generated power will be government regulation and incentive schemes. In the UK, new measures have been put in place to encourage individuals to generate their own electricity.

These intend to make it easier for prosumers to generate their own power through solar, store it in batteries and sell it back to the National Grid, something which regulator Ofgem claims could save consumers between £17 billion and £40 billion by 2050. This isn’t the only scheme of its kind currently in action.

The UK’s Renewable Heat Incentive (RHI) encourages homeowners and businesses to adopt low-carbon heating, offering to pay a certain amount for every kWh of renewable heat generated. Feed-in tariffs, on the other hand, also offer financial incentives, with electricity suppliers paying prosumers for the energy they produce themselves.

Is my home or business big enough?

The prosumer revolution will not happen overnight. Self-generation and self-storage of power and the installation of renewable heat systems are more suited to larger properties or those linked up to community-based projects, so for many people living in properties they own, rent or in social housing the idea of becoming a prosumer could right now be a little far-fetched.

And although there is evidence that the national transmission grid is already decentralising, nor will this revolution mean the complete eradication of all centralised utilities.

Through gradual improvements in small-scale energy generation, power storage, smart technology and government policies, it will become an increasingly affordable and efficient way for communities, businesses and institutions to go green.

Do electric vehicles actually reduce carbon emissions?

19 August 2017

Electrification
Redcar Sunset

Electric vehicles (EVs) are often seen as a key driver towards a greener future. Indeed, transport accounts for roughly a quarter of the UK’s greenhouse gas emissions and seriously affects air quality in major cities.

To tackle pollution problems, governments around the world are implementing ambitious policies to promote the electrification of transport and phase out ICE (internal combustion engine) vehicles. The UK and France both plan to ban the sale of petrol- and diesel-only cars by 2040 while India is setting an even more ambitious end date of 2030.

Added to this are EVs’ growing popularity with drivers. There are now almost 110,000 electric cars and vans on UK roads spurred on by lowering battery costs and a growing range of models. Including plug-in hybrid vehicles, EVs now account for 2% of new registrations.

Switching to EVs is an obvious way to massively cut pollution in areas of dense traffic. But the question remains – how clean are EVs on the broader scale, when you look at the electricity used to charge them? 

Electric vehicle

Electric vehicles are getting cleaner

EVs don’t give off the same exhaust emissions as engines, but the power in their batteries has to come from somewhere. Follow the flow back from the car, through the charging point, all the way back to the power station and it’s likely some of that electricity is coming from fossil fuels. And that means emissions.

“They weren’t as green as you might think up until quite recently,” says Dr Iain Staffell, a researcher at Imperial College London and author of Electric Insights – a study commissioned by Drax that analyses electricity generation data in Britain. “Now, thanks to the rapid decarbonisation of electricity generation in the UK, EVs are delivering much better results,” he continues.

In fact, year-round average emissions from EVs have fallen by half in the last four years thanks to greener electricity generation. Today, they are twice as efficient as conventional cars.

Take the Tesla Model S. In the winter of 2012, producing the electricity for a full charge created 124g of carbon emissions per km driven, roughly the same as a 2L Range Rover Evoque. Now the carbon intensity of charging a Tesla has nearly halved to 74g/km in winter and 41 g/km in summer, as the UK continues to break its own renewable energy records. For smaller EVs, the results are even better. The Nissan Leaf and BMW i3 can now be charged for less than half the CO2 of even the cleanest non-plug-in EV, the Toyota Prius Hybrid.

Carbon intensity of electric vehicles

So, the current outlook for EVs is hugely positive – but as their numbers continue to increase, will the demand they add to the grid put their clean credentials at risk?

Will EVs accelerate electricity demand?

The National Grid suggests there could be as many as nine million EVs on UK roads by 2030, which could lead to an additional 4-10 GW of demand on the system at peak times. This, in some cases, could lead to a rise in emissions.

Electricity demand in Britain typically peaks between 6pm and 10pm, when people arrive home and switch on lights and appliances. If you were to charge your EV between those evening hours, the emissions would be 8% higher than reported in the chart above. If you charged between midnight and 6am, they would be 10% lower.

