www.teitimes.com

May-June 2020 • Volume 13 • No 3 • Published monthly • ISSN 1757-7365

THE ENERGY INDUSTRY TIMES is published by Man in Black Media • www.mibmedia.com • Editor-in-Chief: Junior Isles • For all enquiries email: enquiries@teitimes.com

Offshore wind

On the edge

Offshore wind looks set to dominate

capacity growth for next decade.

Page 7

DSOs are starting to implement even

more intelligence at the grid edge.

Page 13

News In Brief

Renewables can support

resilient and equitable

recovery

Advancing the renewables-based

energy transformation is an

opportunity to meet international

climate goals while boosting

economic growth.

Page 2

Lawmakers challenge

Trump’s ACE rule

More than 70 Democratic

lawmakers from both chambers have

joined a lawsuit challenging the

US government’s Affordable Clean

Energy (ACE) rule.

Page 4

Coal will remain key, despite

nancing issues

Coal is expected to remain a key

power generation source in multiple

emerging markets across Asia over

the coming decade, despite Japan’s

increasing shift away from nancing

coal projects.

Page 5

UK and Brussels argue over

climate in Brexit deal

The UK is resisting EU pressure to

include guarantees on respecting

international climate change

commitments in a future trade deal

following Brexit.

Page 6

Renewables will still see

gains

Renewable energy technologies

will continue to show strong growth

despite the near-term hurdles

presented by the coronavirus.

Page 8

Global companies plug into

hydrogen

A growing number of companies

around the globe are showing an

increasing interest in moving into

hydrogen.

Page 9

Technology Focus: Batteries

react to network needs

A project is under way, which for

the rst time will enable batteries

on the UK distribution network

to automatically provide reactive

power services to National Grid

ESO’s transmission network.

Page 15

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The coronavirus pandemic has caused the biggest fall in energy demand in 70 years, with

only renewables showing any kind of resilience. One positive outcome, however, is carbon

dioxide emissions have seen a record annual decline. Junior Isles

Asian banks shy away from coal

THE ENERGY INDUSTRY

TIMES

Final Word

Every day seems the

same, says Junior Isles.

Page 16

A new report by the International En-

ergy Agency (IEA) has provided an

almost real-time view of the Covid-19

pandemic’s extraordinary impact

across all major fuels.

Its stark ndings have revealed that

the Covid-19 pandemic represents the

biggest shock to the global energy sys-

tem in more than seven decades. The

drop in demand this year is set to

dwarf the impact of the 2008 global

nancial crisis, resulting in a record

annual decline in carbon emissions.

“This is a historic shock to the entire

energy world. Amid today’s unparal-

leled health and economic crises, the

plunge in demand for nearly all major

fuels is staggering, especially for coal,

oil and gas. Only renewables are hold-

ing up during the previously unheard-

of slump in electricity use,” said Dr

Fatih Birol, the IEA Executive Direc-

tor. “It is still too early to determine

the longer-term impacts, but the ener-

gy industry that emerges from this

crisis will be signicantly different

from the one that came before.”

Based on an analysis of more than

100 days of real data so far this year,

the IEA’s Global Energy Review in-

cludes estimates for how energy con-

sumption and carbon dioxide (CO

)

emissions trends are likely to evolve

over the rest of 2020. Its projections

are based on assumptions that the

lockdowns implemented around the

world in response to the pandemic are

progressively eased in most countries

in the coming months, accompanied

by a gradual economic recovery.

The report forecasts that energy de-

mand will fall 6 per cent in 2020 –

seven times the reduction seen after

the nancial crisis. In absolute terms,

the IEA says the decline is unprece-

dented – the equivalent of losing the

entire energy demand of India, the

world’s third largest energy consumer.

Advanced economies are expected

to see the biggest declines, with de-

mand set to fall by 9 per cent in the US

and by 11 per cent in the EU. The im-

pact of the crisis on energy demand

largely depends on the length and

stringency of measures to curb the

spread of the virus. For example, the

IEA found that each month of world-

wide lockdown at the levels seen in

early April reduces annual global en-

ergy demand by about 1.5 per cent.

Electricity demand is set to fall by 5

per cent in 2020, the largest drop since

the Great Depression in the 1930s.

Demand for electricity from coal and

natural gas has been hit hardest, as

they are increasingly squeezed be-

tween low overall power demand and

increasing output from renewables.

As a result, the combined share of gas

and coal in the global power mix is set

to drop by 3 percentage points in 2020

Continued on Page 2

Wespac has become the latest Asian

nancial institution to announce plans

to halt coal investments in a region that

is still largely dependent on coal red

generation.

At the start of May Australia’s sec-

ond largest bank said it will ofoad its

thermal coal investments over the

coming decade, as it looks to align

both its investments and its operations

with a net zero emissions goal.

As part of an updated climate change

position statement for 2023, Westpac

said that it would look to wind down

its investments in the thermal coal

sector, as well as setting a target of up

to $3.5 billion in lending to climate-

friendly investments over the next

three years.

Westpac has also adopted emissions

intensity targets for its electricity gen-

eration portfolio that will effectively

prevent the bank from investing in

any new or existing coal red power

stations, as well as putting pressure on

any investments in gas projects.

