Saving Billions on Grid Upgrades

Onshore Grid Costs for New Offshore Wind – Updated December 2022 Figures

Britain’s need for onshore grid reinforcement to accommodate offshore wind generation has risen in December 2021 to £20bn grid upgrades for just 8GW new offshore wind – because the total by that date was 14GW operational + 8GW in construction (i.e. onshore work had previously been approved and started). When reinforcements required to connect up the balancing, stability and operability services are added, this can be expected to total about £3bn per GW of new offshore wind. And that figure is rising fast, as the previous analyses show: in December 2020 the figure was £1.75bn per GW, and the Pathway to 2030 (June 2022) showed that to be increasing by 43% to 2040.

Operational Costs

Moreover, this incurs 10% additional on-costs every year thereafter (£300m p.a.) per GW, split roughly equally between maintenance and operational costs. And this ignores the contractual, emergency costs of procuring those balancing and stability services, or the ever-increasing complexity for the control centres to manage.

This is only about half of the enormous (and exponentially growing) non-energy costs of the energy system which were ~£8bn more in 2020-21 than just 3 years before, which split roughly:

  • ¼ balancing services costs;
  • ¼ stability, operability, ancillary, resilience and restoration services costs;
  • ½ reinforcing the grid.

Note that the further the energy transition progresses, the higher the renewables penetration on the grid, and therefore the higher every one of these costs will rise – by ~43% for increased renewables 2030-2040, as calculated below.

Global Applicability

This analysis only focuses on the UK because the UK is further advanced than most in the decarbonisation of its grid (and most familiar to the author); the same issues will apply to most grids (e.g. the American ones) as they decarbonise. The cost of getting it wrong is immense: billions in capital costs, and over a billion in annual operational costs – as shown by the first UK Lockdown.

A Better and Cheaper Way

Connecting large renewable generation to the grid through large-scale long-duration storage would greatly reduce costs and improve the services by:

  • Reducing the size of grid connection and need for grid capacity / reinforcement – by a factor of 2-4 for offshore wind, 3-6 for onshore wind and 4-10 for solar;
  • Providing the balancing services before the energy gets onto the grid, so that remote provision is not needed;
  • Ditto stability services – all types of large-scale long-duration storage are naturally inertial, and Storelectric’s can produce double-scale inertia 24/7.

A 1GW output Storelectric Green CAESTM plant with 2GW input would save 1GW grid connection and reinforcement, totalling £3bn, at a cost of ~£1bn (first-of-a-kind ~£1.3bn), saving £2bn capital costs in addition to all its operational benefits (below).

Multi-Tasking Technology

In considering different storage technologies, it is important to determine the number of services that the storage can deliver concurrently, using the same resources (i.e. not sub-dividing the plant’s output or storage capacity), e.g. one large-scale, long-duration, naturally inertial plant can deliver concurrently a range of services that require many same-sized batteries:

  • Balancing services and arbitrage (based on power and duration);
  • Ancillary services (based on speed of response);
  • Inertial services (including related services, such as short-circuit levels) –
    • Distinguish between real and synthetic inertia, the former being best for preventing failures and the latter for recovering from them, as shown here;
  • Reactive power and load;
  • Voltage and frequency regulation;
  • Black start (without having to reserve capacity);
  • Other services, e.g. constraint management, curtailment avoidance.

Integration with the Hydrogen Economy

This integration can be taken further. Electrolysis (and the technologies that use hydrogen, such as fuel/chemical synthesis, iron/steel making etc.) hate intermittency, which reduces efficiency and plant life while requiring much more plant investment per unit output. By taking out (most of? – Subject to cost/benefit analysis) that intermittency before it hits those plants, Storelectric can make them much more efficient and cost-effective: the greater the integration, the better the synergies.

What Needs to be Done

Government, regulator and grid need to do a number of things in order to enable all this – most of which cost little or nothing and, if done fully and well, achieve all the benefits with purely commercial investment, without subsidy. This would save tens of billions in grid upgrade costs, and further billions in both operation / maintenance costs and procuring services, whether for balancing / constraints, inertia and stability (as shown by the blackout on 8th August 2019), for energy sufficiency, for black start and other services, and additionally make renewable generation itself cheaper and more profitable. These actions include:

  • Provide a level regulatory playing field for storage, including a regulatory definition of storage as storage and not as a sub-set of generation;
  • Make slight changes to the regulatory setting of OFTOs (which connect offshore wind to the grid), so that wind farms can benefit from the storage;
  • Incentivise and support the construction of first-of-a-kind plants, which have for years been prevented by regulatory and contractual measures;
  • Provide contracts with durations and breadth that enable large, flexible plant to compete with smaller and more narrowly capable ones.