New National Grid connection 2021 forecasts are down nearly 70%

Issues affecting electricity generators and the energy market as a whole.

National Grid Transmission expects to connect just 11GW of new generation by 2021, down from 33GW projection set just 2 years ago - thinning UK capacity margins further.

The fact that National Grid Transmission announced recently that it expects to connect just 11GW of new generation to it network and 48 new Super Grid Transformers (SGTs) by 2021 was worrying. Why? Because its original predictions at the start of RIIO-T1 in 2013 were three times that - 33GW of new generation and 72 SGTs - predicted during the first eight year period to 2021.

RIIO-T1 is the first transmission price control review, led by OFGEM, to reflect the RIIO (Revenue = Incentives+Innovation+Outputs) regulatory framework. RIIO-T1 itself sets out what the transmission network companies are expected to deliver and details of the regulatory framework that supports both effective and efficient delivery for energy consumers over the eight years from 2013 – 2021.

The Grid blamed recent changes in political and regulatory environment for the downgrading of the T1 forecast. Cuts in support for renewables has had an adverse impact on the timing and amount of new generation connections to the Grid.

RIIO aims to help meet the investment and innovation challenges of decarbonising. It does this by placing much more emphasis on incentives to drive the innovation needed to deliver a sustainable energy network that offers value for money to existing and future consumers. The RIIO framework is designed to promote smarter gas and electricity networks for a low carbon future.

The Government took the view that subsidies on renewables was costing the consumer and the Government too much and that renewables could not deliver the guaranteed baseload that it was looking to replace as up to 21GW of oil and coal-fired power station and old nuclear capacity is set for closure over the next 10 years.

So we are set to deliver 11GW of new capacity over the next six years but will be losing at least 13.2GW during that time period according to forecasts. Meanwhile, seven ageing nuclear plants due to be decommissioned between 2014 and 2023, currently offering a total of 7.5GW between them, may have to have their lives extended to keep pace with demand before the first of the next generation of nuclear plants at Hinckley C is likely to come on stream in 2025.
But the problem of energy security isn’t just one for a few years hence – it’s already an issue as we strive to decarbonise and meet new EU rules on air quality. Jefferies, the investment bank, calculates that for 2016-17 just 53 GW of capacity will be available to meet forecast peak demand of 56 GW and this winter is the second winter on the trot that National Grid has had to line up emergency back-up capacity. UK capacity margins are at a seven year low and still falling - we are very close to the edge.

It seems clear that the Government needs to think again about incentivisation of new renewable generation rather than turning off this vital new energy tap too early. It also needs to back innovation in energy storage alongside renewables investment to limit losses of additional capacity that wind and solar power can deliver. We gave you some of the numbers in the last post but they bear repeating because they make the case on their own:

On current projections, by 2020 we are likely to be generating 28-30GW of wind energy alone. Imperial College estimated that if this happens, and no new investment in energy storage facilities is made alongside it, some 27% of that maximum power output will have to be effectively thrown away!
But just a 10GW/50GWh fleet of new storage facilities would effectively unlock the full potential of that wind power - cutting curtailment (shutting down of turbines) from 27% to just 7% of the usable time, effectively mopping up 31.4GW of wind power. Over the 25-year lifespan of a windfarm this could save £91.3bn.
We looked at the storage technology options last time - some well-proven and others needing more development and progress is being made already. The UK Government and OFGEM has already funded several demonstration projects over the last two years, including a fully automated 6-10MWh smarter network storage project hosted by UK Power Networks. This is expected to save more than £6m on traditional network reinforcement methods. S&C Electric Europe is already working with UK network operators to explore applications and business cases for energy storage and is credited with installing 20% of the world’s utility-scale batteries to date.

But appropriate market mechanisms need to be introduced to support this part of the market. In addition, the supplying companies themselves need to provide the business cases for larger storage projects now; and all this needs to happen quickly if we are to meet our decarbonisation targets while assuring UK energy security over the next few years and beyond.

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