Payments to generators to manage a bottleneck on the transmission network between Scotland and England will surpass £1 billion in 2026, modelling by LCP has suggested.
For comparison, the electricity system operator (ESO) at National Grid currently spends £450 million per year managing thermal constraints across the whole of Great Britain. LCP said similar constraints in East Anglia and the South West are also expected to increase costs significantly.
The report was released in response to the launch of the ESO’s constraint management pathfinder in December 2019, which according to the consultancy highlighted an “elephant in the room” for the energy industry; that “unless innovative solutions are identified and brought forward, the current network infrastructure cannot support the expected increase in renewable generation capacity in Great Britain and significant amounts of this power will be curtailed.”
The pathfinder will look to secure 200MW of flexibility to help manage constraints at the transmission boundaries between Scotland and England and the north of England and the midlands. This flexibility will be activated in the event of a network fault, unlocking spare capacity that would otherwise have to be kept aside as a safety net.
LCP said the project could save consumers as much as £40 million per year but this is “a relatively small impact” when compared to the more than £1 billion its modelling suggests will need to be spent in 2026 just to manage constraints across the boundary between Scotland and England.
Constraint costs and time constrained for transmission border between Scotland and England
“The reason this process is expensive is because when National Grid ESO turns a generator down on one side of a network constraint boundary it has to turn another generator up on the other side of the constraint to keep the system in balance,” the report explained.
“The generator being turned off gets compensated because it can no longer sell the power it promised to the market and the generator on the other side of the constraint boundary gets paid to produce power. This is particularly costly when the generator being turned down/off receives subsidies as National Grid ESO must compensate the generator for its lost subsidy revenue.”
Limits on the amount of power that can be transferred from Scotland to England would mean that for more than 40 per cent of the year renewable generation would have to be curtailed and “almost certainly replaced with carbon emitting generation sources south of this boundary.” LCP forecast the impact on emissions to reach 4.5 million tonnes in 2026.
“Most estimates for carbon emissions from electricity production in the future fail to take constraints into consideration,” it warned. “If these are not taken into consideration, we could significantly underestimate emissions and fall short of our emissions targets.”
Emissions due to transmission constraints between Scotland and England
The firm, which developed the dynamic dispatch model used by the Department for Business, Energy and Industrial Strategy, said it expects to see significant drops in both emissions and constraint costs in 2027 and 2029 following the completion of two 2GW high-voltage direct-current cables between Torness and Hawthorne Pit and Peterhead and Drax.
It noted that the projects were originally scheduled for completion in 2023, several years ahead of the peak in constraint costs, but were delayed due to the lack of guaranteed funding through network price controls.
Given the long lead times for infrastructure projects, LCP head of market insight Kyle Martin said there is now little that can now be done to significantly lower the projected bill beyond what the ESO is doing already.
However, speaking to Utility Week, Martin said the findings demonstrate the importance of promptly delivering additional network capacity, whether through reinforcements or flexibility.
Although LCP has not yet undertaken the equivalent analysis for these areas, Martin said costs are also likely to rise significantly as a result of similar constraints in the South West and East Anglia, which are home to large and growing volumes of solar and offshore wind generation respectively.
He said there may be a case for building a new transmission circuit running the around the South and East coasts of England to help transport power from offshore windfarms, in particular towards to London.