The UK could save millions, if not billions, of pounds every year if it properly invested in tackling electricity losses, according to innovators seeking to get their products into the country’s grid infrastructure.
Over the last 10 years, electricity losses in the UK have been almost double net imports (on average 27TWh lost versus 16TWh imported), analysis of government DUKES (Digest of UK Energy Statistics) figures show.
Enertechnos chief executive Dominic Quennell – who carried out the analysis – told Utility Week that the significant losses highlight a major issue with the UK’s “creaking” grid infrastructure.
He points out that the 27TWh of electricity lost on average each year exceeds the 26TWh that Hinkley Point C is expected to generate annually when it comes online.
“To put that in context, Hinkley Point C is now going to cost £33 billion and the strike price is set at £92.50 per MWh in 2013 prices,” he said.
“However, the standout number for me is the value of what the plant is going to produce – even at 2013 prices it will cost £2.4 billion per year for electricity and that doesn’t even cover the amount of losses in each of the last 10 years.”
Quennell added: “So that is the key point. We are willing to spend £2.4 billion per year to generate that amount of power, but we are not paying any attention to reduce the losses.”
On the transmission network, the percentage of network losses is lower than on the distribution network.
Recent research by Citizens Advice suggests that about 1.7% of the electricity transferred over the transmission network is lost, and a further 5-8% is lost over the distribution networks.
National Grid Electricity System Operator’s research into electricity losses concludes that losses are higher at a distribution level “because transporting electricity via a lower current and high voltage causes lower network losses”.
It adds: “The transmission network operates at ultra-high voltages to transfer bulk energy across long distances – which minimises losses. However, higher voltages require better electrical insulation which makes the cost of building and maintaining the transmission network more expensive.”
Quennell – whose company has developed a new cable design which it claims reduces losses – said the government, regulator and the DNOs themselves “can no long go on sweeping the issue under the carpet”.
He has encouraged Ofgem to revisit the losses discretionary rewards (LDRs) mechanism which was on offer during ED1. It encouraged and incentivised DNOs to improve their understanding and management of electricity losses, but was subsequently removed following low take up from the network operators.
“The principal justification was that not enough of the DNOs were applying for it. My view is that it was allowed to wither on the vine,” Quennell said.
“Talking with people I know at Ofgem they said they just didn’t get enough traction with the DNOs but speaking with some of the DNOs they say that it was just too difficult and it didn’t work because of the way it was set up.”
Speaking to Utility Week, a senior engineer at one of the DNOs said that losses are “taken seriously” by the network operators but there needs to be a “refined way to incentivise” companies to do more.
“LDRs were good in principle, but in reality they were too convoluted,” they said. “There needs to be a clearer mechanism which is easy to apply for and which rewards the work to tackle losses.
“It needs to be a substantial reward that recognises how difficult it is to actually do this. Losses can be lowered, no doubt, but it takes a lot of work and there has to be some financial compensation for trying to reduce losses as it involves risk as well.”
Maxine Frerk, former senior partner at Ofgem, also believes that incentives to reduce losses should be brought in by Ofgem to spark change.
“Ofgem seems to have accepted an increase in losses as inevitable as loads on the network increase. But to me that’s a reason to pay more attention to them not less,” she said.
“There are a range of actions the companies can take from using new low loss equipment to operational actions to balance loads across their networks – but without a clear signal from Ofgem that these are important they won’t be a priority for companies.”
In response, an Ofgem spokesperson stressed that DNOs have a statutory licence obligation in place to ensure distribution networks keep electricity losses as low as possible.
The spokesperson added: “Networks face the prospect of action if they don’t comply with this. Some losses are inevitable in the normal operation of an electrical system, and these should not be confused with loss of supply.”
Enertechnos chief operating officer Gareth O’Brien believes that as well as regulatory incentives, there needs to be a greater focus on embracing innovations within the DNOs’ internal structures.
He added: “The problem at DNOs is everyone is on standard pay increments, at the end of each year everyone who hits their KPIs gets their pay rises signed off and moves through the organisation at a desirable pace.
“If you are involved in something truly innovative that has the potential to make a big difference but ultimately does not deliver, then that follows you culturally throughout the organisation.
“There is no upside at the employee level to do anything new or innovative. Across the DNOs, across the grid, there is no upside for Joe Engineer to take a calculated risk and put something new into the network – whether that’s a fancy new transformer or a new cabling system.
“You cant blame the lads with the day jobs, employees within DNOs need to be incentivised to innovate and they are not.”
The lack of incentive to embrace innovations is a common problem across Europe, according to Layla Sawyer, secretary general of Current – an industry association representing innovative grid technology companies.
Sawyer said that rhetoric around innovation does not align with the reality, with grids around Europe reluctant to implement something new unless it has been proven to work elsewhere.
“Many of our members have innovative grid technologies that are already commercially available, but are not being deployed at a meaningful scale,” she said.
“Companies are spending years doing pilot after pilot across Europe. The regulatory framework should do everything possible to avoid a death-by-pilot and implement the technologies that have already been tried and tested.”
Quennell added that the difficulty in getting new products into grids shows that “there needs to be a more meaningful approach to get more innovation in grids because there are lots of companies around the world – whether it is cabling, or transformers or materials – who are all knocking at the door saying ‘we can help you with this problem’”.
He continued: “We have to deliver double the amount of electricity by 2040, so we have to invest now. The nature of the problem has changed, so the nature of the solution needs to change. This is not your grandad’s grid anymore, and everybody knows that, but our frustration is to get people to be supportive of innovation and that starts at DESNZ and then Ofgem and then feeds into the grids.
“We can’t eliminate losses, nobody can do that because Oms law gets in the way there but we can certainly reduce some of the impedance and we’d love to help. But first people need to get their heads around the scale of the problem – that’s why when you compare the losses to the capacity at Hinkley Point C you say ‘crikey’ that is a really big issue. And it is not something you can keep sweeping under the carpet and say it is someone else’s problem.”