Watts the holdup?
How does the grid work? Why is there a limit? What solutions can technology provide?
The UK's 'grand' ambition to become a net-zero carbon nation by 2050 has encountered a significant bottleneck. Zoisa North-Bond, Chief Executive of Octopus Renewables, has referred to grid access as the "biggest limiting factor" in increasing the share of renewables. The Financial Times reports that approximately 600 projects, with a combined capacity of 176GW, are in the connection queue in England and Wales, compared to the 64GW of connected capacity. Some battery, wind, and solar projects are being informed that they must wait until 2036 for a connection. The grid, initially designed for a small number of fossil fuel generators, is struggling with the transition to a more geographically dispersed range of renewable suppliers, resulting in higher lead times and costs and thus delaying crucial carbon emissions reductions.
Primer on the functioning of the grid
Before diving deeper into the UK's grid connection challenges, it's essential to understand the basics of how the power grid works and why there is a maximum capacity for electricity. The power grid is a complex network of interconnected components, including power generation plants, transmission lines, substations, transformers, and distribution lines, all working together to deliver electricity to consumers.
Using a road system analogy, electricity travels from power generation sources through the motorway (high-voltage transmission lines), then, electricity goes on to quieter roads via substations, which convert this high voltage to a lower voltage, suitable for distribution to homes and businesses. Transformers, located on utility poles or underground, are cul-de-sacs that further lower the voltage to a level that can be used by consumers.
There is a maximum capacity of electricity on the grid due to the physical limitations of the infrastructure. Transmission lines, substations, and transformers are designed to handle a certain amount of electricity safely and efficiently. When demand exceeds this capacity, it can cause damage to the infrastructure, potentially leading to blackouts.
As well as having a maximum capacity, the grid is constantly trying to manage the flow of electricity so that electricity usage and supply are in equilibrium at 50 Hz (in the UK). With renewable energy production from solar and wind, which is stochastic in nature, it is becoming a lot harder to manage this, and there is often a mismatch between peak energy demand and supply.
Why is there a backlog?
In short, the demand for a ‘slot’ connected to the grid has far exceeded the supply of ‘slots’. By 2050, in the UK and many other developed countries, electricity consumption will likely more than double. The speed at which we can increase energy generation capacity is far greater than the speed at which we can increase the capacity of the grid, meaning we have a backlog.
Hardware is expensive and takes a long time to build. The size and complexity for hardware in the grid are even worse. In the US for example, it costs $2 million per km of transmission lines. These projects need to be started years in advance of any power generation being connected.
Due to the sheer scale and level of interdependency in the grid, it's a super complicated technical challenge. Turning on a light switch in a home can change the currents and voltage throughout the wiring system, and in the same way, the addition of one node to the network of generators and consumers can destabilise the whole grid. This complexity has meant there is a ~10% efficiency gap between energy generated vs consumed, generating tremendous opportunity for better utilisation of the grids current capacity.
Part of this was due to ineffective regulation and demand management practices. For example, Ofgem does not allow network companies to discriminate between projects seeking a connection, whereby connectees are treated on a first-come, first-served basis. Until recently, Ofgem (the grid regulator) prohibited any investment in upgrades until a connection proposal was fully agreed upon, which meant that the process of connecting the grid to the power generation site could only begin after the planning and permission of the generation site were sorted out.
In late 2022, however, there were several encouraging developments in addressing the grid connection backlog. On the National Grid's register, projects with a low likelihood of completion could leave at no cost or for a reduced fee. Additionally, Ofgem is revamping its procedures, mandating that queued projects meet specific milestones or risk losing their position in the queue. Even with these advancements, the extension challenge remains; the most we've ever achieved is just over 6GW per year, and the average need to meet the 2035 net-zero target is 14GW per year.
What can tech do?
One solution to the grid extension problem is the implementation of distributed energy systems. By incorporating small-scale, decentralised power generation sources, such as rooftop solar panels or local wind turbines, distributed energy systems can reduce the pressure on the centralised grid infrastructure. This approach allows energy to be generated closer to the point of consumption, reducing transmission losses and congestion, and improving overall system efficiency.
In addressing the efficiency gap, a variety of technological solutions are emerging that go beyond grid extension. We can classify these innovations into three main categories: supply-side, demand-side, and grid management solutions.
On the supply side, we have two key solutions: flexible generation and battery storage. Flexible generation comprises resources like natural gas plants, hydroelectric facilities, and other dispatchable renewable energy sources. These power plants can respond rapidly to changes in demand or intermittent renewable energy output, ensuring a reliable energy supply. Battery storage, another essential component, helps to maintain balance between supply and demand. These energy storage systems store electricity when supply is high and release it when the supply is low, contributing to a more stable power supply.
Turning to demand-side solutions, we find two main strategies: demand response and electric vehicle (EV) smart charging. Demand response involves financial incentives, time-of-use pricing, or direct load control by utilities, encouraging consumers to adjust their electricity consumption in response to grid conditions or pricing signals. This helps balance demand and supply. EV smart charging, on the other hand, employs managed charging systems that optimise the timing and rate of EV charging, reducing peak demand and better aligning with grid conditions.
Lastly, we have grid management solutions, which include Optimal Power Flow (OPF) and Dynamic Line Rating (DLR), as well as other smart grid technologies like advanced sensors, control systems, and communication networks. OPF algorithms help optimise the power flow within the grid to minimise costs, losses, or achieve other objectives while adhering to operational constraints. DLR systems and other smart grid technologies provide real-time information on the actual carrying capacity of transmission lines and grid conditions. This data enables better load balancing, demand response integration, and overall grid stability.
Insights from the experts
I spoke to Jerome Minney recently, a founder leveraging AI to solve the OPF problem, who shared with me his insights about the problem and how technology can help solve this issue.
While grid extensions can be costly and time consuming, technology can offer us more efficency and utilisation whether that’s reducing the efficiency gap through OPF or through smart solutions to both the consumption and production of energy. We can increase the capacity.
The UK's ambitious net-zero carbon emissions goal by 2050 faces grid connection backlogs as a significant challenge. Innovative solutions, such as distributed energy systems, AI to solve OPF, and grid-enhancing technologies, combined with smart grid infrastructure, can resolve these issues and accelerate renewable energy integration. By fostering an environment that encourages public-private collaboration, streamlining permitting processes, and investing in sustainable energy infrastructure, the UK can surmount the grid connection challenges.