Sponsored post: Peter Jones, ABB Technology Strategy Manager outlines the challenges and opportunities presented to mission critical businesses as the UK shifts towards a more flexible power system that will likely create sharp price signals around energy consumption.
Recently, we saw the publication of the National Infrastructure Commission’s ‘Smart Power’ report. This followed Ofgem’s 2015 position paper ‘Making the electricity system more flexible and delivering the benefits for consumers’. Both explain the challenges – and opportunities – facing the UK power industry. They also highlight the need for increased flexibility if the UK is to take full advantage of ‘the smart power revolution’.
The challenge is that our power industry is entering a period of unprecedented change. Around two-thirds of our existing power stations are expected to close down by 2030 as older coal, nuclear and gas fired plant reaches its end of life. The quest to decarbonise generation and embrace renewables is also driving the shift from the traditional ‘top-down’ model of power generation, transmission and distribution to one where generation resources are diverse in both nature and capacity, widely distributed, increasingly intermittent and counted in the thousands rather than the hundreds. Demand for electricity is also set for a dramatic increase in new sectors such as heating and transportation.
To accommodate these profound changes calls for system flexibility to be taken to a completely new level so that both demand and supply are able to respond to changes in power generation and consumption. We must ensure continuity of supply at the correct voltage and frequency in this increasingly complex and unpredictable environment.
A particularly interesting solution to this flexibility challenge could be Virtual Power Plants (VPPs) that can aggregate many small and medium power plants, both traditional and renewables, so that they can be offered to the electricity market to provide grid services such as power balancing and frequency regulation.
VPP is simply a term used to describe a collection of many disparate power generation sources, energy storage devices, power quality installations and demand response participants distributed around a distribution grid, yet pooled into a single entity. The beauty of the VPP is that it can incorporate almost any generation technology including biogas, biomass, combined heat and power (CHP), wind, solar, hydro, diesel generators and fossil fuel plant. The aggregation effect of the VPP also delivers the scale and flexibility necessary to provide ancillary grid services.
There could also be a significant role to play for local microgrids, either within an overall VPP or on a stand-alone basis. One benefit is the optimisation of generation, energy storage and DSR (demand side response) resources. This will allow consumers and generators to provide flexibility to support local network management. It will also reduce to a minimum the power that flows in and out of the local zone, helping to reduce the load on the national grid.
Energy storage is also important within the VPP. This could be any type of energy storage technology including batteries, thermal storage, compressed air or pumped storage. Energy storage is highlighted by both Ofgem and the National Infrastructure Commission as a key area for attention. This is because as the UK’s rotating power reserve is lost with the decommissioning of large, centralised power stations, energy storage is becoming vital to maintaining grid frequency and voltage levels within mandated tolerances. Furthermore, in addition to helping reduce the impact of peak demand, storage has the potential to ease constraints on grids, possibly enabling the deferment of major investments in network reinforcement projects.
VPPs will also include power quality equipment such as the new generation of Line Voltage Regulators (LVRs). These devices can automatically adjust the voltage in the distribution system according to the actual load or generation mix, addressing a key stability challenge posed by the increasing amount of renewables entering the power network
The fourth, and critical element of the VPP, is in implementing demand flexibility that covers a broad range of activities to help reduce or shift demand for electricity during peak periods. These include adjusting the consumption of electrical appliances or other facilities or deploying off-grid sources of power. There is, for example, major potential to allow residential and business consumers to change the way they use electricity. Steps have been taken with the rollout of smart meters. But there is still a long way to go.
All the technologies are already in place for VPPs. But there are two key steps for the UK to embrace them. First, we need to create the overarching structure in which they will operate. Second, we need a regulatory regime that will make VPPs worthwhile for both their operators and their customers.