One challenge of fine-tuning Britain’s electricity transmission network so that it operates efficiently 24/7 is finding ways to deal with congestion on the system. Constraint payments – made to generators to come on or off the grid – are one tool used by National Grid.
The winds of change
"We are right in the midst of a massive infrastructure investment programme that will equip our transmission network for the demands of the future."
Duncan Burt, National Grid Head of Commercial Operations.
The Western Link project will transmit 2,200MW of power, capable of meeting the electricity needs of two million people.
Source: National Grid.
Duncan Burt, Head of Commercial Operations, explains how these payments are helping to ‘bridge the gap’ while a major programme of infrastructure investment is under way.
I had the opportunity recently to speak to the BBC programme Countryfile on the subject of wind farms. I explained how National Grid manages wind on the system and how we deal with constraints – or congestion – on the transmission network.
Our electricity network is a bit like the motorways of Great Britain, built in a way that enables us to move power from where it is generated to where it is needed. We design the network so that it can cope with most of the flows we see typically each year. But just as a Bank Holiday weekend can lead to traffic jams heading for Cornwall and other holiday hotspots, there are times when the grid becomes congested.
Very few people would suggest building a parallel motorway alongside the M5 purely to deal with holiday hold-ups, and we face a similar challenge. It would make no sense to build bits of the grid that are rarely used. So we need to balance the correct level of investment in a stronger network with the cost and disruption to communities that major projects can bring.
This challenge is amplified by the increase in low carbon generation such as wind and nuclear power that we expect in the years ahead. These sources tend to be more remote from towns and cities, which in turn increases the need to reinforce the network.
How constraint payments work
A constraint happens when power cannot be transmitted to where it is needed and we need to take some action to balance the system. We do this to avoid potential overloads or instability on the network and one way is to pay generators to come off the grid for a short period of time.
Generators in Britain pay to have access to the transmission network around-the-clock so that they can choose when and how much power to generate. Constraint payments are compensation for when this access is unavailable due to system congestion.
It is worth stating that constraint payments are not unique to wind generation. In fact they have been in place for some time for coal and gas generators as well. It is a condition of our Transmission Licence from Government that we do not discriminate between different types of generation and hence we work in the same way with wind operators.
The cost of constraints
There were no constraint payments to wind-powered generation prior to 2010. Since then figures have varied from £7.6 million in 2012/13 to £49.7m in 2013/14. The figures up to the end of November 2014 show that £33.7m has been paid out in the current financial year. Of course, these are significant sums of money, but in the final analysis we need to balance the short-term and long-term options to determine the most cost-effective solution for consumers.
To put this into context, to meet our future energy needs and the UK’s target of generating 15% of all energy from renewable sources by 2020, there are effectively two options. We could hold off on connecting new sources of energy until the process of network reinforcement is complete – which would delay the construction of new sources of power – or we can connect new generation earlier and deal with the constraint issues that arise.
Following consultation in 2009, the Government has opted for the second route, which means we are seeing an acceleration in new connections. Constraint payments, therefore, are viewed as a necessary price to pay for bringing on stream as quickly as possible the significant new generation capacity we need as a country.
Our role and future investment
So, what of National Grid’s role? We are generation neutral and our job is to balance supply and demand on the system minute-by-minute; doing this in the most economical way within the framework laid down by Government and Ofgem.
At the same time we are right in the midst of a massive infrastructure investment programme that will equip our transmission network for the demands of the future. One example is the £1 billion Western Link joint venture project between National Grid and ScottishPower Transmission that will bring renewable power from Scotland to homes and businesses in England and Wales.
The project is important because it will help us to increase capacity between England and Scotland from 4GW to more than 6GW when Western Link is completed in 2016. The work involves laying 385km of direct current subsea and underground cable. At present we’re making progress with building the two converter stations at either end of the cable – at Hunterston in Scotland and at Flintshire Bridge near Connah’s Quay in Wales. We’ve laid 36km of shallow water cable off the coast of the Wirral and we expect work on the deeper water offshore cable and the onshore cable across the Wirral to start in the spring.
What lies ahead?
Although some congestion is a natural part of operating our electricity system, we have seen the congestion on the transmission network rise in the past few years as new sources of generation are connected, which in turn has led a spike in constraint payments. We are now nearing the end of this peak period as major upgrades are completed and from 2016 onwards we expect to see the level of constraint payments reduce.