UK policy: Gas and CCS to compete on “level playing field” with renewables and storage

However, fossil fuels also represent stored energy, and Carbon Capture and Storage (CCS) can make them low carbon too. This option will be viewed on an equal footing to renewables and a variety of forms of power and heat storage, as well as other forms of “flexibility”, according to members of the Climate Change select committee, in a discussion of the subject in Parliament on October 25th.

Speaking at the event, which brought together delegates from academia, industry and government, Phil Shepherd, director of operations at National Grid, said there was a huge opportunity for energy storage, with up to 18GW expected between now and 2040. So far, however, he said progress had been limited. From a total of 74.7GW of capacity that has prequalified for flexible supply under National Grid’s scheme for 2020/1, (21.4GW of new build and 53.2GW of existing capacity) - little more than 1GW is batteries and none is heat storage.

Over 9GW of CCGT plants also prequalified for the scheme – if more storage is not forthcoming then this and other gas-fired capacity, combined with CCS could be the best flexible option long term, not just as a 10-20 year bridging fuel. The combination has the advantage that it is able to cover long mid-winter renewable supply troughs, which electricity storage has shown little potential to be able to manage. But Professor Seamus Garvey of the University of Nottingham, said heat storage was the key to making energy storage competitive with gas (which he also described as stored energy) and CCS, rather than the storage of electricity.

Garvey said that batteries – although useful to a degree for short term balancing - were not a good option for the long term or large scale storage of electricity required in high latitude countries like the UK. He said heat storage should work out much cheaper and held the key, adding that current UK decarbonisation targets were “tame” because “we are over-assessing how expensive energy storage is”.

“All flexibility in the past relied on varying supply, in future it will be demand side management, storage, and so on…. Energy storage is a lot more than just batteries.” His colleague Tristan Davenne explained that storing surplus power in the form of heat was far simpler and less expensive, because the medium for storage – rock or fluids – was already available, and did not require expensive manufacture. The problem area was the reconversion of the heat back to electricity at a reasonable level of efficiency, and research into this and other areas was being carried out by the “Energy Research Accelerator” group, which links seven universities in the Midlands.

Flexibility is key

But the real message of the discussion was that no one “flexibility” option would be favoured over any other, and that the market still needed to be designed to ensure sufficient commercial incentives for private companies to want to invest in the required ground breaking technologies. “Flexibility for us is key,” said Shepherd, irrespective of the (low carbon) means of achieving it. He divided this flexibility into three types - ancillary services, which balanced short term variations; changes in capacity, or volume reinforcement, which adds supply at particular times – including from batteries – and a third around arbitrage, or demand side management, which he hoped would provide 30-50% of the flexibility needed, although other speakers felt this was over-optimistic.

He said National Grid had brought 400 companies together to seek flexible solutions, and would publish a report on the consultation on November 13th. “If we manage to meet just 5% of peak demand with flexibility it will save £500 million per year for consumers,” he noted. National Grid has already awarded an ancillary contract for 201MW of enhanced frequency response for short term balancing, which he said would save £200 million for consumers over 4 years. That system goes live in 2018.

It appears gas and CCS could be very competitive in this flexible mix. In September an advisory report for the UK government outlined an approach to CCS that it said could produce power at about £85/MWh (cheaper than Hinkley Point), if led by a state-run organisation to offset the risks private investors can’t handle without demanding excessively high returns.

Baroness Julia Brown, deputy chair of the parliamentary Climate Change Committee, included CCS in her vision at the discussion. She said that by 2030 carbon emissions would need to fall to 90g/KWh and that required “renewables, nuclear and carbon capture and storage to make up 75% of the generation mix”. She added that beyond 2050, signing up to the Paris agreement would mean complete decarbonisation by 2100, and that achieving net zero emissions may require a carbon negative grid. A CCS network would be an important component in such a grid.

She said a level playing field was required for all technologies, but that the government needed to improve the image of renewables, as many among the public had grown to think of solar and wind power as unreliable. “We must get away from thinking of renewables as intermittent… it is better seen as predictable generation”. She said the UK’s skills in forecasting, systems and data management were able to accurately say when supply would occur.

“Consumption is predictable as well, so with predictable supply and demand we are in a better position [to achieve a decarbonised grid].” She said that with import and export flows, “we may not need as much storage as people think, or as much baseload”. In terms of demand management she said that “we need to be ready for the Uber of grid balancing” – a centralised system able to aggregate demand at a local level to match it with supply at particular prices. “I am far less sceptical than I used to be over individual households getting involved in this,” she added.

She said that industrial strategy should encourage the development of new UK energy technology. This “requires more of a controlling mind than recent governments have been prepared to support,” she said, otherwise it will be done somewhere else, and the UK would once again miss out on leading in something the committee believed it has great potential to succeed in. “We need a more assertive vision on how this should be done.”

So while the UK cancelled CCS last December under the Cameron government, it could potentially be revived as part of Prime Minister May's new industrial/energy policy. However, a civil servant close to the matter, who I spoke to later, said that this was not likely, and that a level playing field for all options - including CCS and gas - was the main thrust of likely policy, rather than actual government intervention. Nevertheless, CCS certainly could fit the bill as an area of exportable expertise, with calls from both the UN and World Energy Council recently to speed up CCS development, and depleted North Sea oil and gas fields ideal locations to store not just the UK’s but northern Europe’s emissions – which are currently rising due to higher coal use.

All members of the discussion group agreed that a new regulatory system needed to be set up to incentivise the desired flexibility, with the economics currently not making sense to store energy or introduce enough low carbon flexibility. “We are at the early stages of understanding how policy should be used to encourage this, simply because if I’m being paid to produce a baseload whenever, why should I change to specific times,” said Baroness Brown, adding that there was some distance to go to provide the right levers to achieve the policy goals. There was also agreement that moving the energy department into the business department would make it easier to achieve coordinated policy, and delegates dismissed public concern that climate change goals would not continue to be prioritised as a result of the move.