flexibility and the outlook for the gb power...
TRANSCRIPT
© Aurora Energy Research Limited. All rights reserved.AE
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Flexibility and the outlook for the GB power market
Presentation to Demand Responsive, 11 May 2017
Dr. Benjamin Irons, Director, Aurora Energy Research
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Agenda
▪ The emergence of flexible and distributed generation
▪ Market outlook
▪ The investment case for batteries, gas peaking plant and DSR
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2017 2030
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Growing intermittent renewable generation is materially changing the economics of dispatchable power generation
Demand mainly met by uninterrupted baseload generation
GB power demand in a typical winter week (GW)
Demand mainly met by flexible generation
Residual demandSolar Wind Nuclear
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1. Load factors will be no more than 15% for as much as 15GW of future CM contracts (These won’t go to CCGTs!)
Sources: Aurora Energy Research, National Grid
1. Includes CCGT, OCGT, recips, DSR, batteries and others; excluding nuclear and interconnectors 2. Contracted in the T-4 2020/21 CM auction.
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4 6 8 12 14 160
30
50
70
90
2 302010
80
60
40
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0
18 22 24 26 28 32 34
Max load factor achievable%
CM-procured dispatchable capacities by 2030de-rated GW
Amount of capacity required
13-15 GW of capacities with load factors below 15%
(Current peakload 8 GW, meaning this is the main investment opportunity)
18-20 GW of capacity with load factors above 15%
(Current CCGT capacity 23 GW, meaning this is mostly already built)
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2. Ancillary services value is set to nearly triple due to falling thermal generation and new nuclear
Sources: Aurora Energy Research, Ofgem
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500
1,000
1,500
2,000
2,500
3,000 +174.1%
20302025202020152010
National Grid balancing services spending£m/year
BM constraint management
Black start
STOR
Frequency response
FCDM
EFR
Reactive power
Headroom/footroom
Other
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3. Balancing mechanism volumes are set to double by 2030 due to the imbalance introduced by wind and solar
Source: Aurora Energy Research
Bid-offer acceptances (BOA)GWh
2,000
-2,000
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-1,000
1,000
3,000
-3,000
+100%
2017 2020 2025 2030
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Three flexible technologies have emerged to capture the new build investment opportunity, but how will they compete?
Source: Aurora Energy Research
▪ Diesel reciprocating engines
▪ Gas reciprocating engines
▪ OCGT
▪ Bulk storage
- Compressed air
- Pumped hydro
▪ Small scale
- Lithium ion
▪ Emerging techs
- Flow batteries
▪ Domestic
▪ Industrial and commercial
- Refrigeration
- Air conditioning
- Manufacturing processes
Peakers Storage DSR
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Agenda
▪ The emergence of flexible and distributed generation
▪ Market outlook
▪ The investment case for batteries, gas peaking plant and DSR
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GENERATION MIX
We expect peakers to dominate in the near term, batteries in the medium term, with DSR the dark horse
Source: Aurora Energy Research
1. Pumped storage and compressed air
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CAGR: +7%
204020352030202520202018
Other storage1
DSR
Battery
Recip. engine
OCGT
Installed capacity by technologyNameplate (GW)
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Agenda
▪ The emergence of flexible and distributed generation
▪ Market outlook
▪ The investment case for batteries, gas peaking plant and DSR
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2016 2018 2020 2022 2024 2026 2028 2030
1. STORAGE
Arbitrage is the biggest opportunity for storage, but is only economically attractive when lithium ion cell costs fall below £150/kWh
Breakthrough
Consensus
Historic learning ratesLithium ion cell costs £/kWh
2019 2027Year of mass entry:
£150/kWh is the magic number for load shifting applications
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Cost reduction to 2020 % p.a.
X
Source: Aurora Energy Research
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2. PEAKERS
Gas reciprocating engines are worse off after triad reform, but much of the lost income is recovered, and the investment case remains strong
Source: Aurora Energy Research
20252020 2040203520302017
BSUoSCapacity
Balancing
Fast reserve
STOR
Triads
Wholesale
GDUoS
Gas reciprocating engines under STOR business model
Gross profit, £/MW/year
We expect much of the missing triad revenue to return via- Higher energy and balancing prices in winter- Cancelled CM14/15 projects increasing CM prices- Increased STOR procurement
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20402015 2020 2025 2030 2035
3. DSR
We estimate there is 8GW of flexible demand in the GB system, but not all will be economically viable as “turn down” DSR
Sources: Aurora Energy Research, National Grid
Peak demand(GW)
Industrial
Commercial
Domestic Industrial
Background Interruption
8 GW of DSR potential
Inflexible demand
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Please contact [email protected] for more information
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All our forecasts and analysis are available by subscription
Thank you
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