What happened to the UK’s electricity balancing markets during Covid restrictions?
An acceleration of net zero in recent times, and a pathway to a sustainable future
A legacy grid design, to be simultaneously reliable, affordable, and sustainable, requires solutions from first principles innovation to be fit for purpose in a Net Zero future
The total value of the Balancing Markets more than doubled during the 2019-2021 period
Covid-19 and its variants caused a global reduction in average historic energy demand due to government mandated restrictions before easing again as countries moved to more normal consumption patterns when economies returned to growth. Electricity consumption levels, in the UK for example, fell to its lowest level this century in 2020. The coupling of lower demand and normal levels of renewables generation has given us a glimpse into accelerated net zero emissions behaviour with the increase in the ratio of generation supplied by renewables relative to demand. In particular, the electricity balancing services of Electricity System Operators, have been strained with some of these markets more than doubling in size during these periods. This article examines the observable effects in the Great Britain Balancing Market and highlights that a legacy grid design, to be simultaneously reliable, affordable, and sustainable, requires solutions from first principles innovation to be fit for purpose in a Net Zero future.
In the figures below, we map England and Wales demand[1] in 2019 when there were no Covid restrictions and compare to years 2020 and 2021 when restrictions were in place.
In 2020, restrictions ranged from full lockdowns in March – June 2020, minimal lockdown restrictions in July – September 2020, reimposing restrictions September – October 2020, the second national lockdown in November 2020 and finally a tiered system in December 2020. The impact in 2020 was, on average, approximately 7.1% less demand than 2019.
The third national lockdown took place in January – March 2021, with a staged exit from lockdown in March – July 2021. The impact on demand in 2021 was smaller than 2020 and, on average, demand was approximately 3.2% lower than 2019.
Figure 3 – England Wales Demand v Covid Restrictions in 2021
Figures 4-6 below show generation of wind and solar[3] during 2019-21:
The corresponding GB balancing markets from 2018-2021 are shown in Figure 7 below:
The total value of the Balancing Markets more than doubled during this period:
GBP £1.2 billion in 2019
GBP £1.79 billion in 2020
GBP £2.65 billion in 2021
This is unsurprising. As the share of wind and solar rose, their negative impact on the grid also rose. These resources are unable to respond to changes in demand, creating challenges for maintaining frequency stability as well as storing excess renewable generation and filling gaps in generation. They also introduce noise and harmonics to the network, damaging equipment and reducing the network’s capacity. Finally, the map poorly to demand, increasing the need for network capacity to transport renewable energy to demand centres.
We can therefore observe that a net zero trajectory places more financial pressure on the end consumer who pays for these higher balancing costs through rising non-commodity electricity prices. The top three segments that spiked during the Covid period are Constraint payments, Operating Reserve and Frequency Response; the remaining market segments appear to have remained relatively stable.
At their peak, Constraint Payments to (largely) turn wind generation off, increased almost 7x on historic levels. National Grid defines “Constraint” as Constraints Transmission - the costs incurred when there is a need to increase or decrease power flows from one part of the network to another part of the network due to a limit on the transmission network (i.e. the constraint). Constraints Rate of Change of Frequency (ROCOF) are the costs that arise from reducing the size of the largest possible infeed loss or bringing on more generation to increase the amount of inertia.
Operating Reserve increased almost 15x. Positive Reserve is required to operate the transmission system securely and provides the reserve energy required to meet the demand when there are shortfalls, due to demand changes or generation breakdowns. It is managed in the Balancing Mechanism, through trades, or System Operator-System Operator services.
Frequency Response more than doubled. This is a service used to keep the system frequency close to 50Hz. Fast acting generation and demand services are held in readiness to manage any fluctuation in the system frequency, which could be caused by a sudden loss of generation or demand.
Examining the Frequency Response sub-markets during the Covid lockdown period, it illustrates the effect of high wind and low demand as an acceleration of Net Zero tendencies on the power network. As well as material increases in Constraints, Operating Reserves and Frequency Response, we can see that within Frequency Response the largest markets are Balancing Mechanism Response and the Firm Frequency Response and its replacement scheme Dynamic Containment as Figure 8 illustrates:
These spikes in the Balancing Market segments for these top three areas show the inherent and dramatic cost increases that will accompany the convergence of Net Zero emissions with the existing grid. The Covid experience highlights the risk that the cost of balancing the network will derail the adoption of renewable generation, imperilling the decarbonisation of the power system.
Enoda take the approach of first principles innovation in fundamental physics to help balance the prevailing legacy grid design, at lower and more affordable costs to society. Enoda is able to provide Balancing Market services through our unique power flow technology, Prime, which is installed in the distribution network, actively correcting the signal and helping maintain network frequency, at the lowest marginal cost. By shifting the source of stability from the spinning mass of thermal generators to the network itself, deployment of Prime at scale will ensure that renewable resources can be fully utilised, that consumers can benefit from their low cost, and that the electricity system can operate with 100% renewable energy.
[1] Historic Demand Data, National Grid ESO, https://data.nationalgrideso.com/demand/historic-demand-data
[2] The 50,000 MW for the Covid line in Figures 1 and 2 is arbitrarily selected just to highlight when the period of Covid restrictions took place
[3] Historic Demand Data, National Grid ESO, https://data.nationalgrideso.com/demand/historic-demand-data