Few people realise that despite Brexit, the UK is embarking on a large expansion of its electricity interconnections with the European mainland. Is this a good idea, asks energy finance consultant Gerard Wynn? Wynn, who has just co-written a report on the Electricity Grid Transition in the UK, points out that the UK-France interconnector came under tremendous pressure last year, but in the end proved its usefulness. Courtesy Energy & Carbon blog.
Recently, there has been rising agreement that new investment in interconnectors is vital to solve the riddle of achieving a secure and affordable low-carbon power supply. That is no more true than in isolated electric grids, such as in Britain, Spain and Italy.
But did huge setbacks and handicaps troubling the UK-France interconnector in 2016 undermine this growing consensus?
Interconnectors are cross-border cables which can smooth variability in renewables such as wind power, by reaching wider weather systems. They can also diversify generation – eg Britain can tap hydropower in Norway, whose supply peak matches UK peak demand in winter. And they can access cheap imports. In Britain, with lower historical wholesale power prices than its neighbours, the National Grid estimates that a doubling of interconnection capacity would lead to consumer savings of £1 billion annually as a result of cheaper imports.
But one worry is that when things go wrong, interconnectors can be a double-edged sword, sending electricity the wrong way – ie exporting to a neighbour, when you need it most.
Britain’s biggest and oldest interconnector is the IFA sub-sea cable to France. At 2GW, it supplies half Britain’s entire 4GW interconnection with its neighbours.
And things went wrong last year! At least from a UK view. First, some 43 days of maintenance outages were already planned in France in 2016. Second, multiple French nuclear closures drove up wholesale power prices in France in the second half of the year, relative to its neighbours. As a result, electricity started flowing out of Britain. And third, half of the eight cables were severed by an inconvenient trailing anchor, dropped by a ship caught in a storm on Nov. 30, halving capacity into the start of 2017.
The result of all these impacts is shown in the figure below. The maximum daily power flows in any direction is 48,000 MWh (2,000MW capacity times 24 hours). First, we see an outage which halves capacity in May.
Second, we see net flows to the UK gradually falling from the end of June, as French nuclear outages kick in (due to safety checks at 22 of the country’s 58 nuclear reactors). Net UK flows plunge to zero as French power prices spike from September, in response to news that EDF would extend the closure of 12 nuclear power plants. Net flows then turn negative in Oct and Nov, as French baseload power prices reached their highest level since 2012, exceeding prices in the UK.
The impact of an anchor ripping through the interconnector is seen from Nov 30, when maximum flows in either direction were halved through the end of Feb. 2017. From March 2017, a more typical picture returns, with large net flows to the UK.
Figure. Net daily power flows from France to the UK, through the IFA Interconnector (MWh)
Source: Gridwatch (http://www.gridwatch.templar.co.uk/download.php)
The question I posed at the top was, does this mean interconnector benefits have been over-cooked?
Actually, it appears not. Even in this unprecedented year, flows through the interconnector were bang in line with those cautiously allowed for by the regulator, Ofgem.
Ofgem assigns what it calls a de-rating factor to power plants, to estimate how far they can be relied upon. This adjusts or “de-rates” power plant capacity according to likely availability. The lower the de-rated margin, the higher the loss of load probability, meaning the higher the chance that supply will fail to meet demand. For the IFA interconnector, that de-rating factor is 55%. Apply that factor to its 2GW capacity and you get annual new flows to the UK of 9.6TWh. Last year, net UK imports were 9.9TWh.
I think Ofgem should take a bow.
What does this mean? For me, it shows that Ofgem factored in a worst-case scenario pretty well. Last year was atypical.
More importantly, I think it means we can trust Ofgem estimates for the de-rating factor of interconnectors in the project pipeline.
These are summarised in the table below, taken from a report by IEEFA this week, which I authored. Please do read the report, “A U.K. Electricity Transformation Under Way, But in Need of Better Direction“.
As I mentioned in the report, this table suggests potential additional supply of 49 TWh annually by 2025 (67 TWh in 2025 vs 18 TWh estimated in 2016), if all these interconnector projects proceed. That is equivalent to more than a third of UK gas generation in 2016.
So it turns out that interconnection is a valid way to go, for Britain to solve that riddle, of a secure, affordable, low-carbon grid.
Table. Planned UK interconnectors, with estimated generation, applying Ofgem de-rating factors
Gerard Wynn is an independent energy finance consultant. This article was first published on Gerard Wynn’s and Gerard Reid’s excellent Energy & Carbon blog and is republished here with permission.
Wynn has just published a new report, Electricy-Grid Transition in the UK, with David Schlissel, published by the Institute for Energy Economics and Financial Analysis (IEEFA). This report presents a detailed recent snapshot of the UK electricity market. It assesses the performance of this market four years after reforms were implemented intended to increase the cost-effectiveness of new renewable power capacity and bolster grid security by incentivising reliable new generation. The hope at the time was that the introduction of capacity markets would prepare the UK adequately for the energy transition, but the report concludes that so far the effort has done little more than support the status quo.