The Energy Transition | Ofgem consultation on Capacity Market Rules, new energy storage site to be developed in Yorkshire, Caldera launch domestic heat battery and Europe’s hydrogen strategy

Written on 21 May 2021

This week we focus on Ofgem's publication of a consultation on the Capacity Market Rules, Renewable Energy Systems' development of an energy storage project in Yorkshire, Caldera's new domestic heat battery and Europe's hydrogen strategy.

Ofgem publishes statutory consultation on Capacity Market Rules

Ofgem has published a statutory consultation setting out its minded-to views on proposals for seven amendments to the Capacity Market Rules. This comes alongside the draft Rule amendments for four of the other proposals, which are set to be implemented for the 2021 prequalification period.

The regulator has proposed amendments to the Rules in the following areas:

  1. Applicant notices.
  2. Evergreen Prequalification.
  3. Relevant Balancing Services.
  4. Capacity Market Register.
  5. Planning Consents.
  6. Maximum Obligation Period.
  7. Previous Settlement Period Performance.

For further detail on the proposals, please see a helpful table that summarises the changes on pages 6-8 of the consultation.

Ofgem intends to hold a further consultation on its draft Rule amendments in connection with evergreen permissions and applicant notices, along with the remainder of its proposals for the Capacity Market Register. The consultation closes on 18 June 2021.

Renewable Energy Systems to build a 99.9 MW Yorkshire-based energy storage project

Renewable Energy Systems (RES) has been given the green light to build a 99.9W energy storage site in North Yorkshire. This will raise RES' total energy storage portfolio in Ireland and the UK to roughly 420MW. The Lakeside Energy Storage project is to be located in the Selby district, and RES believe that the site will be significant in terms of supplying the UK with renewable energy.

Construction of the project (which will include 42 transformers and 51 energy storage containers) is anticipated to start in late 2022.. Upon its completion in late 2023, Lakeside will be the biggest energy storage unit in RES' portfolio.

When operational, the utility-grade batteries will store electricity from the National Grid during periods of low demand and high renewable generation, which will later be transferred back to the grid during periods of high demand and low generation. RES have also included a biodiversity initiative in its plans, which will exceed the government's proposed 10% biodiversity net gain requirement. Head of Energy Storage at RES, Alan McMahon, explained that "increasing energy storage capacity allows us to safely maximise the useable output from renewables, and is a key part of the infrastructure required to power the energy transition and meet the UK's climate goals".

Caldera launches innovative flexible domestic heat battery

UK-based start-up, Caldera, is piloting a cutting edge, domestic heat battery that uses surplus renewable energy on the grid to supply low carbon heat. The battery, named Warmstone, uses patented technology and can be heated overnight using green and inexpensive off-peak electricity. It then operates throughout the day to provide heating and hot water.

The Warmstone system weighs 1.7 tonnes and measures 1.7 metres in height by 1 metre diameter, and is mainly intended to replace gas or oil boilers. Caldera intends to increase commercial production of the system in 2021/2022, having already installed one unit in a trial home.

In addition to offering another route to decarbonisation (in particular for off-gas grid homes) this flexible technology, akin to domestic battery units and EVs, could be used for demand side response. Caldera hope that, if the technology is widely disseminated, thousands of domestic heat batteries could supply gigawatts of smart energy storage. For instance, one million heat batteries could provide 20GW of flexible demand lasting five hours. This could be then be released to bolster the absorption of excess generation, and keep the grid balanced.

The European Union's strategy for Hydrogen

The European Parliament passed a resolution on 19 May 2021 to agree a strategy for hydrogen as a renewable energy source. The resolution states that the creation of a European Strategy for Hydrogen will require agreement across the following eight areas:

  1. Hydrogen classification and standards – agreeing a common legal classification of the different types of hydrogen is of "utmost" importance.
  2. Ramping up hydrogen production - a coherent, integrated and comprehensive regulatory framework for a hydrogen market should be proposed by the Commission.
  3. Citizen engagement, which is key to the implementation of a successful, participative and inclusive hydrogen energy transition.
  4. Hydrogen infrastructure - the development of infrastructure for hydrogen transport, storage and production to incentivise adequate capacity-building, and to stimulate supply and demand,
  5. Hydrogen demand, which should be concentrated in sectors where hydrogen is close to being competitive, or that, at present, cannot be decarbonised using other technological solutions.
  6. Research, development, innovation and financing, which will be crucial along the whole value chain.
  7. International cooperation on hydrogen - establish partnerships with neighbouring regions, such as North Africa, the Middle East and the Eastern Partnership countries.
  8. The role of hydrogen in an integrated energy system - an integrated energy system is needed to achieve climate neutrality by 2050 at the latest, and to meet the requirements of the Paris Agreement.

