Smart technology a ‘no brainer’ for an optimal power sector

When Power Engineering International spoke to Jens Madrian earlier this year he was enthused about the potential of smart technology and the possibilities arising for the power sector. We caught up with him again this week when Reactive Energy’s Grid Data Measurement System was unveiled.

The technology has been hailed as another leap forward as it facilitates transmission of data through the electric grid, something that had not hitherto been possible. On paper at least, it threatens to further marginalise the need for development of grand-scale conventional power plants
Jens Madrian of Reactive Energy
While much effort is being put into energy storage as the holy grail of solutions to doom fossil fuels to irrelevance, could GDMS, coming in under the radar, be more likely to transform the global power infrastructure in the short to medium term?

Madrian, Reactive’s chief financial and commercial officer, is cautiously optimistic.

“Our Grid Data Measurement System has the potential to go very far and only time will tell what the total scale of the impact of this technology will be. GDMS certainly has the potential to fundamentally transform how we manage the energy system and how to take advantage of latent flexibility within it,” he says.

GDMS is a new communications technology. It uses the frequency of the electricity network to transport data through it and can cost-effectively send and receive digital messages through electricity networks, over long distances and importantly through network transformers. It can be used to communicate with any enabled device connected to the electricity network be that a point of demand, generation or indeed storage.

“GDMS is particularly suited to enabling hard to reach assets and customer segments such as the residential sector to participate in demand side response programmes and delivers a secure fit-for-purpose energy communications system removing the need to rely on the internet or other technologies such as cellular systems,” says Madrian. “GDMS messages can travel to wherever power travels, therefore it benefits from extensive coverage using existing, secure infrastructure in terms of the electricity network. This coverage is wide, corner to corner of the country (UK) but also deep ” messages reach all the way to individual assets at the end of the electricity line.”

The second most vital feature of GDMS is that it can be used to remotely measure and verify the status of assets connected to electricity networks such as energy consuming assets, like freezers, and hot water tanks (demand), embedded generators or storage assets and offers the potential to generate a wealth of insightful data about how electricity is generated and consumed at the distribution network level.

Such information is essential for operators tasked with balancing electricity networks which are becoming increasingly complex with the increased variety of assets connected to them such as distributed and intermittent generators like solar along with electric vehicles and batteries. The technology can generate valuable data about the make-up of demand on the electricity system which is important to National Grid and other network operators as assumptions on the make-up of demand are used to calculate how much reserve and balancing services are needed at any given point in time.

GDMS can create new datasets on demand which can be used to improve the accuracy of their forecasting models and procurement decisions, ultimately driving down prices for consumers.

Madrian also draws attention to the technology’s built-in highly accurate frequency measurement units, with receiver devices that can allow smaller assets to participate in high value, system critical frequency response services. This means that more assets can participate in these services, increasing the volume of this valuable asset to National Grid cost effectively.

National Grid spent over à‚£1bn on balancing the electricity system in the UK last year and estimates that this could double in the next five years to à‚£2bn[1].”

“Traditionally these balancing services have been provided from power stations on the supply side of the electricity system. Earlier this year, National Grid announced that it would like to procure up to 50 per cent of its balancing services from the demand side by 2020 marking a dramatic change in how the energy system will be managed in the future. This approach makes a lot of sense as flexible demand offers the lowest cost and lowest carbon way to balance the electricity system.”

“GDMS offers a new route to market for energy consumers to allow their flexile demand to participate in DSR programmes, increasing the potential capacity of this valuable resource and allowing zero carbon intermittent generation to be balanced by zero carbon flexible demand.”

“It can be used to better understand the energy system and to unlock latent flexibility in existing assets. These benefits drive high efficiencies in the energy system and ultimately lead to better digitalised services for consumers at a lower price.”

à‚  So what about the impact of GDMS on already beleaguered conventional power ” could it further minimise development of fossil power plants, particularly in the UK case- gas-fired power plants? Madrian is unequivocal.

à‚  “Using operational flexibility as a resource for balancing the energy system instead of conventional power plants is in many ways a more forward-looking, digital-proof and CO2 neutral solution which will make peak plant investments in the UK obsolete over time.”

à‚ “Given the push from National Grid to source up to 50% of balancing services from the demand side by 2020 and greater volumes beyond then, I would greatly question entering into that space in this time horizon.”

“Not only that, I expect the increase in operational flexibility to be delivered at a lower variable cost than the variable cost of power plants auctioned via the capacity market. Flexible demand will kick in at a lower point in the merit order, shifting existing, older, carbon intensive, peaking plants out of the merit order. It not only has an impact for future investment; it will also have an impact on the capacity prices for the existing fleet.”

Madrian adds that using operational flexibility from existing assets seems to be a more sensible solution than investing significant capital in 10s or 100s of assets (peaking plants) which run the risk of being stranded shortly after they have been built. He believes it’s more a question of when this happens and how quickly demand side capacity can be picked up; rather than if.

National Grid has set itself a target to procure up to 50% of its balancing services in the UK from the demand side by 2020 and he says GDMS offers a new route to market for DSR, increasing access to participate in DSR programmes, increasing competition and thus contributing to reducing costs and supporting delivery.