Today, this demand is met by the existing mix of power stations (which last quarter included more than 50% renewable and low-carbon sources). But when there are sudden spikes in demand above this typical usage, the National Grid must call in the help of carbon-intensive reserve generators, such as coal-powered stations. Polluting diesel generators are also on standby around the UK, ready to turn on and feed into regional distribution grids at a moment’s notice.

To meet the challenge of peak-time EV charging, less carbon intensive power generation, storage and smart power management systems are needed. These include rapid response gas power stations such as the four Drax OCGTs planned to come online in the early 2020s, as well as grid-scale batteries, home-based batteries and demand-side response schemes. As the share of intermittent renewable capacity on the grid increases, more back-up power needs to be available for when the wind doesn’t blow and the sun doesn’t shine.

Keeping our future fuels clean

A future increasingly relying on back-up generators is far from inevitable, especially if the use of smart technology and smart meters increases. By analysing electricity costs and country-wide demand, smart meters have the potential to ensure EVs only charge outside peak times (unless absolutely necessary), when electricity is more likely to come from renewable or low-carbon and cheaper sources.

If the grid continues to decarbonise through advances in renewable technologies and lower-cost coal-to-biomass conversions, the potential of EVs’ electricity coming with associated emissions is diminished even further.

There is no doubt that EVs will make up a significant part in the future of our mobility. That they will also play a part in the future of cleaning up that mobility is as good as assured, but on this journey, it’s imperative we keep our eyes on the road.

Commissioned by Drax, Electric Insights is produced independently by a team of academics from Imperial College London, led by Dr Iain Staffell and facilitated by the College’s consultancy company – Imperial Consultants.

What you need to know about Britain’s electricity last quarter

17 August 2017

Power generation
Drax EI header

For an hour over lunch on Wednesday, 7th June, more than 50% of Britain’s electricity came from renewables. It was only the second time this had ever happened – the first had come just two months earlier, in April.

The second quarter (Q2) of 2017 was a period largely made up of firsts for Britain’s electricity system. While there were only two instances of renewable power tipping the 50% mark between April and June, overall, wind, solar, biomass and hydro energy made up more than a quarter of all Britain’s electricity for the first time ever.

These findings come from Electric Insights, research on Britain’s power system, commissioned by Drax and written by top university academics. Over the past year, the quarterly report has shown breaking renewable records is becoming the new normal for Britain’s electricity. Last quarter was no different.

Here, we look at the key findings from Q2 2017 and what they mean for the changing nature of the energy sector.

Daily electricity generation graph

More than half Great Britain’s electricity came from renewables. Twice

Wind, solar, biomass and hydro accounted for 51.5% of the UK’s electricity for an hour on 7th June, generating 19.1 gigawatts (GW). Combined with nuclear power and imports from France, low-carbon output was a record 28.6 GW – a massive 89% of total demand. This followed 30th April, when Britain’s electricity edged over the 50% renewable mark for a shorter, but no less significant, period.

The percentage of renewables making up our power supply is set to grow as additional renewable capacity comes onto the grid. There is currently 6 GW of additional wind capacity being constructed in Britain. Solar capacity has already hit 12.4 GW – more solar panels than analysts thought would be installed by 2050. Plans to convert more of Britain’s coal units to biomass will increase the availability of renewable power further, still.

25% electricity infographic

Electricity was cleaner than ever

There was a key date in the history of coal during Q2. On 21st April, Britain recorded the first full day it had gone without burning any coal since 1882 – the year Holborn Viaduct power station became the world’s first coal-fired public electricity station.

While that date is symbolic of the UK’s shift away from coal, in practice, it means carbon emissions are also dropping to historically low levels. Carbon intensity reached a new low in Q2, averaging 199 g/kWh over the quarter – 10% lower than the previous minimum set last year. For context, carbon intensity averaged 740 g/kWh in the 1980s and 500 g/kWh in the 2000s.

