Meeting climate change targets and reducing global greenhouse gas emissions will require the decarbonisation of all parts of our economy. Electricity and heat production are the largest contributor to global emissions, followed by transport and manufacturing, making the electrification of heating, transport and industrial processes essential for the transition to a low-carbon economy.
National Grid has said that the UK will produce enough electricity to meet the demands of electrification. However, as businesses work to electrify their operations, a major bottleneck is emerging.
Although there is expected to be sufficient capacity of electricity to support widespread electrification, many parts of the network will require reinforcement to make this capacity available. Faced with stringent climate targets, businesses and local authorities are now facing prohibitively high costs to upgrade their grid connections to facilitate electric heating and EV charging infrastructure projects, assuming access to the grid is available in the first place. In the UK, the costs of these upgrades are currently paid for by the company requesting the connections and can take months or even years to implement, causing uncertainty and unwanted delays. From April 2023, more of the cost of connecting to the distribution network will be transferred to the distribution network operators, but the delays are likely to persist.
Unless a solution is found, this challenge could end up slowing down and increasing the cost of the transition to clean electricity, hampering net zero progress.
Why grid constraints occur
Our energy system is changing, with new sources of power generation like wind and solar, and new types of demand like heat pumps and EVs being connected to the network. This means that more electricity is being moved through the wires and cables that make up our energy networks.
In some instances, this can mean that there isn’t enough spare capacity on the network to accommodate a new source of demand, such as EV chargers. The conventional solution to this challenge is to upgrade the local network to increase the capacity of the site. However, upgrading the network can be an expensive and lengthy process for the connecting business.
The current process for many businesses is as follows:
– A company identifies a potential positive business case for the installation of electric heat pumps
– The Distribution Network Operator assesses the site’s metered connection and identifies insufficient spare local capacity, meaning a local grid connection upgrade is required
– The distance from the substation, level of upgrade, amount of work required, all affect upfront cost
– The company reevaluates the business case and discovers it is less likely to be favourable compared to gas heating.
Companies facing costly grid upgrades
Motorway service operator, Welcome Break was quoted tens of millions of pounds to establish a high-speed EV charging connection for one of its sites. Most Motorway Service Areas’ (MSAs) current electricity grid connections are insufficient to cope with all but a small increase in the amount of charging they can support at their site, and grid upgrades are often not possible within a timescale or cost which is economically viable. If the demand for EV charging exceeds the capacity at a given site, it reduces the amount of power each vehicle receives, quickly translating into unacceptably slow charging speeds and/or long queues for an available charge point, which is a huge loss for the business.
The Greater Norwich Growth Board – a partnership comprising a number of local councils, are responsible for the development of housing and energy infrastructure in the area. As part of the group’s Energy Infrastructure Plan, which included a number of housing developments with heat networks, the group was quoted costs of between £2.5 million and £10 million to upgrade the local network connection. As local authorities explore the opportunities provided through a range of energy schemes, they are often confronted with significant grid constraints which don’t always stop councils pushing ahead with their plans and projects, but are causing delays and uncertainty.
Some of the factors that impact the cost of a site’s grid upgrade include:
– Excavation costs or cable trench (more so in urban areas) and related civil work/labour costs
– Material and installation costs Fault repair and maintenance
Can businesses predict the cost of local grid upgrades?
Investment needs for grid reinforcement vary from site to site, making predicting the total cost for a grid upgrade extremely challenging. One suggestion to overcome this would be for businesses and local authorities to put pressure on DNOs to publish more information such as more detailed local heat maps, to enable better end user planning. More capacity map tools have come online in recent years, but the tools are not targeted enough to allow businesses to plan effectively. The DNOs would require more localised data on energy consumption than what is currently available to deliver this. There are other parts of the world where DNOs do provide this data. In France for example, the DNOs provide free online tools for self-running network simulations so the business can then have an idea of the impact on the network of the requested capacity on each location (green means no reinforcement would be needed).
Can grid-constrained businesses avoid upgrades?
One way businesses can avoid grid upgrades is to set up a microgrid. A microgrid is a self-sufficient energy system that serves a specific site, such as a hospital, a business park, a university campus, or a residential community. A microgrid includes a source of distributed energy such as solar, wind, or a diesel genset that produce its power. Many microgrids also contain an energy storage system to increase its reliability. Microgrids can operate independently from the central grid, allowing them to supply power to a site when a grid outage occurs. With electrification of heat and transport driving electricity demand, it is expected that more businesses will install microgrids to manage local demand and generation within existing network limits to avoid costly grid upgrades.
Another way companies can avoid the disruption associated with grid upgrades is to install onsite energy storage. Energy storage allows companies that want to build new housing developments or electrify their fleets a way of doing so without the hassle, cost and uncertainty of paying for new grid infrastructure.
A long-duration energy storage system like CEL’s eTanker helps to reduce transmission losses and makes the system ideal for managing grid-constraint issues, avoiding the need to make major investments to size the grid for peak power needs and allowing higher utilisation of existing assets. The compact and modular nature of eTanker means it can be strategically installed next to sites across the distribution system, often serving in behind-the-meter roles and providing local resilience to microgrids as well as wider network balancing. The system can connect into local low voltage substations to smooth out demand and supply peaks across the day that might otherwise require major overhauls to local grid infrastructure.
Whilst grid constraint issues are site specific, many lessons can be learned from other businesses and their electrification efforts. Distributed resources and storage assets are a viable alternative to costly, time-consuming grid upgrades and will be essential in the transition from a centralised energy system to a more distributed, interconnected one.
Cheesecake Energy is working with a number of businesses with grid-constrained sites to help fast-track their electrification plans and achieve their decarbonisation goals. Have a project in mind? Get in touch with us today.
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