Listen to it on Spotify:
This blog is an Innovation Insights video podcast transcript. In this episode of Innovation Insights, Emerald’s Partner Charles Vaslet discusses Energy Transition Challenges and Trends. Click here to watch or listen.
Charles Vaslet: It’s my pleasure to welcome Tom Edwards to the episode of Innovation Insights. Tom is the senior modeler with the consulting firm, Cornwall Insight, and I’ve been avidly following Tom’s posts on Twitter for years, and so I’m really pleased to finally speak to him. Welcome, Tom.
Tom Edwards: Oh, thanks for having me.
Charles: I’d like to start by asking you about what has surprised you the most about the impact on the electrical grid from the COVID demand suppression?
Tom: I think it was the… How quick it’s felt like 2025 got here, ’cause I’ve been talking and thinking about grid stability for a number of years now, and it was always this arbitrary thing that was gonna happen in the future, and we had to get ready for it, and then suddenly it was here. And we were all talking about inertia rock off and all of these things, and grid was spending huge sums of money. And it all got very exciting very quickly, and that was the thing that surprised me is just how quick we got here. I guess it feels like we’re really close to being a 100% renewable, something like that. It’s super exciting.
Charles: Yeah, so I was gonna ask you, do you think this has shown us that we’re ready for the growing influx of renewable generation, and if not, what procedures or changes will we need? What additional equipment will have to be procured and installed on the system?
Tom: I think it’s shown us we’re not ready. I think that’s clear. Grid has been doing lots of things like turning wind farms off, pulling thermal generators on, trading over the inter connectors to increase demand. I think that we will need to do lots of things to get ready. So, for it to hit that 2025 target of being able to balance a 100% renewable system, we’re gonna need things like new procedures. Grid is investigating things like Power Available, which is a real-time data feed on wind speeds from wind farms so that they can work out how much reserve might be available on a wind turbine. Or it’s doing trials with batteries to look at how state of charge on the battery affects what kind of reserve that they can buy from that battery unit. So, there’s those kind of procedural how do they change what they’re already doing, but there’s also things like what kind of new services can you buy. So grid’s creating something called Dynamic Containment Moderation and Regulation, which are less than one second response services. So, at the moment, firm frequency response, dynamic firm frequency response, which is the kind of the race horse, Ferrari response they currently have is about 10 seconds max response, this is gonna be much, much quicker than that.
Charles: Do you think that it’s realistic for consumers and even generators to expect the same level of service or the same uninterruptible access to and from the grid, given the widening gap between the trough and the peak that you showed in your presentation?
Tom: I think there’s gonna be much more incentives for consumers to respond to what’s happening on the system, so the idea that supply will always follow demand might no longer be suitable. It might be that demand follows supply, and there will be some loads that are gonna have to think very carefully about what the wind forecast is for tomorrow, because they will have to maybe curtail their operation if the wind isn’t blowing. I think people can definitely expect, they should expect, that the grid will have the same levels of reliability and voltage and flicker and all of that sort of stuff. But I think that the price signal should show that perhaps you shouldn’t consume here, perhaps you should consume over here, or you should install storage. Those kind of things that I think that a 100% renewable system is going to rely as much on demand as it does on generation.
Charles: Do you think the operators, even the politicians, will allow the price signals to rise sufficiently to drive that widespread use of, I don’t know, software solutions or hardware storage solutions to balance the system? You’ve talked about amazing increase in the cost of balancing, which will have to be spread, is that gonna continue to grow to attract that technology?
Tom: I think that there has to be serious consideration thought about what in the market design that can bring all this together is because as I said, it’s an essential service, it’s very politically sensitive, and of course, the revenues here… We’re talking about spiky revenues, and those might not necessarily be attractive to investors. There might be another market design out there that helps smooth those out, and perhaps that also helps smooth things out for investors, but it also smooths things out for consumers and gives them more confidence, say in planning ahead for the long-term. So, I think that the current market design, in my opinion, is not suitable for a Net Zero world. I think it will have to change, and a serious consideration in the new market design will have to be given to revenue certainty for these new basic kit that we need, but also revenue certainty or cost certainty for consumers as well.
Charles: Hey, really thanks again, Tom, for presenting at the European Venture Fair. The energy transition is gonna have a meaningful impact on the grid. And for those of us interested to see how this evolved, I really highly recommend that they follow you and the work that you and your colleagues are doing at Cornwall Insight. Thanks again, Tom.
Tom: Great. Thanks very much.