Already a trend among global banks

from Europe, Africa, Australia, the

UK and the US, the decision by West-

pac is now also a growing trend for

Asian banks.

In April, Japan’s two largest institu-

tional banks – Japan Bank for Inter-

national Cooperation (JBIC) and

Sumitomo Mitsui Financial Group –

announced that they would stop

nancing new coal red power

plants. The decision came after rival

Mizuho Financial Group Inc. said it

would stop nancing coal power

plant construction. Mitsubishi UFJ

Financial Group Inc. already stopped

such nancing last year.

Tim Buckley, Director Energy Fi-

nance Studies, Asia Pacic at the In-

stitute for Energy Economics and Fi-

nancial Analysis (IEEFA), said a

domino effect across other coal lend-

ing nanciers in Asia is likely.

“Mizuho is the world’s largest pri-

vate nancier of coal developers,

which means other nancial lenders

keep a close eye on its activities. Now

that they’ve announced a coal exit

which indicates to the market that

coal is a very poor investment, we ex-

pect other lenders to also announce a

policy shift away from coal.”

The Japanese giants have joined

Singapore’s United Overseas Bank,

DBS Bank, and Overseas Chinese

Banking Corp. in halting the nanc-

ing of new coal power projects. Japa-

nese trading houses, such as Marube-

ni Corp., Mitsubishi Materials, Mitsui

and Itochu, are also divesting away

from coal.

South Korea, meanwhile, is target-

ing zero emissions by 2050 as it intro-

duces an effective carbon tax and the

phase out of domestic and overseas

coal nancing by public institutions.

Covid-19 drives

record lows in

energy demand

and carbon

emissions

Dr Birol: “this is a historic shock”

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THE ENERGY INDUSTRY TIMES - MAY-JUNE 2020

Europe News

The UK is resisting EU pressure to in-

clude guarantees on respecting interna-

tional climate change commitments in

a future trade deal following Brexit.

EU ofcials said the latest negotiating

round with the UK has revealed a clear

split over cooperation in the ght

against climate change.

While the EU wants to nail down

guarantees about shared green ambi-

tions, Britain argues that it should not

have to make such legal commitments

in exchange for preferential access to

the European market.

In particular, the EU wants to iden-

tify the emissions reduction pact

agreed in Paris in 2016 as an ‘essential

element’ in a future EU-UK trade deal,

a status normally reserved for core

principles such as respect for human

rights and the rule of law. The move

would create a legal justication for

the EU to suspend preferential trading

arrangements if Britain abandoned its

Paris obligations.

“The commission had already fore-

seen to include the Paris agreement

upfront as an essential element,” one

EU ofcial told the Financial Times.

“This means de facto that both the EU

and the UK commit to respect the

Paris agreement, and in case one does

not, the other party can take measures.

For now, the UK does not seem to want

this.”

The UK argues that any trade deal

must respect its regulatory indepen-

dence, and says it would not sign up

to conditions that went beyond those

in the EU’s existing trade pacts with

other countries.

A UK government spokesperson

said that Britain was “absolutely com-

mitted to tackling climate change”,

adding that the country would use its

presidency of the next UN climate

change conference to drive forward

implementation of the Paris accord.

Last June the UK adopted a net zero

carbon emission target for 2050, mak-

ing it the rst big economy to pledge

to cut emissions to close to zero.

The European Commission said in

December that the Paris agreement-

should from now on be included in the

‘essential elements’ clauses of any

trade agreements the EU negotiated

with other countries around the world.

France and the Netherlands also

called for the step in a joint paper pre-

sented in early May.

The talks came as European countries

began presenting their National Energy

and Climate Plans (NECP) to the Eu-

ropean Commission, and countries

called for an accelerated energy transi-

tion towards renewable energy sources

in the midst of the Covid-19 crisis.

At the end of April, France submitted

a NECP that will aim for renewables

to represent 33 per cent of its energy

mix in 2030. Weeks earlier, Spain sub-

mitted a plan that will see renewables

represent 42 per cent of the country’s

energy mix and to generate 74 per cent

of its electricity by 2030.

Meanwhile, different initiatives are

asking European leaders to put the

Green Deal at the heart of Europe’s

economic response to the pandemic.

Malta, Slovakia, Slovenia and Ireland

recently joined 13 other countries in a

call to keep the climate and ecological

crises high on the political agenda

when developing recovery plans.

Sweden is planning to eliminate sub-

sidies for onshore wind farms by the

end of 2021, at around the same time

as neighbouring Norway. The news

came as several countries, including

Sweden, announced an end to coal

red generation.

On the sidelines of a wind power

conference in Stockholm, Sweden’s

Energy Minister Anders Ygeman said

onshore wind developments are al-

ready protable without subsidies.

Falling technology costs and battery

prices across the board have made un-

subsidised onshore wind and solar

power the cheapest options for electric-

ity generation in major economies.

Solar and wind power are now cheap-

er than coal in most parts of the world

and Sweden generates more than 54

per cent of its electricity from renew-

able sources on a sustainable basis.

Sweden recently cemented its shift

away from fossil fuels with the closure

of its last operational coal red plant.

