Can energy flexibility help the UK stabilise its electricity market?

As a result of the instability in the UK energy market due to increases in energy prices, some seven utility companies have ceased operating.

What measures can be put in place to address the challenges facing the UK market as a result of the limited supply of natural gas? Can energy flexibility help the UK stabilise its electricity market and avoid a similar situation in the future?

How flexibility can help?

Gas supply shocks are real now and they have happened before. It’s worth remembering a couple of relatively recent examples. During winter 2006/07 following an earlier explosion at the Rough gas storage facility, many gas power stations switched to liquid fuel (equivalent to diesel oil), and coal stations were also heavily used.

A more recent example was the Beast from the East, in early 2017, when the cold weather caused operational problems at a number of gas infrastructure sites at just the time that heating demand was at its highest. This happened after a decade of renewable growth. On the worst day of that cold snap, wind power broke records and was a major contributor to keeping the lights on.

The recent gas price shock is unusual in that rather than happening during the winter, it landed in late summer. The relatively benign weather in fact exacerbated the problem, by reducing the amount of wind power entering the system.

At the same time, many traditional power stations have been undertaking routine maintenance. This means that the extreme electricity prices we have seen were caused not just by the high cost of the marginal fuel – which is normally gas – but the lack of plants in a state of readiness to turn it into electricity.

This time, one particular flexible asset class stood out in its contribution: grid-scale batteries, which have been able to take in electricity during off-peak periods overnight, and deliver it back to the system just as demand hits its peak.

Across our portfolio, we’ve also seen industrial and commercial sites being called to deliver reserve. Every megawatt of power delivered by merchant batteries or flexible customers reduces the amount that National Grid ESO has to pay to call on fossil power stations. That reduces both cost and emissions across the market.