Balancing act: Storage and flexible energy vital to UK’s renewables tipping point
The cost of generating energy from wind and solar in the UK is expected to halve by 2040, but the expected future power system volatility will lead to more economic opportunities for flexible energy sources and storage capacity.
That is the key finding of a new study issued by battery developers Eaton, in partnership with the Renewable Energy Association (REA) and Bloomberg New Energy Finance (BNEF). The study found that the intermittency of wind and solar energy will create wildly varying outputs from renewable energy generation in the UK by 2040.
At certain times, the report notes, wind and solar energy could exceed total power demand across the UK. However, in 2040, entire weeks and even months will occur where wind and solar produce little to no energy, with other resources needed to plug a 72% to 80% demand gap.
While the study notes that battery storage is a viable solution to help with flexible demand over short-term volatility issues stemming from renewables output, the longer periods where wind and solar outputs fall will require other solutions.
According to the study, battery storage is not well suited to providing back-up across weeks and months. To meet these longer-term gaps, the report claims that hydro, interconnectors and gas generation are the only solutions that can ease flexibility economically. Other technologies such as hydrogen storage would require significant cost reductions by 2040.
“This study highlights a seismic shift in how power systems will operate in future. As wind and solar become the cheapest options for power generation, the race is on to develop and deploy the flexible resources that will complement them,” BNEF’s head of global analysis Albert Cheung said.
The study builds on the data and findings issued in BNEF’s New Energy Outlook report from June, which highlighted that renewable energy sources will account for around three quarters of the expected $10trn global investment into power generating technologies between now and 2040.
That report claimed that Europe has currently reached its first tipping point, with wind and solar now the cheapest options for new power generation. The next tipping point is expected in the late 2020s, where the cost of power produced by new wind and solar projects falls below existing gas and coal plants.
These costs falls are expected to be somewhat mirrored by battery prices, although this will predominantly be driven by the electric vehicle (EV) market. The study notes that batteries will compliment the flexibility of the grid, which will be improved via alternative energy sources.
One area of exploration could be the interconnection between the UK and Nordic nations. The study revealed that hydro will account for 67% of power generated in Nordic countries by 2040. Currently, at least eight cables are being laid under the sea or through the channel tunnel to trade power between the UK, Ireland, France, Belgium, Denmark and Norway.
Total back-up capacity needed in 2040 is expected to remain at 2017 levels of 70GW, which can be balanced through dispatchable resources, generation, storage, flexibility and interconnectors. In the highest output months, the UK could source 70% of its needs from wind and solar and some associations claim that bioenergy could be used to provide the remaining baseload.
“Massive increases in future renewable power generation mean that industry and government must start planning now to ensure low-carbon, cost-effective ways of balancing demand and supply,” the REA’s chief executive Dr Nina Skorupska said.
“We believe that there is a role for fuelled renewable technologies such as bioenergy and energy from waste to provide the complementary baseload generation that will be required, to avoid the need for carbon intensive generation at all.”
Eaton has worked with the REA in the past to highlight the importance of a continued dialogue between industry players and policymakers. Analysis from the Carbon Trust suggests that energy storage could contribute £2.4bn to UK electricity system savings by 2030, but only if a range of 'necessary regulatory reforms' are introduced to steady the UK's energy market.
As part of an ongoing partnership with Nissan, Eaton is exploring how battery storage can unlock economic benefits for consumers and businesses, as part of a wider grid reform. The company will issue a second study in 2018, focusing on policy and technology responses.
“These solutions could include continued promotion of smart metering, reforms to increase market openness and transparency for all grid ancillary services and long-term grid service contracts and pricing schemes. We will also analyse the benefits of various policy options for the future of the energy market that include battery storage,” Eaton’s distributed energy segment manager Louis Shaffer said.