In a fully decarbonised power system most electricity generation will be variable. Wind and solar generation expand, while gas-fired generation – and the associated import bill – diminish. Both the proportion of variable to dispatchable generation and the reserve margin required for secure system operation will increase markedly.
On the one hand, there needs to be enough capacity and/or flexibility to meet peak demand when variable generation is low. On the other, this excess reserve margin will generate a lot of surplus power when the opposite conditions prevail – variable generation is high and demand weak.
Even on an average day, electricity system operation will become more complex.
Baseload generation versus flexibility
As renewable generation capacity expands, the amount of baseload generation provided across the system increases. The wider the geographical distribution of energy sources, and the more offshore wind involved, the better, owing to its higher capacity factor than either onshore wind or solar. It is rare in the UK for there to be no wind anywhere.
Just as a more diversified generation mix increases energy security, a diverse mix of renewables increases baseload generation as different variable generation profiles overlap each other. The large dependence on solar and wind alone in the UK’s energy transition is a weakness.
When variable generation is low and demand high, the system will have to rely on a combination of more flexible assets: imports; dispatchable generation sources, which by 2030, will be limited to biomass and possibly some gas-fired generation with carbon capture and storage; electricity storage; and demand-side management – the ability to reduce demand rather than increase supply.
For short-term variations in supply and demand, battery storage will provide much of the flexibility required. The UK has about 5 GW of battery capacity in operation and another 5 GW under construction. The total pipeline of projects runs to 127 GW, of which just over 40 GW is consented.
In addition, the UK has a range of interconnectors and is building more. In extreme situations, their utility depends ultimately on the generation sources at the non-UK end of the interconnector. The interconnectors with Norway – a hydro-based power system – and with France – a nuclear-based power system – add significant generation diversity.
Those with Ireland, the Netherlands and Belgium, for example, provide less, as these systems, as a result of their own energy transitions, will also be dependent mainly on wind and solar. They will be of less use, if the same or similar weather conditions prevail at any one time in northern Europe.
By contrast, the proposed 3.6 GW Xlinks interconnector with Morocco – also based on wind and solar – may seem like an out-of-the box proposal, but it would stretch across Europe’s general north-south weather divide, connecting the UK with different climatic conditions.
Surplus power
At times of surplus generation, interconnectors again provide flexibility. The UK has 10.5 GW of import capacity and 10.6 GW of export capacity with the same caveats applying. North European interconnectors with other wind and solar based power systems are likely to experience surplus generation at similar times.
Periods of surplus generation will cause wholesale electricity prices to fall to zero, or become negative. Even on an average day, when all demand is met by generation sources with no marginal fuel cost, wholesale electricity prices under the current regime are likely to be very low.
At first glance, this looks like good news for consumers, but while the average wholesale price of electricity falls, government obligation costs (environmental and social), operating and network costs will all increase. The majority of generators, by 2030, will have low wholesale electricity prices topped up by the government under the contracts for difference regime under which the generation capacity is developed.
The UK’s wholesale electricity pricing system is designed around competing fossil fuels to supply the marginal kWh of power. The price of the last kWh sets the price for all. As there should be no fossil fuels in a clean power system, the small amount of dispatchable generation left – biomass and perhaps some abated gas-fired generation – will become the price setters at times of scarcity.
Long-duration storage
Long-duration storage – the ability to store electricity over months rather than hours – would be an enormous help. Storing power between seasons means less renewable energy capacity would have to be built in the first place.
However, the ability to do so on a large scale is limited. Cost effective solutions do exist, for example liquid air storage, but would need support to expand more quickly than at present.
Instead, the focus is on hydrogen, which itself is a form of long-duration storage. Hydrogen could be produced from power surpluses and then later used to generate zero-emissions power, using either hydrogen turbines or fuel cells.
However, the cost of hydrogen production and use are currently uneconomic and ill-suited to absorbing variable power generation. Green hydrogen production costs will not fall to economic levels by 2030.
System complexity
In this more complex environment, in which generation loses value and the ability to provide flexibility gains, demand will also change. It is expected to rise as more heating is supplied using electricity, more electric vehicles arrive on the streets, industry increases the use of electric motors, and as more electricity is consumed by IT services such as artificial intelligence.
Of these, the transition from gas-fired heating is the most significant. At present, about 85% of UK homes are heated by gas. Domestic gas use in 2023 amounted to 237 TWh, more than the 206 TWh used for electricity generation. The government has a target of installing 600,000 heat pumps, which rely on electricity, each year, by 2028.
This shift in residential and commercial heating will increase substantially peak load electricity in winter and also enlarge the difference between winter and summer electricity demand. This means more renewable energy capacity will be required, to maintain an adequate reserve margin in winter, which will in turn produce larger generation surpluses at other times of the year.
The UK system will have metamorphosised into a much more complex machine, in which the pricing arrangements, if not reformed, will likely fail to value fully a function which will become paramount to its operation – flexibility.
So, will the UK achieve a full decarbonised power system by 2030?
Probably not, the timescales are simply too short. However, that is no reason not to try. If substantial progress can be made, and the targets reached sometime in the following decade, it would still represent not just a massive achievement – but a necessary one.
Ross McCracken is a freelance energy analyst with more than 25 years experience, ranging from oil price assessment with S&P Global to coverage of the LNG market and the emergence of disruptive energy transition technologies.
