Economic and Carbon Costs of Electricity Balancing Services: The Need for Secure Flexible Low-Carbon Generation

The electricity sector aims to achieve a balanced progress in all three dimensions of the energy trilemma: affordability, decarbonisation and security of supply. Separate strategies for decarbonisation and security of supply have been pursued; each with close attention to minimising costs, thus consistent with the affordability aspect of the trilemma. However, while it is evident that the pathway for decarbonisation increases pressure on security of supply, the pressures that cost-minimising security of supply measures are putting on decarbonisation goes unaddressed. The United Kingdom (UK) is a global leader in the transition towards a decarbonised economy and aims to achieve net-zero emissions by 2050. As a major part of the UK, Great Britain (GB) has achieved greater than 50% of low-carbon electricity generation and the grid’s carbon intensity has dropped by 36% over the period 2015–2019. However, balancing services that provide security of supply uses only 8% of low-carbon generation. Their carbon intensity is double the grid’s average and this gap is widening. This is an effect of a systemic reliance on carbon-intensive fuels. Financial support for capital investment for flexible low-carbon technologies is much needed. The GB context suggests that an integrated strategy covering all three dimensions of the trilemma might achieve an improved balance between them and unlock an affordable, net-zero emissions and secure power system.

A secondary option market design for reserve procurement by renewable energy sources.

Wind power generation is uncertain and intermittent accentuating variability. Currently in many power systems worldwide, the total generation-load unbalance caused by mismatch between forecast and actual wind power output is handled by automatic governor control and real-time 5-minute balancing markets, which are operated by the independent system operators for maintaining reliable operation of power systems. Mechanisms such as automatic governor control and real-time 5-minute balancing markets are in place to correct the mismatch between the load forecast and the actual load. They are not designed to address increased uncertainty and variability introduced by large-scale wind power or solar power generation expected in the future. Thus, large-scale wind power generation with increased uncertainty and intermittency causing variability poses a techno-economic challenge of sourcing least cost load balancing services (reserve).

A secondary option market design for reserve procurement by renewable energy sources.

Wind power generation is uncertain and intermittent accentuating variability. Currently in many power systems worldwide, the total generation-load unbalance caused by mismatch between forecast and actual wind power output is handled by automatic governor control and real-time 5-minute balancing markets, which are operated by the independent system operators for maintaining reliable operation of power systems. Mechanisms such as automatic governor control and real-time 5-minute balancing markets are in place to correct the mismatch between the load forecast and the actual load. They are not designed to address increased uncertainty and variability introduced by large-scale wind power or solar power generation expected in the future. Thus, large-scale wind power generation with increased uncertainty and intermittency causing variability poses a techno-economic challenge of sourcing least cost load balancing services (reserve).