Keeping the Lights on: The Renewable Energy Dilemma

Keeping the Lights on: The Renewable Energy Dilemma

As the UK continues on its inexorable path to a carbon free energy world, the questions around how this is achieved and the paths that should be taken become ever more pertinent. With the continued closure of large, dirty coal plant, coupled with the drive towards the electrification of transport and heat, the UK’s peak electricity demand will be rising at exactly the same time as base load is coming offline.

So, how do we overcome what could potentially be a very big problem and keep the lights on?

As we’ve seen in August this year Blackouts can still happen in the 21st century and unless we can increase flexibility and have a good mix of technology within our energy market these could become more frequent.

Last month provided an important milestone for renewables, after it was confirmed that renewable energy produced more electricity than fossil fuels across a quarter for the first time. Whilst this is great news, the ever greater rise of intermittent renewables within the energy mix does present its own challenges.

Energy storage will play an important role here, as can other technologies such as interconnectors.

The case for interconnectors is an interesting one: whilst there are compelling benefits through the linking of our networks (there are three major proposals in the pipeline to France, Germany & Norway), and the additional security and flexibility this can bring, along with some potential price benefits (wholesale electricity prices are cheaper in Europe), there could be unintended consequences. If we are going to be bringing in cheaper electricity from Europe, for instance from Norway’s numerous hydro plant, it could affect investment into projects within our own borders. With these interconnector projects benefitting from a cap and floor regime, we could somewhat perversely find ourselves subsidising renewables projects in Europe to the detriment of our own.
Which brings us to energy storage. The discourse on this in recent times has been very much dominated by batteries. Whilst these will play a very important role in the future energy mix, one tried and tested large scale storage solution has been somewhat drowned out (pardon the pun!): pumped storage hydro (PSH).

2018 marked the 75th anniversary of the Hydro Electric Development Act, which kick-started major hydro developments across the country, and today we have four operational PSH plant across the UK.
The benefits this tried and tested technology can bring can be easy to forget within the maelstrom that is the energy revolution and its cutting edge technology.
The concept of PSH remains alluringly simple: take two bodies of water with a sufficient height difference, and pump up and release the water between them. Very large amounts of energy can be stored within them and they can provide a great deal of flexibility to our future energy markets.

Importantly, this flexibility could result in lower costs for consumers. In a report commissioned by SSE, Baringa found that Coire Glas, a consented PSH plant in the Scottish Highlands, would deliver about £70 million per annum benefit in social welfare and a reduction in consumers’ bills of about £215 million per annum.

As is the case with major infrastructure projects, a large investment is required at the front-end but, once developed, PSH plant have a very long operational life.

With a few adjustments, such as longer lead-in times for development we believe the existing mechanisms in the Capacity Market could give the PSH market the kick-start it needs in this country and help to secure the investment required to get new projects moving.  

If we provide the support now for PSH we believe we will look back in many years with the satisfaction of knowing that the path well-trodden was indeed the right one to take.

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