In April the 120 MW KVV6 coal red

cogeneration unit at Värtaverket,

stopped operations after 30 years of

service.

The closure makes Sweden the third

EU country to exit coal red power

generation after Belgium and Austria

closed their remaining plants in April.

Six more European countries are

expected to complete promised coal

phase-outs by 2025 or earlier, with

France aiming to close its last plant

in 2022, Slovakia and Portugal sched-

uled to follow by 2023, the UK aiming

for a 2024 target date, and Ireland and

Italy planning to shutter their last

plants by 2025.

A further ve European nations are

working to complete coal power

phase-outs by 2030, including Greece,

the Netherlands, Finland, Hungary,

and Denmark. Meanwhile, discus-

sions are currently underway in the

Czech Republic, Spain, and North

Macedonia over proposed coal phase-

out target dates.

The German government has also

announced plans to exit coal by 2038

with the target and accompanying

compensation packages set to be in-

corporated in a new coal exit law.

A consortium of European Transmis-

sion System Operators (TSOs) are

jointly developing a cross-border

blockchain platform called Equigy,

which will enable millions of Euro-

pean households and owners of e.g.

electric vehicles to actively offer the

exible capacity of their cars and

house batteries on the energy markets.

The platform being developed by

TenneT (Germany and the Nether-

lands), Swissgrid (Switzerland) and

Terna (Italy), will allow the TSOs to

stabilise an electricity system that has

an increasing amount of intermittent

renewables, while allowing consum-

ers to earn money from the energy

transition.

“Now that the conventional power

stations are closing, we are preparing

for a future in which we are largely

dependent on consumers with their

electric cars, home batteries and heat

pumps to stabilise the grid reliably,

sustainably and cost-effectively. In

order for all these devices to work

together to balance the grid, the

Equigy platform provides an impor-

tant technical basis, said TenneT’s

CEO Manon van Beek.

“With this platform, data can be ex-

changed between the devices, market

players and grid operators. This means

that everyone will soon be able to help

realise the energy transition and also

benet nancially from it.”

For millions of decentralised small

storage units in households in the one

to two digit kilowatt range across Eu-

rope to be able to offer their free capac-

ity for grid stabilisation, automated

processes and IT solutions are needed

that make this possible in a simple, fast

and cost-effective way.

With the Equigy platform, the TSOs

create the conditions for this. As an

open source solution, the platform will

be available free of charge. The plat-

form uses blockchain technology,

which allows transactions from mil-

lions of individual systems to be car-

ried out securely, cost-effectively and

transparently.

Unambiguous laws and regulations

enable consumers, businesses and

manufacturers to market the exible

capacity of electric vehicles, domestic

batteries and heat pumps easily and

location-independently in all partici-

pating countries, thus simplifying

access to the electricity market. At the

same time, all local/regional exibility

platforms can be connected to the

Equigy platform so that as much ex-

ibility as possible can be bundled.

The Equigy platform will initially be

launched in Germany, the Netherlands,

Switzerland and Italy. The partners

expect other European network opera-

tors to join as well. Denmark’s Energi-

net has already formally expressed its

intention to join the consortium, which

will extend Equigy’s European roll-out

to ve countries.

n TenneT has contracted eight cable

suppliers to develop and test what will

be the world’s rst 525 kV HVDC

subsea cable system for the planned 2

GW offshore grid connections in the

Netherlands and Germany. TenneT

plans to have the new cable system

certied in spring 2022. The compa-

nies that will jointly develop the new

cables system are: Hellenic Cables, LS

Cable & System, Nexans Norway,

Ningbo Orient Wires & Cables, NKT

HV Cables, Prysmian Powerlink,

Sumitomo Electric Industries, and

Zhongtian Technology Submarine

Cable (ZTT).

Sweden and Spain respectively have

the cheapest average corporate PPA

prices in Europe for wind and solar

electricity, according to Bloomberg-

NEF’s (BNEF) 1H 2020 European

Corporate PPA Price Survey. The rst

of its kind in Europe, the survey aims

to provide pricing transparency and

simplify the complexity around corpo-

rate power purchase agreements, or

PPAs, helping buyers to understand

this fast-growing market.

The survey nds that the lowest price

levels for onshore wind corporate

PPAs in Europe are in Sweden at

€30.50/MWh. Solar PV shows its low-

est price levels in Spain at €35.30/

MWh but is generally more expensive

across the region than wind. The report

reveals big differences in renewable

energy PPA prices across Europe.

Helen Dewhurst, an analyst at BNEF

and the author of the report, said: “The

very wide range of results was par-

ticularly interesting, with the gap be-

tween the cheapest PPA you might sign

in Sweden and the most expensive PPA

in the UK being over €30/MWh.”

BNEF’s 1H 2020 European Corpo-

rate PPA Price Survey looks at the

minimum-maximum price range for

the most common PPA scenario – a

‘base case’ – for both solar and wind

across nine markets. The survey then

shows how PPA prices change depend-

ing on three main adjustment factors:

capacity, term length and contract

structure.

