Flexibility needed ‘urgently’ to avoid spiralling renewable costs

Flexibility is defining feature in wildly variable integration costs

The government needs to “act urgently” to deliver a more flexible power system and avoid “spiralling” costs from the integration of renewables, the UK Energy Research Centre has warned.

Analysis by the research body found that the costs of absorbing intermittent renewable generation remain “relatively modest” in general, but vary enormously depending on the flexibility of the energy system.

The new report provides an update to a systematic review of evidence conducted by the UK Energy Centre (UKERC) a decade ago. “Ten years ago, penetration levels for renewables were small, and the costs of managing the grid to incorporate wind and solar was pretty trivial compared to the costs of building wind farms and solar panels themselves,” said report’s authors.

“Now, however, costs have fallen and renewables are close to being cost-competitive with fossil fuels. With higher penetration levels come higher system costs, and building flexibility into the system becomes much more important.”

The 2006 study only considered renewable penetration rates of up to 20 per cent and found that integration costs would be “negligible”, with the only exceptions being for balancing services and back up capacity.

However, as renewable penetration rises to far greater levels in coming years, UKERC said other integration costs will start to come into play. They include the costs of curtailment, network reinforcements, maintaining system inertia and the reduced efficiency of thermal generation.

“The conversation we have every winter, which is only about whether we have enough spare capacity to keep the lights from going out, is the wrong question,” said report co-author Rob Gross. “What we should be asking instead is not just how many power stations we need, but whether they’re the right kind of power stations to keep the system flexible enough.”

The study also emphasised the importance of taking a whole system approach to analysing the relative merits of different technologies, in part because of the risk of “doubling counting” some elements of cost.

“For example, increasing system reserves to meet short-term balancing requirements may also contribute to the capacity margin required to reliably meet demand peaks,” the report said.

Lead author Phil Hepstonstall added: “The findings reveal that the costs of intermittency lie within a wide potential range, and that it is no longer possible to estimate system costs simplistically, for example by adding up the cost estimates for individual categories of impact together.”

Energy and Climate Intelligence Unit energy analyst Jonathan Marshall commented: “One very recent study suggested that building battery storage alongside solar energy results in a negative integration cost – or, if you prefer, an integration benefit. With growing pressure on energy bills, it shows that ministers are right to be promoting smart grids as a key way of decarbonising our electricity system in the most cost-effective way possible. 

He said there is also evidence from Europe that connecting national grids together increases flexibility and lowers costs: “The obvious conclusion for the UK is that we should push ahead with planned power links to Belgium, France, Norway and elsewhere, making the trade of electricity easier and keeping bills for homes and businesses as low as possible.”

RenewableUK executive director Emma Pinchbeck welcomed the report’s findings: “This is a green light to government to drive on their work to replace outdated, clapped-out infrastructure with smart clean technology to meet our country’s energy needs.”

The costs of integrating and backing up solar generation are “negligible”, a report by Aurora Energy Research concluded in October last year.