Centrica : 08 May 2020 UK energy slump provides opportunity to test flexibility

08 May 2020 UK energy slump provides opportunity to test flexibility

By Nick Park
Policy and Insight Director, Centrica

As the grid faces the unprecedented challenge of demand decreasing in recent weeks, it's important to keep pushing forward on the issues we have been debating for a long time.

Lots of people are posting their views on Coronavirus and its policy implications at the moment. One thing I was arguing for before this crisis is now proving to be even more important, and that is the value of greater flexibility in our electricity markets. The potential benefits of flexibility in helping us manage the expected growth in renewable energy as we strive for net zero are too great to ignore.

This bank holiday weekend we are likely to see unprecedented lows in power demand. National Grid says that it expects demand overnight on Sunday to be just 14.4 GW. To put it simply, that is less than half of what is normal in the UK.

In recent weeks, as businesses and industries have shut down, industrial energy demand has significantly reduced. Domestic use has risen, but the warmer weather has meant this has been minimal.

As a result, National Grid is facing a challenge to balance supply with demand. This weekend they will likely need to shut down wind and solar generation or enter into an expensive contract to essentially turn down production at the Sizewell B nuclear plant, or both in order to balance the system.

While COVID-19 is the major factor in this event, these kinds of swings in demand are likely to be more common in the near future, by nature of the growing proportion of renewables on the grid. Our energy system needs to get ready to deal with them.

It's something we have been considering for a while. Lockdown is a prime opportunity to test out what the future may hold.

Without question, the UK will need to deploy more renewable generation to keep on track to meet its net zero target. But the current grid was set up to accommodate large, fossil fuel power stations. So, policymakers will need to make changes to energy markets and regulatory models to help the system to integrate large volumes of intermittent renewable generation.

We will need to manage our system flexibly, and be 'smart' about how demand and generation are balanced. That means more decentralised, local generation and significant investment in grid level battery storage, like our In line with the advice of the Committee on Climate Change, we see the need for a significant increase in flexibility - upwards of 80GW of flexibility will be required to maintain security of supply in a cost-effective way.

We're particularly keen for Government to commit to leading on the delivery of fully functioning flexibility markets at a local and national level by 2023. The energy white paper would be a good place to set out a policy objective around deployment of flexibility as a tool to enable meeting net zero at least cost.

Network operators need to be incentivised to deliver local flexibility markets, like our to prevent the crowding out of non-regulated, commercial investors, and to give investors greater certainty over how they will be remunerated - following for example the success of the CfD scheme in giving certainty to renewable developers.