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Electricity system flexibility, energy storage, innovation: all key components of the energy transition

The electricity system is undergoing fundamental change. As Europe aims to become the first climate-neutral continent by 2050, the share of electricity coming from low-carbon sources must grow.

“Electricity system flexibility, grid flexibility, energy storage are all key components of the energy transition that we have embarked on,” said the British Ambassador to Hungary Paul Fox, opening the Third Energy Innovation Forum, an exclusive workshop on innovation in the energy sector in the UK, organised by the British Embassy in Hungary and the Smart Future Innovation Cluster.

“As host of the United Nations Climate Change Conference (COP26), the UK aims to increase awareness to achieve a climate-resilient, net-zero global economy while meeting the targets of the Paris agreement,” he added.

Last November, Prime Minister Boris Johnson unveiled a ten-point plan for a green industrial revolution which will mobilise 12 billion pounds [13,6 billion euros] of government investment and up to three times as much of private investment by 2030.

Also, Hungary has high ambitions in the fight against climate change. Last June, the Hungarian Parliament passed a new law that confirms climate-neutrality by 2050 as a legally binding obligation.

The importance of enabling greater flexibility

According to the latest Eurostat data, 34 per cent of the electricity consumption in the European Union in 2019 came from renewable energy sources, led by wind and hydropower.

Therefore, flexibility is increasingly central to these transforming systems. As pointed out in the 2018 Smart Systems and Flexibility Plan: progress update published by Great Britain’s regulator for gas and electricity markets Ofgem, technologies and applications such as storage and demand response can help balance generation with demand and provide essential services to the grid.

This can facilitate the deployment of weather-dependent renewables such as solar and wind, while also enabling greater uptake of new types of demand such as electric transport. These changes promise to provide significant public benefits – cleaner air, lower carbon emissions, lower energy bills and giving consumers greater control over their energy use

“The topic of flexibility is increasing in interest and importance across the entire energy value chain,” said Zsolt Bertalan, the President of the Smart Future Innovation Cluster. “Flexibility could lead to a better utilisation of the network, as well as a development of the network capacity and it can be an alternative to the traditional network in a cost-effective manner.”

“The need for greater flexibility is growing with the transition away from fossil fuels,” added Tom Corcut, Deputy Director for Wholesale Markets and Commercial at Ofgem.

Mr Corcut defined flexibility as the ability for consumption to react in response to a signal on the energy system, which means that the system stays in balance, consumers see their demand met and ideally, with the right price signals we also get a location element so that demand and supply are balanced roughly in the same area.

Moreover, there is an important financial aspect to be considered as well. According to the Climate Change Committee (CCC), the value of flexibility to the system in Great Britain will be 7.8 billion pounds per year by 2030, rising to 16 billion pounds per year by 2050.

“So the potential savings to consumers are very significant if we enable greater flexibility,” Mr Corcut added.

The challenges in CEE

While climate neutrality is a global political goal, it also raises huge challenges for the electrification system.

EU climate-neutral by 2050 enabling framework. Source: EPSC

“Europe wants to be a trade partner in the global economy so the production must be very competitive which means we cannot increase the prices of energy if we want to sustain the competitiveness of our industry,” noticed Ákos Dervalics, Manager of InnoEnergy HUB Hungary on Europe-level challenges. “Also we have to think about social aspects, like education and training. People need to keep up with the changes, so there is a need for engineers as well as economists due to always new financial measures and financial incentives. So, we need to invest more in R&D in the long term perspective.”

The lack of innovation and IT skills was acknowledged also by Péter Rózsa, Head of Market Organisation Department at Hungary’s utility service provider NKM Utilities. According to him, this kind of innovation is needed because metering and operation systems have to be renewed and developed to collect more data close to real-time.

Moreover, if we purely rely on renewable energy sources (RES) there are many risks. Mr Dervalics recalled the blackout in the UK in August 2019, an outage that lasted less than an hour but travel disruption across the country caused a major delay for railways well into the night.

More recently, the system separation in Continental Europe which occurred earlier in January cut Europe’s power grid into a South-Eastern and a North-Western part for about an hour.

“Grid operators had to initiate contracted load shedding in Italy and France to keep the grid stable and sensitive machinery automatically stopped working,” said Mr Dervalics underlining the risks large corporates face today.

He went on saying that the biggest challenge is for the battery industry.

“We are not competitive right now as almost everything comes from Asia or Australia and Europe still depends on external providers,” he explained. “There is a shortage not only for raw materials but also processed materials and cells/modules.”

In Hungary, there are three batteries manufacturing sites and two additional ones are going to be built. However, they are all owned by Asian companies which bring their resources and their technologies.

“We need to do something to reduce the dependency of Europe from other players,” warned Mr Dervalics. “Europe has a chance to be a global leader in the battery industry and we are looking forward to it.”

Lessons learnt from the UK

The UK has made tremendous progress in electricity decarbonisation over the past decade. As pointed out by Ambassador Paul Fox, the UK proved that green growth is certainly achievable: between 1990 and 2018, the economy has grown by 75 per cent, while at the same time emissions were cut by 43 per cent.

However, significant challenges remain especially regarding the heating and the transport sector: only 5 per cent of the energy used to heat homes in the UK is from low-carbon sources and the use of electric vehicles may need to grow from 230,000 today to 39 million by 2050. In this regard, new technologies, better use of data and AI will play an important role to boost flexible demand. And all of this without forgetting the customers.

Iain Miller, Head of Innovation at electrical distribution company Northern Powergrid said that the future is about moving the focus from the transmission system operators and large customers to the domestic users.

That’s why the company is insisting on energy storage projects that will have benefits for the consumers. At the end of the day, it is all about how we run our homes and how we drive our cars. Among others, Mr Miller mentioned the SilentPower project, a van full of batteries instead of using a diesel generator. This solution is getting customers back on supply, it doesn’t emit CO2 nor NOx and, especially, as its name suggests, it doesn’t make any noise.

Also, Steven Meersman, Founder and Director of Zenobe the UK’s leading independent owner and operator of battery storage agreed that we need to look at challenges in a holistic way.

Source: Zenobe.

Zenobe can provide a range of solutions which includes the upfront financing for local authorities, original equipment manufacturers (OEMs) and bus and other fleet operators. Depending on requirements, the company will own and operate batteries in the depot, smart charging infrastructure and the batteries on the vehicles. This will give customers the option of an end-to-end, one-stop solution.

Mr Meersman also underlined the importance of data. Zenobe’s software looks after the EV bus fleet in and outside the depot and provides useful information, including the charging time, the moments when it loses energy and also keeps into consideration the drivers’ feedbacks.

“If we think about 150 buses, each of them has a 500 kWh battery and they all need to be charged every night, compared to passengers cars,” he said. “And we need more data in real-time as the impact on the grid is higher.”

As Ian Miller reminded, quoting Mark Twain, “there is no such thing as a new idea. We simply take a lot of old ideas and put them into a sort of mental kaleidoscope”. Thus, to get to the net-zero target we need innovation both in technology but also in consumers’ attitude, business models, regulations and government support, all working together to make major changes in how we make, use and store energy.

Cover photo: Zenobe.

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