InstaVolt lands a contract to supply 200 Electric Vehicle chargers for Costa Coffee

InstaVolt has announced a new partnership with Costa Coffee to install 200 rapid electric vehicle (EV) chargers at Costa Coffee Drive-Thru locations across the UK, offering charging speeds of up to 120kW. InstaVolt’s ‘open charger’ model allows drivers to use its charging points on pay-as-you-go terms, increasing charging ease and visibility.

As reported in a previous issue of the Energy Transition, this announcement follows InstaVolt signing partnerships with KFC and McDonalds, and adds to the 176 charge points already in operation at specified Costa Coffee locations across the UK. In March, InstaVolt also laid claim to the UK’s biggest public rapid charger motorway hub. The eight-bay hub is located at Welcome Break’s service area on the M6 northbound carriageway at Corley in the Midlands.

Adrian Keen, CEO of Instavolt, highlighted the perception of there being a lack of public chargers as being "one of the biggest barriers" to the EV transition. Keen then added that "EV charging needs to ‘slip in’ to customers' everyday lives and by partnering with Costa Coffee, we’re able to take additional steps towards combatting range anxiety in the UK".

Ofgem decision clarifies emergency disconnection for distributed generation

Ofgem has released a decision clarifying when and how the Electricity System Operator (ESO) can instruct distribution network operators (DNOs) to disconnect plant at a time of system emergency, and the actions that the DNOs must take upon receipt of such instructions.

Plans to allow the ESO to instruct DNOs to disconnect plant as a last resort were approved in May 2020, following struggles to balance supply and demand resulting from the Covid-19 pandemic. While no such instructions were issued by the ESO, this decision seeks to address concerns about when the instructions can be issued and how it would work in practice.

Key clarifications made by Ofgem were that:

  • The ESO must have exhausted all other commercial options before using this emergency power.
  • The ESO will issue systems warnings to DNOs and generators as early as possible before triggering the emergency power.
  • DNOs should engage with their generator stakeholders and put in place arrangements for safe and secure implementation of any emergency instructions from the ESO.
  • If the emergency generations controls are triggered, an independent review should be conducted to assess the appropriateness of the actions taken.

The decision will come into force on 17 May 2021.

UK Emissions Trading System opens for first time

The inaugural auction of UK carbon allowances took place this week, with the carbon price hitting £50.23 per tonne before dropping by 10% after the first auction of allowances. This meant that early futures prices were higher than the EU price on Wednesday, before settling below £44 a tonne.

The UK Emissions Trading System (ETS) is closely modelled on the EU ETS, which puts a cost per unit on CO2 emissions. Under the scheme, polluters such as power plants are given a set quota to cover their emissions. If these polluters go above their quota they must buy additional allowances to cover the emissions, whereas if they produce less they can sell their remaining allowances for profit. Due to the smaller size of UK ETS market compared with the EU market, there have been concerns from market participants that UK prices would be higher and prone to volatility. However, the UK government has put in place a Cost Containment Mechanism to intervene should the UK prices rise consistently above EU prices. The Financial Times reported that Sebastian Rilling, an EU power & carbon markets analyst, said he expected UK prices to "trade in line" with EU prices after "an initial period of volatility".

Government to build 'all electric' prisons

The Ministry of Justice (MoJ) has announced that four new prisons being built in England will use an all-electric design, in an effort to work towards the government's net-zero target. The government also confirmed that future prison expansions will be built to similar environmental standards as part of £4 billion investment programme.

The prisons will utilise heat pumps, efficient lighting systems and have thousands of solar panels installed. During the construction phase, 40,000 tonnes of carbon will be saved by using recycled concrete and steel. Over the next 60 years, the prisons are expected to save 280,000 tonnes of CO2 emissions, as well cutting £100 million in energy costs when compared to prisons already under construction. Existing prisons will also receive £15 million in investment in order to help cut their emissions.

Robert Buckland, Secretary of State for the MoJ, said the government's "ambitious approach offers a unique opportunity to build back a safer and greener prison system."

ScottishPower Energy Networks launch new artificial intelligence powered app

ScottishPower Energy Networks (SPEN) have announced the development of a new app which will recognise network assets and customer devices using new artificial intelligence technology.

The app will be called iDentify, and will allow users to identify a network asset using their phone camera, which will recognise the asset type. The phone's geo-location system will then determine where the asset is located, before the data is sent back to SPEN. This will enable SPEN's field staff to gather data asset information more efficiently, and will also allow asset data to be crowdsourced by third parties. As the uptake of low carbon technologies continues to grow, installers' use of the app will allow SPEN to assess the impact of devices like charging points and heat pumps on the electricity network.

Michael Alexander, the iDentify project lead, said "as a key enabler to decarbonisation, we focus on modernising our network with digital initiatives, and see a real opportunity for this latest innovation to enable more agile network capacity management and monitoring".