As we head into another May bank holiday under lock down, National Grid is forecasting record low power demand with potential high generation surplus. If it’s sunny on Saturday, which is it very possible, we could see an additional 4.2GW of extra power on the grid. A huge challenge for the grid to deal with, potentially leading to renewable generators being told to switch off, and something that could cost £500 million through the course of the summer.
It is a challenge that with some degree of foresight from policymakers to enable the clear appetite in the market for investment in battery storage, could have been avoided. Or indeed been an opportunity — imagine if we could store all of that surplus clean power.
Over the past five years we have been increasingly frustrated with government’s approach on the future of energy. The obsession with building more inflexible, expensive nuclear and the lack of foresight and diversity is staggering. Today we are seeing the evidence that such a policy is both short sighted and frankly childish.
The concept was simple — work out the detail and then raise funds to roll it out. The battery would support the site with its changing energy needs and in the future potentially support both the national and local grid. But following the announcement, a string of illogical policies battered away at the business case
The complete lack of leadership, policy and frankly intellectual rigour has led us to a place where very few batteries have been invested in here in the UK despite the interest across both equity and debt markets.
The fundamental issue is that we have a marketplace that is not fit for purpose. A capacity market that is broken, a set of contracts that don’t encourage investment and a wholesale market that is inflexible, and are we seeing the impact of that today. The lack of diversity in our future thinking is bereft of challenge.
The hilarious irony is that renewables have long faced the criticism that they provide too little power, so the thought that they might produce too much has not dawned on the naysayers. It’s easy to switch of a wind turbine or a solar panel with just the flick of a switch. Or indeed a tidal power plant and hydro station — just let the water run through. We could do that today. But the market isn’t ready. The complexity of it creates too many conflicts.
And the renewables industry isn’t innocent, the CFD as a mechanism allows no capability for flexibility, so even if power prices go negative these sites will continue to generate.
What we need right now is some leadership. Let’s get rid of the capacity market, it’s not delivering the right outcomes – if we have the situation we are in today. Let’s rethink the wholesale market, and come up with a more equitable way of managing our power. But finally let’s not build any more nuclear power stations, they just don’t fix anything.