Transformation of the UK energy system is gathering pace with more decentralised power and an increasing reliance on electricity to heat homes and power transport. At the same time, climate change is bringing more unpredictable weather.
But what does providing reliability and resilience mean to network operators, regulators and – most importantly – customers, both now and in a future energy system? Network operators, innovators and regulatory experts came together with representatives from S&C Electric to discuss this important topic at a Utility Week roundtable.
These are the key themes that emerged.
Unmanaged flexibility is a new risk to the system
The way the UK system is structured today is a product of the industrial revolution, and as we go through the energy revolution it will look very different in the near future. That was the view of participants, who were concerned that the public did not have a full picture of the changes coming down the line.
“There’s going to be a lot of flexibility, a lot of customers who work with us by selling energy and services back to us, lots more options to get involved in the energy mix, and more options for us to run a more flexible network, to provide more capacity out of existing networks,” was how one network participant described it. This would bring challenges and complexity to the network and its ageing assets, some of which are 100 years old.
It was agreed that unmanaged flexibility is a risk for the system. Another attendee noted: “We’ll see a lot more demand-related faults on the system than we’ve seen before, which at the moment is very rare in most networks. I think we’ll see various new failure modes emerging, ones we’ve not had to deal with before – failure to deliver flexibility services, communication systems going down, etc. So we’ll need to be ahead of the game in terms of understanding these new failure modes, and making sure that we can deal with them at scale.”
It was also thought that the current regulatory framework was not set up to deliver on this and that changes were likely to be needed in order to maximise future benefits.
Short interruptions will present a bigger reliability challenge
Network operators made the point that customers are increasingly concerned about short interruptions such as brief power cuts, which they felt were not acceptable in the 21st century. Certainly, it was felt that networks would need to reduce interruptions to meet the changed expectations that had come in the wake of the pandemic, which has led to more people working from home and created a greater reliance on a reliable supply. One attendee noted that customers’ number one concern was “repeat interruptions”, including short interruptions. “You see Ofgem rightly responding to this by looking at standards and the value of short interruptions,” he added.
It was felt that technology would eventually provide a future where networks would be aware of every fault before it happens and that DNOs would be able to make a proactive decision on what action to take regarding an impending fault, rather than being reactive.
While there was consensus that more could be done to monitor the network to enable faults to be predicted, it was also felt that more needed to be made of the data collected.
“A lot of people talk about data, but it’s a social asset, and it should be for the good of that community. But we do need better data as network operators,” said an innovation specialist.
Another participant pointed to end user data as being critical. “Understanding what consumers really value when it comes to using energy is going to be key.”
We need to balance reliability and resilience with affordability
The problem, our guests said, was that while some in society would have their own in-built resilience, there would be others who would not be able to afford behind-the-meter resilience solutions like batteries. One guest noted: “About six million people are now behind in their household bills. Solutions will have to be cost effective so as not to exacerbate this affordability challenge.”
“Ultimately, we’re conflicted by the fact that the system is changing, the sources of energy are changing. We’re moving to lots of decentralised sources, and we’ve got to adapt to that.”
Differing expectations and problems around affordability made one participant question whether the same level of reliability would need to be delivered to everyone. “If you can attribute value to better reliability, and consumers are aware of that value, they can make choices about whether they want different levels of reliability, and how much they’re willing to pay for it,” he said.
There was a mixed response to this idea, with one commenting: “I agree that those who are self-resilient will need less investment, but we can’t have people priced out of resilience either.” Others felt that having twin-track reliability levels would not be practical given how the network operates.
The conversation turned to how resilience can be bolstered. “We all accept that electricity demand is going to increase over the next 30 years. At the moment, we all benefit from a degree of redundancy in the existing network, in part because demand has fallen, but also because of the way these networks have been designed,” observed one attendee. He added: “But as demand grows, the headroom will be eroded, unless we invest. And as that headroom erodes, the reliability of those networks can fall.”
Another guest noted that “consumer choice and trends will drive this and may lead to increasing levels of investment.
“This is a very different proposition for regulators, who are traditionally risk averse. But the way we’re going with increased demand, if we wait until that demand arrives, we’ll never have time to make the investments needed to keep the networks reliable,” he said.
One idea mooted was whether there needed to be a hybrid model in which some aspects of the energy system are treated as a public good which needs to be protected for reliability, but with another portion that is more flexible.
One guest commented: “People often use the example of the internet. The backbone of the internet is relatively fixed from country to country, and businesses and consumers all operate that on a fairly standard basis. But then what goes on it is extremely flexible. Is there a way in which the energy system can move that way?”
Another innovation expert compared the situation to the rollout of broadband. “If you look at the rollout of broadband, it’s quite clear that there were significant parts of society left behind, precisely because we were given that choice. If we want everyone to get this at a fair price, we’ve got to make difficult decisions.”
One expert noted: “I can see a world where my neighbour doesn’t care about short interruptions, they’d rather see a cheaper bill. I choose to put a UPS in my home that keeps the power on for an hour, so short interruptions basically don’t exist to me anymore. Whereas my neighbour is paying 20 per cent less, but does get short interruptions.”
The need for regulatory change and investment
It was mentioned earlier in the discussion about the need for regulation to match the increased issues of resilience.
One attendee pointed to the scale of the challenge faced. “In my perception, there’s a huge amount of work to do out there. We need to get on with it, and the only way to do that is to get ahead of the curve, and start investing ahead of need,” he observed.
“We’ve got a planet to save, and we can’t waste time. And it’s going to cost money. Our goal is to achieve it at minimum cost,” he said.
Reflecting this view, it was generally agreed that RIIO2 represented a significant opportunity to address this challenge and to enable the investment required to support the energy transition.