Grid Constraints in Scotland and location of Data Centres

John R. said:

socially useful

There's your problem . They are all for-profit generators. They want / need someone to pay real money instead of 'them' having to pay constraint costs.

I'm sure there are other better ways from a social viewpoint. Perhaps one of those big battery systems?? e.g https://www.autonocion.com/us/850-megawatt-battery-biggest-charge-australian-grid/

That's not my understanding of the market design.

The payment to an in-merit generator (BMU) which is constrained off in the Balancing Mechanism by the System Operator comes from consumers' bills as does the payment to BMUs constrained on elsewhere to balance demand.  And in case the market price is 'too low' BMUs with government awarded CFDs get paid a markup to the CFD price.  That too is allocated back to consumers.  

So constraint costs are socialised to our bills and generators are paid regardless.  

This, I think, may incentivise government looking for a cheap and quick way to claim that they're reducing bills to see data centres as a 'solution' although quite how this is the case if they receive subsidised energy isn't yet something I've fully grasped/

The whole thing looks like a massive policy failure to me.  Wind generators allowed to build without there being enough local demand for the energy and / or transmission capacity to ship it elsewhere.  Grid 'blamed' for not having capacity when the fundamental problem is policies and pricing mechanisms that do not encourage generation to locate appropriately to demand.

It's interesting to note that the subsea cable links being built / proposed come ashore well south of the B6 boundary.  Looking at realtime information online, it appears that the prevalent constraint boundary runs from about Kings Lynn to Pembrokeshire.

Even if / when gas generators aren't mostly setting market price, constraint costs, CFDs etc will ensure that the energy costs we need to pay will remain stubbornly high.  And future guaranteed prices for new nuclear await in the longer term.

It's already evident that those with money and space are buying their own battery-solar.  Those who can't will face higher costs and more people will face energy poverty while self-rationing demand.  Data Centres will only increase completion for energy.

John R. said:

This, I think, may incentivise government looking for a cheap and quick way to claim that they're reducing bills to see data centres as a 'solution' although quite how this is the case if they receive subsidised energy isn't yet something I've fully grasped/

Maybe there's a longer term idea to tax data centres - a sort of "fuel duty" for AI ...

  - Andy.

My view is that the Scottish government needs to make clear that such data centres will be subject to future taxes as a means of increasing political risk of locating here and ideally building somewhere more sensible (e.g. where there's lots of solar energy).

Most days it's possible to look at BMU outputs and see wind self-constrained on grounds of low wind speeds.  That being the case, it's easy to imagine these plants' backup gas or diesel plants running causing noise and pollution.

I'd still like to see some numbers for the amount of otherwise SO-constrained generation that locating these things between B4 and B6 would actually avoid and what the limiting capacity in the short term might be.

Yes I believe your summary is correct, generating unit output is adjusted through the Balancing Mechanism (BM) and generators are compensated accordingly with the costs recovered through Balancing Service Use of System (BSUoS) charges which are paid by electricity suppliers and recovered from electricity consumers.

John R. said:

The whole thing looks like a massive policy failure to me.  Wind generators allowed to build without there being enough local demand for the energy and / or transmission capacity to ship it elsewhere.  Grid 'blamed' for not having capacity when the fundamental problem is policies and pricing mechanisms that do not encourage generation to locate appropriately to demand.

Yes - the policy was 'Connect and Manage' allowing connections before the grid capacity was in place.

Though I would challenge the idea that the fundamental issue is purely about generation siting, there is an issue with Grid planning and development. It was obvious to anyone with even a passing interest in the GB electricity system that much of the renewables generation would be built/connect in the North of England and Scotland, so that more North-to-South transmission capacity was required, what is rather puzzling, and there's two issues here:

1. Why were plans for more North to South transmission capacity so slow to be developed and the build-out so delayed, that the situation became serious long before much of the new construction will complete?

2. Why have Britain's transmission networks, the regulator and policy makers allowed such a heavy dependency on highly expensive, off-shore HVDC transmission, rather than pursuing the economically efficient and far lower cost design route, of on-shore AC overhead lines? 

The build cost and lifetime operating costs of these off-shore HVDC links are reported to be substantially higher, there's an example in a NESO DNV report, citing 8X the lifetime cost compared to AC OHL, so potentially some hugely expensive design choices, particularly when you look at NESO's future network plans which have a very large number of parallel HVDC off-shore circuits running around the coast of GB. 

Infrastructure is always expensive, but Britain seems to be super-charging that to push its costs up so high into a different league.

