Close to Home: An imminent UK capacity crunch and the role of community energy

The UK government electrification plans need a 600% increase in grid capacity and £110Bn investment as UK fossil fuel reserves run out.
Published: Wed 06 Aug 2014

By Andrew Jones, Managing Director, S&C Electric Europe.

According to a new report from the Global Sustainability Institute, the UK only has five more years of fossil fuel resources, which could lead to much greater dependence on Norway, Qatar and Russia for energy.  The message then, to develop home-grown energy has never been clearer.  Yet, this report comes at a time when the National Grid is struggling to cope under the pressure of new renewable implementation.  To resolve the dilemma, community energy-based microgrids provide answers that benefit the existing grid infrastructure and the local communities that use them, while helping the UK meet its renewable targets.


Easing the Energy Capacity Crunch

As many utilities and government officials are now realising, the UK is facing a capacity crunch. To put it into perspective, the National Grid currently has enough cabling and infrastructure to cope with 60 GW of generation.  According to Government, their plans to electrify heating and transport by 2050 could increase the total demand on the grid to 360 GW.  To meet this substantial increase in demand, Ofgem has estimated that the UK would need approximately £110 billion of investment in new infrastructure such as new transformers and cabling by 2020.  An alternative solution to wholesale grid modernisation and significant grid capacity increases is to kick-start grassroots community energy schemes, using microgrid technology, which can ease the burden on the centralised grid and actually increase the overall resilience of the power supply.

The concept of community energy is not new. The UK’s National Grid did not start out life as a centralised network, it was only conceived in 1938 so that cities did not have to live next to the coal power stations that supplied them.  We created a centralised grid system to transmit energy to homes, via pylons and cabling, from the power stations where it was generated.  Before that, power came from a patchwork of small, independent supply networks that serviced small village communities.

Now, with the advent of renewables that can feasibly be placed anywhere the wind blows or the sun shines, the decentralised grid model of community energy is becoming increasingly attractive.  Theoretically, microgrids could provide an alternative to the national grid model altogether by creating smaller independent networks that are solely connected to distributed renewables.  This also has the effect of allowing communities to generate revenue from energy generation.  Indeed, currently in the UK, microgrids are proving particularly beneficial to isolated island communities, whose electrical infrastructure is typically problematic.  For example, in the Shetlands, SSE recently announced its Northern Islands New Energy Solutions (NINES) Project that plans to energise a 1MW battery storage unit to reduce peak demand (and therefore costs) and dependence on diesel power stations and increase generation from distributed renewables.  Being 120 miles north of mainland Britain, the Shetlands cannot rely on the National Grid and, as such, are forcibly offgrid.  As a result, they are currently heavily reliant on aging power stations, the worst of which is over 60 years old, meaning that new and smarter microgrids are critical to future energy management and also emissions targets. 

Across European countries with less specific infrastructure challenges, community energy is gaining traction. In Germany for example, almost 50 per cent of electricity generating plants are owned or run by local groups. Indeed, with more than 60MW of community-owned renewable electricity capacity in operation in the UK and DECC estimating an increase to 3GW (1 million homes) by 2020 in its Community Energy Strategy, the case for microgrids is growing ever stronger as the National Grid and DNOs look to alternative ways of supplying energy.  


Community Energy - Local Power for Local People

At a societal level, the greater proliferation of community energy in the form of microgrids also has broader implications for the notion of energy independence.  Community-based energy supply has the potential to spark an ideological shift as energy becomes a matter of devolution as well as security of supply, where the more local the energy, the greater the independence gained by its consumers.  Given the steadily declining trust placed in the energy sector – 32 per cent according to a recent trust survey – the microgrid model represents an opportune and attractive alternative allowing consumers to evolve into electricity generators.

Combining this idea with government renewables targets also has the potential to produce mini-renewable ecosystems where communities have control over their energy whilst also meeting renewable targets in the process.  As an example , S&C is currently a partner in a project in Slough that uses small-scale 25kwh battery storage units in conjunction with solar PV, electric vehicles and other energy efficient technologies to create a series of ‘Zero Carbon Homes’.  In essence, the project functions when electricity generated by the solar PV is stored by the battery units during the day (when the family is out at work), and released in the evening when demand is higher and solar panel output is insufficient to meet demand.  In addition, the battery can then be used to charge the electric vehicles for use the next day.


Microgrids or Super-grids?

Microgrids are not the only alternative to address the UK’s growing electricity demand.  At the other end of the spectrum, building even bigger underwater interconnections between different national grids, to create an overall European super-grid, has been suggested as a solution to the energy trilemma.  The principle behind such a transition would be to manage and distribute supply according to demand over a much greater area meaning that surplus electricity in one country could be shared when needed in another.  Certainly, such a proposal has its place, particularly on continental Europe where Germany already has to import electricity from coal plants in France when its solar industry falters during the winter.  An interconnected grid would only make this process easier by seamlessly transmitting high volumes of electricity across great distances throughout Europe.

Undoubtedly, super-grids have their place in future infrastructure planning, if only due to the massive population which they could potentially service.  That said, there are certain drawbacks to consider, such as the inefficiencies associated with AC transmission over long-distance cables and energy lost in conversion by transformers, which make super-grids less appealing.  Indeed, when compared with microgrids in this context, energy storage units placed much closer to communities avoid this inefficiency problem; with local renewable sources, the need for cabling between power stations and sub-stations is removed altogether.  Moreover, microgrids are unimpeded by the potential delicacy of geopolitics that could arise from sharing electricity with other countries. 

At the same time, whilst consumer engagement in smaller community projects will require further progress, the best value in microgrid technology is actually starting to be felt at a town and city level.  Whilst still technically ‘micro’, larger projects beyond just individual homes, streets and villages, are increasingly demonstrating attractive efficiency savings that are bringing further investment.  In Lancashire for example, the Westmill Cooperative raised over £10 million in share capital for its two offerings.  Both offers were over-subscribed and attracted outside funding to finance the balance of the project.  Combined the two projects now generate enough energy for nearly 5,000 homes.  From these types of projects and those even larger still, there is great potential for DNOs – who are always under pressure from Ofgem to balance supply and demand – to incorporate offgrid distributed renewable schemes into their portfolios.


Market forces driving microgrid investment

Whilst technological and regulatory hurdles still persist, the attraction of community energy is beginning to grow strong enough to convince DNOs that the value of the model is worth investing in.  By providing the dual benefits of efficiency savings and demand relief, microgrids have the potential to become a vital part of future energy infrastructure.  In all likelihood, this future will also include larger interconnectors on the opposite end of the spectrum.  The difference however, is that, by their very nature, microgrids can, and are, happening now.