UK and Brussels argue over

climate in Brexit deal

Sweden set to end wind subsidies

as shift from coal gathers pace

TSOs developing

cross-border

blockchain

platform

Sweden, Spain have cheapest

wind and solar corporate PPAs

n Paris Agreement must be “essential element” in future EU-UK trade deal

n France and Spain submit National Energy and Climate Plans

Source: IEA Global Energy Review: The impacts of the COVID-19 crisis on global energy demand and CO

emissions, 30 April 2020

THE ENERGY INDUSTRY TIMES - MAY-JUNE 2020

Energy Industry Data

Lockdowns are sharply reducing electricity demand

Electricity demand to face biggest ever decline

emissions drop the most ever due to the COVID-19 crisis

Lockdowns are sharply reducing electricity demand

Electricity demand drops to Sunday levels under lockdown, with dramatic reductions in services and industry

only partially offset by higher residential use. Service-based economies suffer the most.

Evolution of electricity demand following lockdown implementation

Full lockdown

Closures and

partial lockdown

-30%

-20%

-10%

10%

5 10 15 20 25 30 35 40

Number of days since lockdown began

Germany

China

Italy

Spain

United

Kingdom

India

France

Change in electricity demand

Electricity demand to face biggest ever decline

Global electricity demand is set to fall by 5% in 2020, the largest decline since the Great Depression.

Impacts are largest in the European Union and United States, but extend to all corners of the world.

Percentage change in electricity demand in selected regions, 1970–2020

United States European Union China World

-10%

-5%

10%

15%

20%

1970 2020

1970 2020 1970 2020 1970 2020

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

-3

-2

-1

emissions drop the most ever due to the COVID-19 crisis

Global energy-related CO

emissions are set to fall nearly 8% in 2020 to their lowest level in a decade.

Reduced coal use contributes the most. Experience suggests that a large rebound is likely post crisis.

Global energy-related CO

emissions and annual change, 1900-2020

Second

oil shock

Financial

crisis

World

War II

Great

Depression

For more information, please contact:

International Energy Agency

9, rue de la Fédération

75739 Paris Cedex 15

France

Email: bookshop@iea.org

website: www.iea.org

THE ENERGY INDUSTRY TIMES - MAY-JUNE 2020

Industry Perspective

he decarbonisation, decentrali-

sation and digitalisation of the

energy mix has already rede-

ned the way in which we produce,

consume and distribute power and

yet the energy transition is only just

beginning.

However, the transition is quickly

reaching a critical mass. The Interna-

tional Renewable Energy Associa-

tion recently announced that nearly

three quarters of global investment

in power generation was in renew-

able sources. And closer to home, for

the rst time ever in Q1 2020, re-

newable power was the UK’s prima-

ry source of energy thanks to the

wind revolution and deployment of

more solar power.

What’s more, with the mass de-

ployment of electric vehicles loom-

ing on the horizon and exponential-

ly increasing demand, usage

patterns are destined to change even

further. This intermittency and vari-

able demand bring a string of well-

documented challenges, including

the growing need for highly exi-

ble, data-driven grids.

Now more than ever utilities need

secure, exible and scalable solu-

tions with a high degree of automa-

tion and intelligence all the way

down to the grid edge. Smart meters

acting as grid edge sensors have al-

ready proven themselves capable of

both, sending real-time data back to

system operators and enabling great-

er customer engagement. As grid

edge intelligence is becoming a key

enabler of the low-carbon transition,

meters will be critical components of

the future electricity system.

Distribution system operators, or

DSOs, were some of the rst movers

in deploying grid edge technologies.

Scalable ‘Internet of Things’ connec-

tivity platforms enable monitoring

and control at the grid edge and are

designed to help utilities leverage in-

telligence at the community level

and across the distribution system, to

increase overall system efciency.

An example of how grid edge intelli-

gence helps DSOs optimise their

grid operations is the implementa-

tion of grid analytics that combine

information from smart metering

systems and other data sources.

These data sources can include the

geo-information system and utilities’

investment tools. Such applications

enable more accuracy in grid plan-

ning, better transparency in grid op-

eration and more focused invest-

ments in the low voltage distribution

network.

Having made the rst experiences

with grid edge technologies, DSOs

are now starting to implement even

more intelligence at the edge. New

intelligent end-points can process

measured data themselves and pro-

duce alarms when for example pow-

er quality standards are violated.

Such information is invaluable to

DSOs in a system where measures

of stability such as inertia, which

were once guaranteed, are now in-

creasingly unpredictable.

Another challenge for DSOs is the

impact of households installing

small scale renewable generators on

local voltage levels in the low volt-

age grid. For example, a newly in-

stalled PV system can increase the

voltage levels dramatically when

producing at 100 per cent during low

load periods, like on a Sunday morn-

ing. In such instances the smart me-

ter at that connection point needs to

be used to eliminate possible voltage

violations, sending a command to

the solar panel’s inverter when volt-

age measurements indicate a risky

situation, instructing it to compen-

sate with reactive power and, if nec-

essary, decrease active production.

By accessing data from neigh-

bouring meters, DSOs can now also

easily check whether a service qual-

ity problem agged by a local alarm

is on the grid side or on the custom-

er side. With this capability, they

can take the necessary action to

guarantee grid stability, mitigating

unnecessary conicts with industri-

al customers.

