Is flexibility expertise tomorrow’s export opportunity?

Ofgem is getting a new chief executive. Jonathan Brearley will take over in February at a time of “unparalleled change in the energy industry,” according to the regulator’s chairman, Martin Cave.

But while the new chief executive may be pressed to focus on highly public issues like decarbonization and price caps, we hope that he won’t forget about the little details of how a national grid distributes power to and from customers – the little details that loomed large in early August after the lights went out in the UK’s first significant blackout for more than a decade.

These details are in fact massive. Electric energy has come to underpin most of our modern lives – our homes, our work places, our transportation links, our Internet connections. Energy is critical infrastructure, and the UK is on the verge of making significant gains in network security and emissions while saving tens of billions of pounds in the process. But only if the grid evolves in the right direction: flexibily.

The UK’s energy distribution system is a good one, as national grids go. But there are still many antiquated aspects about how the country’s utilities are run, and big efficiency gains to be made.

In North America’s sprawling energy market, where Opus One Solutions does most of its business, local networks are only beginning to see the potential for flexible, or “distributed”, energy

 

Hari Subramaniam

We’re moving away from 1:1 transmission between big companies and consumers. Less new capacity is coming online from the central power plants, while more is emerging at the edges of the grid – from innovative companies like Tesla, SolarCity and Honeywell, from wind farms, from micro solar grids, even from individual electric vehicle owners, who can charge when demand is low and discharge their batteries into the system when demand is high. New business models and platforms are emerging.

And more will be required, because flexible energy resources complicate management of supply and demand. Lightning was the official cause of the UK blackout, but the challenge of accurately measuring and modelling real-time power needs and supply was already well documented across the global utility industry. National Grid experienced three “near misses” in the months before the UK blackout and The Guardian reported that executives knew they were “walking blind” without accurate estimates of grid stability.

But these issues can be managed. And the problems are far outweighed by the benefits of system flexibility.

A more flexible energy system is a more secure system. With proper safeguards, there will be more backup, more potential capacity and more peer-to-peer sharing to lean on in case of accident, incident or severe fluctuations in supply or demand.

A flexible network is also cleaner, because it allows for increased use of renewables. Our company, Opus One Solutions, worked on a flexibility project with Scottish Power Energy Networks, known as Fusion, designed to show how network operators can unlock flexibility in a distribution network by inexpensively easing congested power flow. In the process, it found an estimated saving of 3.6 million tonnes of carbon dioxide by 2050.

Critically, flexibility creates a much more democratic market. It rewards a greater number of energy players, including smaller players. As utilities move from 1:1 transmission to a role more akin to Distribution System Operators, they will be able to securely operate and develop distribution systems that offer competitive access to markets and the best possible use of energy resources.

This competition helps drive down the cost of energy for everyone – consumers, government, industry. A smarter, more flexible energy system could save the UK somewhere between £17 billion and £40 billion by 2050, according to Ofgem and the Department for Business, Energy and Industrial Strategy, citing research conducted by the Carbon Trust and Imperial College London.

That’s not even counting the potential for growth in exporting the UK’s newfound expertise abroad. In North America’s sprawling energy market, where Opus One Solutions does most of its business, local networks are only beginning to see the potential for flexible, or “distributed”, energy. Even the progressive utilities are still in pilot mode in the US, where flexible energy is poised to double in the next three years.

As such, advice and experience are going to be at a premium, because the financial implications matter immensely. It’s no longer a simple matter to allocate massive public spending on new energy infrastructure. In the UK, Labour has called for renationalisation, but whoever owns it, the grid will always serve the public better if it’s operated flexibly.

Brearley and Ofgem will have plenty of additional issues to manage. But the details around energy flexibility are incredibly important, because the potential benefits are so compelling.

By Hari Subramaniam, chief of strategic growth, and Hisham Omara, vice-president of strategic growth at Opus One Solutions.

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