I worry that when all of these network costs, particularly what appear to be unnecessarily high network costs, are added onto the energy cost, Britain's going to find itself with clean, but very expensive energy which then delays the shift from fossil fuels to electric, delays electrification of heating, electrification of industry etc.

www.neso.energy/.../download

Thanks, TurboGen.

One answer to your questions is the absence of 'systems thinking'.  A fragmented industry without central strategic policy and planning has got us here.

Good old CEGB (I worked for them!) built power stations next to coal fields and transmission systems to ship the power.  This is clearly unsuited to northern and offshore wind but it did meet its original requirement.

Sometimes 'free market' doesn't deliver where long term planning and investment is required. 

The connect and manage approach  for the new generators with no locational pricing incentive, is surely uneconomic at a system level since whole cost is not considered.  

Agree - the build cost of these HV-DC links is high and subject to schedule delay.  But they don't face the same planning problems as on-shore circuits and they do bypass northern and central England and get the power to where it's needed.
NAO reported recently about grid build costs https://www.nao.org.uk/press-releases/delays-to-electricity-grid-upgrades-risk-higher-bills/

100% agree with your last paragraph.  

No one will want to move to electric heating that costs 5 times as much as gas.  I was reading that floor price for new nuclear is over £100MWh!

One thing about energy policy is that its focussed on providing 'green" energy.  But more recently it neglects demand reduction approaches such as significant investment in building low energy houses and insulating existing stock. which offer long term benefits.

John R. said:

One answer to your questions is the absence of 'systems thinking'.  A fragmented industry without central strategic policy and planning has got us here.

Good old CEGB (I worked for them!) built power stations next to coal fields and transmission systems to ship the power.  This is clearly unsuited to northern and offshore wind but it did meet its original requirement.

Sometimes 'free market' doesn't deliver where long term planning and investment is required. 

Well quite, certainly on the lack of systems thinking and strategic coordination, but I'm not sure the problem lies entirely with the 'free market' because most of what we're discussing is not 'free market', it's actually in the control of policy makers (DESNZ) and regulators (Ofgem). The renewable generation is being built under the Contract for Difference (CfD) scheme which they designed, set the structures, the rules, run the scheme and award the contracts. And the transmission networks are privately owned regulated monopolies, with a full-time regulator (Ofgem) responsible for monitoring their plans, their build programme, setting the required outputs.

Logically, the CfD auction process, how it awards those contracts, the generation projects receiving contracts, the locations, should be coordinated with the transmission development plans, so the generation capacity is being commissioned in lock-step with the transmission capacity additions. That would appear to be perfectly possible within that existing model

That's exactly what the CEGB did as it was building out the 500MW unit fleet, the 'Hinton Heavies', building out the 400kV network to get the power to the demand as it was commissioning the 400kV connected, power stations.

I think Britain's problems are down to a combination of policy failure and regulatory failure, fragmentation between different bodies and I suspect there's also an issue of technical / engineering competency, there's simply too little of it in the organisations responsible for managing these big strategic issues. Compared to the CEGB which had technical competency and capability of a greater order of magnitude.

John R. said:

One answer to your questions is the absence of 'systems thinking'.  A fragmented industry without central strategic policy and planning has got us here.

Good old CEGB (I worked for them!) built power stations next to coal fields and transmission systems to ship the power.  This is clearly unsuited to northern and offshore wind but it did meet its original requirement.

Sometimes 'free market' doesn't deliver where long term planning and investment is required. 

Well quite, certainly on the lack of systems thinking and strategic coordination, but I'm not sure the problem lies entirely with the 'free market' because most of what we're discussing is not 'free market', it's actually in the control of policy makers (DESNZ) and regulators (Ofgem). The renewable generation is being built under the Contract for Difference (CfD) scheme which they designed, set the structures, the rules, run the scheme and award the contracts. And the transmission networks are privately owned regulated monopolies, with a full-time regulator (Ofgem) responsible for monitoring their plans, their build programme, setting the required outputs.

Logically, the CfD auction process, how it awards those contracts, the generation projects receiving contracts, the locations, should be coordinated with the transmission development plans, so the generation capacity is being commissioned in lock-step with the transmission capacity additions. That would appear to be perfectly possible within that existing model

That's exactly what the CEGB did as it was building out the 500MW unit fleet, the 'Hinton Heavies', building out the 400kV network to get the power to the demand as it was commissioning the 400kV connected, power stations.

I think Britain's problems are down to a combination of policy failure and regulatory failure, fragmentation between different bodies and I suspect there's also an issue of technical / engineering competency, there's simply too little of it in the organisations responsible for managing these big strategic issues. Compared to the CEGB which had technical competency and capability of a greater order of magnitude.