Households’ active participation in

the energy system is not conned to

behind-the-meter generation like

rooftop solar. Consumer access de-

vices are already in peoples’ homes

in the form of connected fridges,

washing machines and products like

smart thermostats. The consumption

of such products can be identied by

applications implemented in smart

meters like Sense Intelligence and

increase consumers’ awareness about

which appliances, equipment and

furniture in the home are driving the

demand and enable them to monitor

and optimise it.

This data can then be reviewed and

analysed by suppliers, enabling the

customer to take a deeper look into

whether they are using energy during

peak times and then make an in-

formed decision about the best time

to schedule high-consumption tasks,

like loads of laundry or running the

dishwasher.

Seeing and showing where energy

is being used in the home can create

opportunities to reduce consumption.

The forecast popularity of time-of-

use tariffs will capitalise on the data

provided by these grid edge technol-

ogies, shifting load in line with the

peaks and troughs of renewable gen-

eration and network demand.

The UK already sees load-shifting

at a formative level with Economy

7 contracts and now some suppliers

have introduced dynamic pricing

schemes. Tariffs such as these will

become increasingly important as

the power transformation under way

in the transport sector comes to

fruition.

The incremental load an electric

vehicle places on the distribution

system is roughly equal to that of a

new home, therefore much more

data and information will be required

to ensure that the distribution grid is

able to handle the demand, which is

destined to increase dramatically.

Central to this is the need for smart

charging to balance the intermittency

of what will increasingly be a renew-

ables-led generation system, a senti-

ment which was echoed in the EV

smart charging consultation that the

UK’s BEIS issued in July last year,

which commenced their programme

of work in earnest.

In the future EVs are likely to be

the largest load in domestic premis-

es, dominating households’ usage. In

the drive to increase domestic exi-

bility it will be logistically easier to

manage this single, large, output

than the multitude of smaller devices

– such as fridges, freezers, washing

machines and dishwashers – that

will otherwise have to be managed.

However, to deliver the scale of in-

frastructure necessary at a low cost

to the consumer whilst encouraging

individuals and businesses to switch

to electric vehicles, coordination be-

tween industry and government with

the right regulatory framework will

be essential.

Furthermore, the security of infra-

structure is critical. A growing con-

cern is the deployment of charge-

points, which lack a joined-up

communications and security frame-

work. Without this framework there

is a risk that sufcient ‘insecure’

smart chargers could be installed,

which will pose a signicant cyber

threat to the power grid.

The infrastructure deployed under

the smart meter roll-out, including

the communications networks and

industry frameworks, provides a

prime opportunity to efciently and

effectively support the widespread

deployment of electric vehicle

smart-charging infrastructure. Cru-

cially this network is secure, proven

and readily available – not just an

off-the-shelf solution, it’s a tailored

solution which now simply needs

scaling up.

This communications network un-

derpinning the roll out of smart me-

ters has been painstakingly devel-

oped in conjunction with the full

spectrum of stakeholders and as a re-

sult is as robust as it is practicable.

Having such a network readily avail-

able for smart charging of electric

vehicles represents the lowest cost

option for consumers, government

and industry alike by avoiding the

build-out of an equivalent nation-

wide solution.

Building on the smart meter net-

work for electric vehicle smart

charging would help governments to

deliver on their policy objectives to

accelerate the growth of the EV mar-

ket and, ultimately, deliver a net zero

economy.

With the right support and a robust

security framework from govern-

ment, industry can act with urgency

on deploying comprehensive, secure

infrastructure to support the growth

of electric vehicles.

Of the decarbonisation, decentrali-

sation and digitalisation mega-trends

at play in the UK power market, two

are already building momentum

thanks to the shovel-ready nature of

renewable power. But it is smart me-

tering’s foundational technology

which is only now being realised

through the grid edge technologies

that will have a materially benecial

impact on both consumers’ lives and

on the environment. Smart metering

has provided the data and the secure

infrastructure necessary for the full

digitalisation of the energy system,

enabling decarbonisation and decen-

tralisation of power.

The grid also needs to be able to

cope with the scaling up of power

loads, which will include the com-

munications, digital and governance

infrastructure needed to enable the

widespread deployment of electric

vehicles and smart chargers. Utilis-

ing the data from intelligent end-

points at the grid edge, such as smart

meters, sensors and connected IoT

devices, helps to develop new, data-

driven use cases. It also offers in-

creased transparency and control to

the distribution grid, new consumer

services, and opens up new business

models for operational efciency.

Getting the governance right to ef-

fectively manage this infrastructure

and the data it will yield is essential.

As with smart metering, the infra-

structure will be best delivered with

direction from government taking an

active role. Building on the smart

metering model for EVs and other

grid edge technologies will bring our

low-carbon future closer, faster.

As utilities and third parties learn

to capitalise upon these foundational

technologies and navigate emergent

frameworks, the full benets of

smart metering will be realised.

Nick Merricks is Head of UK Smart

Electricity Meter Products at

Landis+Gyr.

