UK electricity prices: will improved infrastructure enable Scottish wind power to be harnessed and so cut costs?
Electricity generation from renewable sources continues to increase in the UK (see figure 1 below). And yet, for more than 5 years, the infrastructure – the network of cables used to flow the electricity from point of generation to point of utilisation – has not been fit for purpose. As a result ‘transmission constraints’ arise. As a result, there are times when those owning wind turbines receive payments to not generate, in order to allow the electricity system to remain in balance. Thankfully, that looks set to change: a new cable, the Western Link, will come into commission in September 2018. Below we take a look at what benefits it is likely to yield.
Energy balancing: matching the amount of electricity supplied with the demand
Electricity demand varies throughout the day as industry waxes and wanes, lights turn on and off, meals are cooked and cuppas made during TV intervals. Electricity supply has to adjust as the demand fluctuates, in real time, since electricity cannot be stored in large amounts (not yet, anyway).
The varying nature of renewables (wind and solar power) has made this even more of a challenge. Coal, gas and nuclear driven thermal plant turn generation up or down according to a schedule. Wind and solar vary as Mother Nature sees fit.
Trades on the electricity markets match supply and demand up until an hour before delivery. National Grid then operate a balancing system to accommodate the late changes. These changes come with associated costs, which can be large. Good weather forecasts can help minimise these costs by enabling better renewable energy generation forecasts: Lake Street Consulting are active in this area and open to enquiries.
System balancing, or transmission constraints
As well as balancing the energy requirements of electricity, there is the issue of transporting the electricity from point of generation to point of consumption. Within the UK the infrastructure – the network of electricity transmission cables – is not currently sufficient to allow the natural flow of electricity due to ‘bottlenecks’, or transmission constraints. In order to maintain a stable electricity supply, National Grid take a number of system balancing actions as well as the energy balancing actions described above.
Transmission constraints between Scotland and England are common: Scotland has high energy generation but low energy consumption, whilst the opposite is true in England: in 2016, Scotland exported 20% of its total electricity generation to the UK (Digest of the United Kingdom Energy Statistics (DUKES), 2017).
Electricity from wind farms has been included in the balancing mechanism since 2010 (Renewable Energy Foundation (REF), 2017). When a wind farm can provide power but the transmission system cannot cope with the resultant flow, the owners of the wind farm receive payments to reduce, or turn off, generation.
Transmission constraint payments to wind farms have increased in recent years as the amount of wind generation installed has increased (figure 2). In 2017, these payments were more than £100 million (Renewable Energy Foundation (REF), 2017).
Whist National Grid initially pays the cost of energy and system constraints, the cost ultimately falls to consumers through increased energy bills. The estimated cost to each household for the wind farm element of the balancing costs in 2017 was approximately £4.
Improved infrastructure which enables unconstrained flow of electricity from point of generation to point of consumption is one solution. A project called the Western Link aims to do just that.
System balancing, or transmission constraints
The Western Link is a cable running from Hunterston, in Scotland, to Deeside, on the Welsh-English border. Power transferred by the Western Link can flow in both directions. The full operating capacity of Western Link will be 2250 MW, and this should be in operation from September 2018. For context, 2250MW is enough power for everyone in the UK to charge their phone three times over.
By increasing the amount of electricity that can flow from Scotland to England, the Western Link will help to reduce system constraint payments. We look below at the impact we expect it to have on enabling wind farms to generate, rather than receiving transmission constraint payments to turn off.
During an initial commissioning phase from December 2017, the Western Link was operating at 900 MW. From March through early May 2018 the scheme was operating at 1125 MW. The Western Link then went out of service, in preparation for completion.
A reasonable comparison?
With only four months of data to compare the commissioning of Western Link, it begs the question as to whether it’s enough data from which to estimate potential benefits.
The Western Link was operating at 40% capacity in December, increasing to 50% by March. The months December through March are typically the windiest months, as we see in figure 3 below, suggesting the part commissioning data should show an influence on wind farm generation. In our ‘Storm’ blog we found that December through March were amongst the months whereby the highest number of UK storms occur, further supporting this hypothesis.
On average between 2011 and 2016, constraint payments have been greater in December and January than other times of the year (see figure 4). A fairly strong correlation (r2 of 0.6) exists between average monthly transmission constraint costs and average monthly Scottish onshore wind speeds.
The part-commissioning period should, therefore, give a good flavour of what benefits we might expect following full commissioning.
Has Western Link improved the transmission of wind generation?
Figure 5 (upper panel) shows the wind power curve (how the wind generation varies with the wind speed) before the Western Link commissioning. There is a large spread between wind speed and wind generation. We can adjust the wind speed curve to take into account days with high constraint payments which results in a reduced spread (results not published here).
If we compare the top panel to the part-commissioning period of Western Link (lower panel) we can see a definite improvement in this spread. However, more data is required to see the whole curve as there were no high wind speed days during the part-commissioning period.
The wind power curve was higher during the part-commissioning period of Western Link (see figure 6 below), which supports the hypothesis that the Western Link is enabling more wind farms to generate.
The data available is limited, but the results for the part-commission period are positive: we see higher wind power generation for the same wind speed when the Western Link is operating.
Did transmission constraint payments decrease in the part-commissioning period?
Figure 7 shows wind farm constraint payments during the part-commissioning of the Western Link, and compares them, by month, to the wind farm constraint payments in recent years.
Transmission constraint costs during the part-commissioning period are lower than previous years with similar wind speeds, and that despite an increase in the installed capacity of wind generation.
Electricity balancing costs in the UK comprise of energy balancing costs and system balancing, or transmission constraint, costs. One main transmission constraint is a ‘bottleneck’, preventing free flow of electricity from Scotland to England. As a result, wind turbines in Scotland receive payments not to generate. The Western Link is a new cable from Scotland to the Welsh-English border which aims to alleviate this ‘bottleneck’. Part-commissioning data from December 2017 through March 2018 shows that wind generation is improved, and transmission constraint costs decreased thanks to the Western Link.
When the Western Link is fully functional, we can expect a further drop in transmission constraint payments. For the general public this is likely to only be a saving of several pounds on their energy bills. And it will take 10 years to cover the cost of the project in saved transmission costs. On the upside, we are paying for the solution rather than paying to turn off wind farm generation which is fully functional.