An important indicator of this falling carbon intensity is that Britain’s electricity now regularly drops below 100 g/kWh, and reached an all-time low of 71 g/kWh on the sunny and windy Sunday of 11th June.

100,000 electric vehicles infographic

Electric cars are cleaner than before

One of the greatest decarbonisation challenges moving forward is how we transform transport. Electrification is the primary driver of change in this sector, and Q2 saw Britain hit a significant milestone as the total number of electric vehicles (EVs) in the country surpassed 100,000.

The potential of EVs in cleaning up transport is significant, but there are also concerns they could, in some cases, increase CO2 levels due to pollution from power stations. However, as the last quarter’s data shows, EVs are in fact twice as carbon efficient as conventional cars thanks to the amount of renewable and low carbon electricity on the system.

“According to our analysis, looking at a few of the most popular models, EVs weren’t as green as you might think up until quite recently,” says Dr Iain Staffell From Imperial College London. “But now, thanks to the rapid decarbonisation of electricity generation in the UK they are delivering much better results.”

25% solar infographic

The most solar power a quarter has ever seen

The longer days in Q2 enabled solar power to become a key source of electricity, and for eight hours over the quarter it generated more than all fossil fuels combined. It also set output records by supplying 25% of total demand on 8th April, and producing 8.91 GW on 26th May.

While wind remains the largest source of renewable energy generation in the UK, solar’s influence is growing – especially as decentralisation of the power system continues to proliferate.

Of Britain’s 12.4 GW solar capacity, 57% is concentrated in 1,400 solar farms of around 5 MW each, while the rest is distributed across almost one million rooftop arrays in homes, businesses and other institutions. In fact, during June, 10% of all Britain’s electricity came from these sorts of decentralised sources – sources of power not on the national grid.

This is unlikely to spell a fundamental shift to an entirely decentralised power grid in the short term, but it does hint at the changes the sector is seeing. From its carbon profile, to its variety, to its flexibility, Britain’s power system is changing – and that’s a good thing.

10% decentralised energy infographic

Explore the data in detail by visiting ElectricInsights.co.uk

Commissioned by Drax, Electric Insights is produced independently by a team of academics from Imperial College London, led by Dr Iain Staffell and facilitated by the College’s consultancy company – Imperial Consultants.

A flexible energy future

Andy Koss, CEO Generation until April 2020

3 August 2017

Opinion

Renewable technologies now account for a larger proportion of Great Britain’s electricity sources than ever before. And they’re growing.

The first quarter of 2017 was another record-breaking one for renewables. Biomass, wind and hydro all registered their highest energy production ever, while solar recorded its highest ever peak output. Drax’s own generation is now 68% renewable and accounted for 17% of the country’s overall renewable generation in the first half of 2017 – enough to power over four million homes.

We’ve made great progress over a relatively short period. However, with every step forward we need to ensure our approach is helping enhance stability. In a power system increasingly made up of intermittent renewables, what will become more and more important for security of electricity supply will be technologies that respond quickly to spikes in demand and drops in supply – for example, when the sun isn’t shining and the wind isn’t blowing.

In short, what the power system of today needs is flexibility.

 The flexibility factor

A recent report by Imperial College London for the Committee on Climate Change (CCC) highlights the significance of increasing system-wide flexibility in achieving decarbonisation. Imperial’s analysis emphasises the cost savings this can have, projecting that flexibility in a 50 g/kWh system – the lower-end of the CCC’s 2030 target for a decarbonised system – could save between £7.1 billion and £8.1 billion a year in system integration costs.

Without flexibility, the costs of balancing the system will rise significantly. This, in turn, could lead to the current fast-pace of grid decarbonisation stalling.

The need for flexibility in our energy system is too financially and environmentally significant to ignore. But what sources and technologies will we need to create it?

The next big thing in system flexibility

There are a number of technologies that are often touted as key to a flexible system, including storage (principally batteries), interconnectors, rapid response gas plants, renewable technologies such as biomass, and demand side response. All are indeed crucial to a flexible future, but alone each one still has its challenges.