Having made the rst experiences with grid edge technologies, DSOs are now starting to implement even more

intelligence at the edge. Nick Merricks

Grid edge tech: the energy

transition’s latest frontier

Merricks: As grid edge

intelligence is becoming a

key enabler of the low-carbon

transition, smart meters will

be critical components of the

future electricity system

www.teitimes.com

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THE ENERGY INDUSTRY TIMES - MAY-JUNE 2020

Technology Focus

A project is under way, which for the rst time will enable batteries on the UK distribution network to automatically

provide reactive power services to National Grid ESO’s transmission network. Junior Isles explains.

he increasing use of variable

renewable energy sources is

making it increasingly difcult

to maintain stable grid voltage. To-

day, grid operators make use of reac-

tive power from network devices

and synchronous generators to pro-

vide this voltage stability. In March,

however, a project was unveiled that

could see batteries used to provide a

reactive power service as part of a

landmark trial in the South East of

England.

Zenobe Energy will use batteries

with a 10 MW capacity in its Kings

Barn facility in Sussex to provide a

reactive power service to National

Grid Electricity System Operator

(ESO), via UK Power Network’s

(UKPN) distribution network. This

is part of the ‘Power Potential’ proj-

ect, a world-rst project to enable

generators on the distribution net-

work to automatically provide reac-

tive power services to National Grid

ESO’s transmission network.

Traditionally, voltage support is

provided by network infrastructure

devices such as shunt reactors for

static voltage control, as well as stat-

ic VAR compensators (SVCs) and

static synchronous compensators

(STATCOMs) for dynamic voltage

control. Reactive power and can also

be provided by synchronous generat-

ing assets on the transmission net-

work, where network operators can

either obtain reactive power straight

from a generator as part of the gener-

ator’s obligatory service under the

grid code or buy additional reactive

power from the market.

Commenting on the existing ap-

proach Dr. Biljana Stojkovska, Na-

tional Grid ESO, Power Potential

Project lead, said: “These are well

known, reliable technologies but we

are starting to lose the number of

synchronous plants connected to the

grid and you cannot keep on con-

necting network devices due to net-

work constraints and costs. We

therefore wanted to look for alterna-

tive sources of voltage support.”

Ned Ponsonby, Senior Associate

at Zenobe Energy, says that batter-

ies could now be one of a number

of new DER market options. “There

are now a number of batteries on

the network. There are also a num-

ber of banks of solar inverters,

some of which are connected to bat-

teries, that have some reactive range

at night when the sun’s not shining.

So there’s now a whole load of ag-

gregated assets across the distribu-

tion network that can be used to

avoid having to install network as-

sets that involve a signicant

amount of cash.”

The Power Potential project is part

of Ofgem’s Innovation Network In-

novation Competition (NIC), which

is providing £10 million in funding.

It kicked off in 2017, prompted by

voltage stability problems that Na-

tional Grid was having on the trans-

mission system in the South East

where there is a large amount of re-

newables connected to the grid.

National Grid ESO was facing two

issues caused by renewables – high

voltage occurrences in the network

and low voltages. While the high

voltage occurrences were manage-

able, addressing low voltages was a

bigger problem. The potential loss of

a double circuit line on the South

East coast, which could cause a low

voltage prole that is outside the

operator’s operational limit, was the

real driver for the Power Potential

project.

According to Dr Stojkovska, the

trial will determine whether small

distributed generators on the distri-

bution network can provide voltage

support to the transmission system

with the same technical characteris-

tics as transmission-connected sys-

tems and provide the same services

they provide.

The battery used in the project is a

10 MW lithium-ion unit, which sits

on UKPN’s 33 kV grid supply point

near Bolney.

Describing the battery’s functional-

ity, Ponsonby said: “Because they

have to import or export quite signif-

icant energy, their inverters have a

very wide range – their reactive

power range could be as wide as

their active power range. As a gen-

eral rule, whatever you are not using

with your active power set-point,

you can reach with your reactive

power set-point. Our batteries tend

to be used for frequency response,

which means that for 95 per cent of

the time around 10 per cent of its ac-

tive power range is being used, wait-

ing for that ve per cent of the time

when the frequency moves out of

that safe zone. So for a signicant

amount of time, they have under-uti-

lised reactive power that they can

achieve.”

While Zenobe did not need to

make signicant modications to

the batteries it bought in, it has put

signicant effort into creating soft-

ware to enable it to “stack” the re-

active power service on top the fast

frequency response (FFR) service

so both can happen at the same

time. The company is now able to

communicate what can be utilised

in terms of reactive power through

the UKPN system all the way

through to a control engineer at Na-

tional Grid ESO.

Ponsonby said: “There were two

main things that really brought the

project to life. One is clever market

design that allows different partici-

pants to stack incremental revenue

that is not core to what they do. But

on top of that, a lot of the effort and

money has gone into developing

software. National Grid ESO has

some software called the Ancillaries

Services Dispatch platform, which

was designed to enable non-balanc-

ing mechanism participants to join

the STOR market and Fast Reserve

market. This software has been

adapted and links the National Grid

ESO control room engineer to the

UKPN distribution network control

centre, so they can see how much re-

active power they can draw from a

network they don’t control.”