“Reducing peaks on the electricity system also reduces stress on the physical transmission and distribution networks therefore GDMS and DSR also contribute to reducing maintenance and new infrastructure costs associated with operating the physical electricity network.”

The seeming encouragement of polluting diesel-powered generators by the government has caused controversy in recent months, an unhappy by-product of the UK’s system of ensuring energy security. Madrian says Reactive’s technology can help the government to be more selective about the type of generators feeding into the overall system.

“There is no doubt that the DSM market is heavily picking up but the vast majority of DSM capacity so far has come from embedded and stand-by generators which is far away from being CO2 neutral. To support the country’s carbon commitments we need to deal with the inconvenient truth that true DSM is still in its early days and will need more regular political support in order for it to reach its potential.”

“It is the right thing to do in the long run and through its digital-centric approach, Reactive is ready to offer future-proofed products and services that can unlock this fragmented but valuable resource. National Grid has already stated its ambition to deliver 50 per cent of balancing services from demand but this will only be a success if it comes through true, carbon neutral, demand side measures. Mobilising true DSR is the only way to deliver the most cost effective methods to balance the system while also supporting the UK’s political commitment to substantially reduce our carbon footprint in line with COP 21.”

Ultimately the technology is part of a growing portfolio of products that are going to lead to a more energy efficient society.

Where true DSR delivers the real efficiency gains is in better infrastructure, carbon and asset management. GDMS offers a new route to market for owners of assets that have latent flexible demand in their existing assets (freezers, hot water tanks etc.), but currently have no way of offering that valuable resource to the market.

It theoretically can allow zero carbon intermittent generation to be balanced by zero carbon flexible demand from existing assets rather than being balanced by carbon intensive thermal, peaking plant with its higher operating cost, significant capital costs and carbon emissions.

“By removing the need to invest in new peaking plant and pushing down the marginal variable cost of balancing the energy system, GDMS and flexible demand offer significant efficiencies in how the energy system is managed from a carbon and cost perspective. Furthermore, flexible demand can help to reduce peaks in energy demand, reducing stresses on the physical electricity network and avoiding the need to invest in new infrastructure, further increasing system-wide efficiency.”

“What we do know for certain is that as we move towards a new era in which a high percentage of our energy needs are being met by renewable energy sources, the smart grid will prove crucial for this successful transition. ICT technologies exist today that will allow the smart grid to become a true reality and we envisage GDSM playing an important role in that. The technology exists to establish smart, low and zero carbon energy systems; political leadership has a key role to play in defining how long it takes to deliver them.”

What sort of immediate obstacles are in the way of a ubiquitous roll-out? In the end, after all, there is no operational difference if you offer up flexibility to National Grid to balance the market through existing power stations or smartly managing consumer demand.

“Whilst this is true, the eventual cost and carbon impacts of these alternative routes to delivery are significant. Additionally, the current market conditions for these alternative routes looks very different. The capacity market offers a way longer time horizon for carbon and capital intensive generators providing significantly greater value certainty through that longer contract when compared to DSR, leading to an unlevel playing field for these technologies.”

“As a consequence, fewer commercial incentives exist to really drive CO2 neutral operational flexibility to be used as a core ingredient for balancing the UK‘s grid. If the goal of meeting 50 per cent of balancing services with demand side technologies by 2030 is to be taken seriously, the market framework needs to give DSM players the same chances and responsibilities as existing and new build generators. This requires political leadership and appropriate interventions to ensure the market framework is set out early and clearly enough for the DSR sector to invest and grow its capacity to deliver against the 2020 target and 2030 ambitions.”

Leaders in the power sector, even those championing their own particular technology, will readily agree that it is going to take a pragmatic selection across the spectrum of technologies to bring the world’s carbon emissions down, while still satisfying the other two criteria completing the energy trilemma. Madrian is no different in this outlook when acknowledging the drive to develop large scaleutility storage devices.

“To some extent you could say that storage and DSR are competing technologies. The point is that every battery comes with a reasonably sizeable capital investment which you just don’t have in the world of operational flexibility delivered through true DSM. As an investor I wouldn’t see it as worthwhile to go purely for battery storage but rather that it makes a lot of sense to work in an integrated way with smart grid companies like Reactive Technologies to drive the most economic use of these assets. The risk of investing in stranded assets will increase over time when true DSM becomes more and more sophisticated and a genuine market phenomena.”

Hinkley Point C nuclear power plant is now set to be built in the UK and advocates of carbon capture and storage are again highly-vocal in applying pressure on the government to re-introduce it into the UK’s list of viable solutions. Madrian sees the promotion of these technologies as retrograde steps that should be consigned to the past.

“Both of these technologies are highly capital intensive with equally highly uncertain consumer benefits. In addition to this, certainty on being utilised regularly for a long time ultimately puts price pressure on consumers well in to the future.”

“In the world of digitalisation we need to learn to allow ourselves to think beyond the classical horizons of existing industries. Using smart communications engineering technologies to generate value from existing assets with hardly any capital involved whilst achieving potentially similar outcomes seems to me a no brainer from economical, ecological and socio-economical perspectives.”



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