Millions of pounds are being invested in battery and storage research – both in the ambition of driving down costs and in increasing capacity. However, there is a way to go on both fronts. For example, consider the scale at which batteries must operate.

The storage domes at Drax Power Station hold up to 300 kt of wood pellets – enough to generate roughly 600 GWh of electricity. At the current battery prices of around £350 per kWh it would cost £210 billion to replace their capacity with batteries. Even if prices fell dramatically we are still talking about a £60 billion price tag.

Greater interconnection is something energy industry regulator Ofgem and the National Infrastructure Commission (NIC) are calling for, but National Grid has voiced concerns that wholesale market price swings could lead to changes in power flows across interconnectors. This, in turn, could impact Great Britain’s system.

However, they remain a potential solution to solving flexibility, not just for their ability to deliver power, but in their ability to deliver ancillary services – something which will become increasingly important in a more volatile power system. For example, if built, Hinkley Point C will have some of the biggest single units on the system (1,600 MW), which will create more demand for ancillary services such as frequency response.

Technologies such as biomass and gas are well placed to provide this as well as quickly respond to changes in demand and supply. They also highlight why it is important to consider each megawatt coming onto the system. Not all technologies offer electricity and system stability tools (ancillary services), and so each one should be assessed from a whole system cost perspective, and according to how they fit into the overall supply mix.

Each type of generation can bring diverse services, so to achieve true flexibility we can’t rely on one technology – instead, we will need to rely on many.

Better together

To achieve full system flexibility we will need a coordinated combination of sources. This means maintaining a stable system that includes increasing levels of intermittent renewables, and flexible generation sources like biomass and gas that will supply baseload megawatts, plug the gaps left by intermittent renewables, and provide ancillary services.

The four rapid response gas power plants we are developing will play a key role once they are consented, secure Capacity Market contracts and become operational in the early 2020s. They will be crucial to plugging gaps in power supply as a result of unfavourable weather conditions.

Creating a system that is sufficiently flexible will make Britain much more effective in responding to stresses such as very low wind speeds over several hours, unexpected power station unit outages, or high demand. More than this, it will keep us on track to meeting carbon-reduction challenges.

For an affordable, decarbonised power system we need to be stable. To be stable we need to be flexible. And to be flexible we need to be varied and we need to work together.

Understanding the pounds behind the power

Will Gardiner, Chief Executive Officer, Drax Group

26 July 2017

Opinion

Editor’s note: On 21st September 2017 the Board announced that Will Gardiner would replace Dorothy Thompson as Chief Executive, Drax Group as of 1st January 2018. Read the announcement to the London Stock Exchange. This story was written by Will two months prior to that announcement and remains unedited below.

The UK electricity market used to be simpler. Coal, gas and nuclear plants generated energy and fed power into the National Grid. Retail companies then delivered that power to homes and businesses across the country thanks to regional distribution network operators. Today, it’s not as simple. The energy system of Great Britain has grown more complex – it needed to.

The push to lower carbon emissions led to the introduction of an array of different power generation technologies and fuels to the energy mix. These all generate power in different ways, at different times and in different conditions. Added to this are government schemes that have changed how this is all funded. In short, our electricity market is now more complex.

Drax Group has transformed itself to align with this new system. It is now an energy company with complementary operations across its supply chain – sourcing fuel, generating 17% of Great Britain’s renewable power and then selling much of that electricity directly to business customers in the retail market. This has fundamentally changed both how we do business and the financial mechanisms behind the business.

Where are we now?

Drax’s financial and operating strategies are very much inter-linked. Shifting how we generate energy changes how we generate revenue. The company is structured according to a set of distinct business segments, each of which is treated in a slightly different way.

The generation business

Drax has adapted its business model to the UK government’s regulatory framework, which through successive administrations has broadly promoted investment in renewable and low carbon power generation. Three of our six electricity generation units – accounting for 68% of our output in the first half of 2017 – have been upgraded from coal to produce renewable electricity from sustainable compressed wood pellets. These units are a core part of Britain’s renewable energy mix. Guaranteed income from the third unit conversion has given us a significantly higher degree of earnings visibility and reduced our exposure to commodity prices.