Dr. Stojkovska added: “There are

things that we need the battery con-

trol system to do: like can it react in

2-5 seconds once it receives the sig-

nal from us and move [the reactive

power] from one point to another

once it has been told where it is

needed?”

Trials to prove the concept were

originally planned to start on March

31st but were put on hold due to the

coronavirus lockdown. NG ESO

says it hopes they can resume on

September 1st.

“There will be 10 weeks of techni-

cal trials to see how the battery re-

acts to changes in voltage proles set

by National Grid ESO,” said Dr. Sto-

jkovska. “Once we have completed

technical trials, we will have 15

weeks of market trials, where we

will simulate auctions for these

DERs, who will be in competition

with each other, submitting bids in

the day-ahead reactive power mar-

ket. We will see how the market

works, looking at what price they are

prepared to bid. We will simulate the

market for them so they can prepare

for the real market, which we will

try to run after the project nishes.”

Another important aspect of the tri-

al, says Zenobe, is that it will help

UKPN demonstrate that it is no lon-

ger purely a network operator but is

a distribution system operator that is

“using the system in a smart way”.

If the project is successful, Na-

tional Grid ESO estimates that it

could provide signicant savings.

“If this is successfully implemented

in the South East and the benets

are multiplied across Great Britain,

we calculate the benets to consum-

ers would be around £400 million.

This will come from avoiding or

delaying installation of new net-

work infrastructure devices,” noted

Dr. Stojkovska.

As the rst-of-a-kind, the project is

clearly signicant. It gives TSOs an

alternative way of providing voltage

control, while giving small genera-

tors the opportunity of an additional

revenue stream.

Zenobe believes the cost of provid-

ing reactive power is expected to in-

crease year-on-year as conventional

generators, capable of providing re-

active power, are used less. This is

an opportunity to earn from provid-

ing reactive power as well as other

services such as black start in a

green way. Ponsonby cited a path-

nder project in the Mersey, where

batteries will be used to shore-up the

system following the closure of the

Fiddler’s Ferry coal red station.

James Basden, Founder Director of

Zenobe Energy, summed up: “The

market for reactive power is growing

fast and will be much bigger than

FFR. For example, Mersey grid is

looking for 229 MVARs of support

and will probably buy signicantly

more than that so they are not depen-

dent on any one provider or substa-

tion. In September National Grid

ESO will come out with a Request

for Proposals that is expected to be

in excess of over 1 GW of reactive

power support and assets on the dis-

tribution network can also come

in… It’s a not a particularly large

revenue source in a revenue stack

but when you have a xed cost base,

that incremental additional revenue

drops straight to the bottom line and

is therefore an attractive thing to get

involved in.”

Batteries react to

network needs

National Grid ESO control room engineers will be able to see how much reactive power they can

draw from the UKPN distribution network

THE ENERGY INDUSTRY TIMES - MAY-JUNE 2020

Final Word

ince lockdown, it’s been like

Groundhog Day; each day

seems much like the next. And

in the electricity sector it has been…

literally.

In late April, the International En-

ergy Agency (IEA) released its

‘Global Energy Review 2020’, which

analyses the impacts of the Covid-19

crisis on global energy demand and

carbon dioxide (CO

) emissions.

Needless to say the results of the

impact have been extraordinary.

Based on an analysis of more than

100 days of real data so far this year

and 200 days of projections, the IEA’s

Global Energy Review includes esti-

mates for how energy consumption

and CO

emissions trends are likely

to evolve over the rest of the year.

Although the impact of the crisis on

energy demand depends heavily on

the length of lockdown measures and

how strictly they are imposed, the

report’s ndings are stark and cer-

tainly unprecedented. It projects that

energy demand will fall 6 per cent this

year – seven times the decline after

the 2008 global nancial crisis.

Looking more specically at elec-

tricity, the IEA says changes to

electricity use during lockdowns

have resulted in signicant declines

in overall electricity demand, with

consumption levels and patterns on

weekdays looking like those of a

pre-crisis Sunday.

Full lockdowns have pushed down

electricity demand by 20 per cent or

more, with lesser impacts from partial

lockdowns. Looking out to the end of

the year, the IEA predicts that electric-

ity demand is set to decline by 5 per

cent in 2020, the largest drop since

the Great Depression in the 1930s.

The IEA’s bleak projection assumes

a very gradual easing of lockdowns

globally and a U-shaped, slow eco-

nomic recovery. Laura Cozzi, IEA

Chief Energy Modeller, said: “This is

assuming a global decline in GDP of

around 6 per cent, which is in line

with what the IMF has put forward in

terms of their longer lockdown case.”

The IEA noted that major uncertain-

ties surround the economic outlook,

such as the trajectory of the pan-

demic, the effects and duration of

virus containment measures, reopen-

ing strategies and the shape and speed

of recovery as the pandemic recedes.

These are downside risks that will

affect the return of electricity demand.

“We are tracking electricity demand

very closely,” said Cozzi. “If China

is an indication of what is waiting

ahead for other countries, we see that

it is starting to see positive growth but

it’s very much lower compared to

normal times… For the year, we are

still expecting an overall decline for

electricity demand,” said Cozzi.