H1, 2017: 10.7 TWh total generation; 7.3 TWh biomass generation

Our coal generation units no longer provide 24/7 baseload electricity. This means we primarily use our coal generation as a support system. When the grid needs it we can ramp up and down coal generation responding to demand and ancillary service needs. Our renewable generation units do this too. Ultimately, however, our long-term goal is to convert the remaining coal units – either to renewables or to gas. Our Research and Innovation team is currently looking into how we might be able to do this, but early indications show that coal-to-gas conversion could be an attractive option for delivering flexible and reliable generation capacity for the UK.

Drax Power is doing well and generated £137m of EBITDA in the first half of this year, a £51m increase compared to the first half of 2016.

We are confident about the projected growth of our power generation business to £300 million EBITDA by 2025. That plan is aided by our move into rapid response gas – a technology that can meet urgent needs of a power system that includes an increasing amount of weather-dependent renewables. Two of the four rapid response gas projects we’re developing are ready to bid for 15-year capacity market contracts this coming February. They are designed to start up from cold faster than coal and combined cycle gas turbine (CCGT) units. These small-yet-powerful plants will respond to short-term power market price signals and be capable of providing other, ancillary services to further enhance security of supply.

These projects should add an attractive additional source of earnings to our generation business. They also will have attractive characteristics, as a significant element of their earnings will come from the capacity market – guaranteed government income for 15 years.

The retail business

We directly serve the retail market through Haven Power, which supplies renewable electricity primarily to industrial and commercial customers. Last week we announced that Haven Power was able to break-even six months ahead of schedule. Retail is an area we’re growing, and in February 2017 we acquired Opus Energy, the largest non-domestic UK energy company by meters installed outside the Big Six. This has had a marked effect – today we’re the largest challenger B2B energy retailer in the UK.

There is a healthy and regular annuity coming in through the existing retail business, and we believe this can generate £80 million of EBITDA by 2025, which, together with our growing biomass supply business, will make up a third of our earnings. We demonstrated good progress in the first half of the year, earning £11m of EBITDA.

The biomass business

Our two operational wood pellet manufacturing plants in Louisiana and Mississippi are progressing well. They are both still ramping up to full production and have seen marked improvements in pellet quality and production.

We are looking to grow our US business and as part of this we’ll need to build on the recent addition of LaSalle BioEnergy with further acquisitions. Expansion will grow our capacity for the self-supply of pellets from 15% to 30% of Drax Power Station’s requirements, adding an additional one million tonnes of production.

In the second half of 2017, we expect the profitability of Drax Biomass to increase. LaSalle will be commissioned in the first half of 2018 and reach capacity in 2019.

What’s next?

The energy landscape continues to change and we’ll need to change with it. Phasing out coal entirely is priority number one. For this we’ll continue to look at options. How and when we can convert more units to sustainable biomass depends on trials that we are conducting at Drax Power Station during 2017-18. The right government support would also make further conversions cost effective.

We also recognise that it’s important to look at alternative possibilities for our remaining coal units. This is why we are seeking planning permission to convert one or more of our 645 MW (megawatt) coal units to 1,300 MW of gas. Such an upgrade would be at a discount to a new-build, combined cycle gas turbine (CCGT) power station of equivalent capacity. And that’s simply because we would use much of the existing infrastructure and equipment.

Another major prospect is in the technology space and so we’re continuing to invest in research and innovation. Batteries and storage are a huge opportunity for us – both in how they could benefit our retail customers, and how they could provide solutions for large-scale centralised energy systems. In short, it’s an area with huge potential. We welcome the government’s recent initiatives designed to stimulate the development of battery technology, as well as encourage the use of electric vehicles.

Drax has gone through a period of considerable change and that will continue as we meet the UK’s low-carbon energy demands. We are improving the quality of our earnings, reducing our exposure to commodities, and positioning to take advantage of future opportunities. As we told investors in June, if we deliver on these plans, we can expect >£425 million of EBITDA in 2025.