The lockdowns have not only se-

verely hit electricity demand, they

also appear to have accelerated the

shift towards low carbon sources in-

cluding wind, solar PV, hydropower

and nuclear.

“For the rst time, we are seeing

that low carbon sources, i.e. nuclear

and renewables, are the number one

source of electricity generation,

overtaking coal for the rst time in

history,” said Dr Fatih Birol, the IEA

Executive Director. “It is still too

early to determine the longer-term

impacts, but the energy industry that

emerges from this crisis will be sig-

nicantly different from the one that

came before.”

Of all the energy sources, only re-

newables has seen any growth since

the outbreak. According to the IEA,

renewable energy demand increased

by about 1.5 per cent in Q1 2020,

lifted by the additional output of new

wind and solar projects that were

completed over the past year.

The apparent resilience of the sector

can partly be attributed to favourable

policies and the market mechanisms

that are in place. In most cases, re-

newables receive priority in the grid

and are not asked to adjust their

output to match demand, insulating

them from the impacts of lower

electricity demand. As a result, the

share of renewables in the electricity

generation mix rose considerably,

with record-high hourly shares of

variable renewables in Belgium, Ita-

ly, Germany, Hungary and eastern

parts of the United States.

Speaking during the report’s launch,

Cozzi said: “What is happening dur-

ing this outbreak is a combination of

two things: lower electricity demand

on one hand, and on the other, we want

to use the cheapest electricity option

possible. Most countries are giving

priority dispatch to renewables,

which means our electricity nowa-

days is cleaner. But when demand

rebounds, other forms of generation

will come back online. We are cur-

rently benetting from [renewables]

installations that were made last year

and government support will be

needed if we want to see further

growth in the year ahead.”

There is an argument that Covid-19

could in fact be a catalyst for the

energy transition and one that really

sets the world on an accelerated, ir-

reversible path to renewables.

In a recent webinar ‘The Energy

Transition: the knowns & unknowns’

Carbon Tracker presented a follow up

to the 2019 report ‘Speed of the En-

ergy Transition’ by the World Eco-

nomic Forum Global Future Council.

New Energy Strategist for Carbon

Tracker, Kingsmill Bond, who is one

of the authors of that report and

member of the World Economic Fo-

rum Global Future Council on En-

ergy, addressed the impact of Cov-

id-19 on the energy sector.

He said: “It’s very clear to us that

the Covid-19 [outbreak] will speed

up the energy transition, in spite of

the best attempts of fossil fuel lobby-

ists to roll back regulatory pressures...

the coronavirus has signicantly re-

duced the power of the fossil fuel

industry to lobby against change be-

cause many of these companies are

now looking for government support,

and furthermore it gives unprecedent-

ed power to governments to allocate

the spare resources of society. There

have been quite a few reports talking

about a green build-back.”

Indeed in early May the UK’s Com-

mittee on Climate Change (CCC) sent

a letter to the government setting out

six key principles to rebuild the nation

following the pandemic whilst deliv-

ering a stronger, cleaner and more

resilient economy. Reducing green-

house gas emissions and adapting to

climate change are integral to the

UK’s recovery package, the Commit-

tee said.

One of the six key principles is to

strengthen incentives to reduce emis-

sions when considering tax changes.

The CCC says revenue could be

raised by setting or raising carbon

prices for sectors of the economy that

do not bear the full costs of emitting

greenhouse gases. It said low global

oil prices provide an opportunity to

increase carbon taxes without hurting

consumers.

Bond added: “Policymakers will

use whatever the most effective tool

is to get their economies up and run-

ning again. Ten years ago, after the

nancial crisis, that meant throwing

money at coal red power stations.

Today, that means throwing money at

expanding the grid and building re-

newable energy systems because

they’re cheaper. And that’s the big

difference. Actually we are in an

unusual position where in this debate

we can have our cake and eat it. Yes

we want to do the right thing, and yes

we want to have the best bang for

buck; and it happens to be, in both

cases, a renewable energy shift.”

While the outbreak has served to

decimate global emissions, there are

fears that its economic impacts might

divert governments’ attention away

from the need to keep up the pressure

on tackling climate change. There is

also the likelihood that as economies

rebound, so too will emissions.

The IEA report predicts there will

be a record decline in annual carbon

emissions of almost 8 per cent. “We

have seen the largest decline in emis-

sions in history but it is not a historic

success because it is happening for

the wrong reasons,” said Dr Birol,

noting that it has come off the back

of “thousands of premature deaths

and economic trauma”. He added that

for emissions to continue downwards,

the “right government policies” are

required.

The IEA is therefore trying to con-

vince governments to make clean

energy policies part of their stimulus

packages. “This,” said Dr Birol, “will

also help job creation improve the

economy and boost the resilience of

the energy infrastructure.”

As Winston Churchill once said,

never let a good crisis go to waste.

For energy ministers and policymak-

ers, the pandemic presents an op-

portunity. The goal has to be for

electricity demand to rebound

strongly, but without the potential

associated carbon emissions.

Let us hope that a return to business

as usual does not mean tomorrow’s

energy sector looks exactly the same

as yesterday’s.

Every day is like Sunday

Junior Isles

Cartoon: jemsoar.com