Behind the targets, industrialized countries with long-established electricity networks that are making the shift to distributed energy have plenty of work to do, finds Janet Wood.

The International Climate Change Task Force recommended that G8 countries should generate 25 per cent of their electricity needs from renewables by 2025. The recommendation comes as the UK takes over presidency of the G8, and Prime Minister Tony Blair has committed to putting climate change “at the top of the agenda”. But despite a new energy policy that for the first time placed at its centre a long term target to reduce carbon emissions by 60 per cent by 2050, and a short term target to generate ten per cent of electricity from renewables by 2010, the UK government has come under fire from some quarters for a perceived lack of commitment to its carbon abatement agenda.

There is some justification for the attacks. Decisions in other parts of the economy, like housing and transport, seem to have entirely missed the message on carbon. In the electricity sector it seems that the UK’s renewables contribution in 2010 is likely to be short by at least a quarter. But the UK is not the only developed country finding that the change from a traditional electricity industry is far from simple. A closer look at the work that is being done makes it clear just how extensive an undertaking it is.

There have been, and still are, social and political issues. When the UK government announced plans for extensive wind farms far offshore (Round 2), for example, primary legislation was still required to claim construction rights over the seabed, and the form of connection is still under discussion. Onshore, new planning guidance has had to be crafted to ensue that the benefits of local energy projects are given due weight. There are ongoing discussions over the local rates and taxes paid by such projects.

But the real mountain of detailed work is in altering the codes and standards of numerous distribution network operators and three transmission companies to allow everything from a kW of rooftop-mounted PV to a 100 MW wind farm to be connected.

The business of electricity supply in the UK has been taken to pieces and rebuilt since privatisation in 1991, but the technologies and technical practices had tended towards evolution, not revolution. Connecting renewables to the grid was an expensive, time-consuming obstacle course, only undertaken by the determined enthusiast. It was an attitude entirely incompatible with the growing pressure to shift to distributed generation.

A sea change was signalled in 2002. Callum McCarthy, then heading regulator Ofgem, told a meeting of network operators that government targets on renewables and distributed generation would require “the biggest revolution in the distribution network for 50 years”. The targets would require 3000 new renewable installations, 1000 CHP plants and up to three million domestic CHP installations. It was “emphatically not business as usual”.

What needed changing? Everything. Here are some examples of the type of root and branch reform under way in the UK, as they are in other countries where a similar shift is required.

At the transmission level, Britain’s capacity is in the wrong place (see Figure 1). The billions of pounds of investment required for new lines is huge compared to the asset base of the regulated Scottish transmission operators who would bear the greatest responsibility for building them, but the price control regime under which those companies operate had no allowance for recouping the cost. Financial instruments were required that would allow investment to be made, while minimizing the likelihood of stranded assets if predictions on new capacity were wrong.


Figure 1: Areas of network constraint in Great Britain
Click here to enlarge image

At the distribution scale the charging regime had been a “positive incentive to get someone else to go first”, Ofgem’s managing director of networks, David Gray, pointed out, because the first-comer paid all reinforcement charges. The traditionally conservative network operators have been hit by a huge increase in connection requests; by the need to move to active control of what is currently a passive network; and by the need to update and rewrite Grid Codes. Yet their regulated status restricts new investment and as Gray noted, “Most DNOs have responded to 15 years of price controls by taking out R&D almost entirely”.

Intense discussions have resulted in major changes to the latest version of the DNO’s price controls, due to take effect in April. It will see an altered charging structure that is intended to promote investment in the network, along with an Innovation Funding Incentive (IFI), and the ability to designate special Registered Power Zones specifically aimed at distributed generation and promoting active networks. So far 30 IFI projects totalling £3.5 million ($6.6 million) have been registered.

Meanwhile, a Distributed Generation Co-ordinating Group, chaired jointly by the DTI and Ofgem with members from across the industry, began work in November 2001. Its remit was to address barriers to the delivery of renewables and CHP targets, and constraints arising from existing network design, operation and market structures. The DGCG’s six working groups will have commissioned around 50 projects before it is wound up on schedule in March (see www.distributed-generation.gov.uk). A successor organization and technical steering group will take on long and medium term issues including the technical architecture of the network, active management and voltage and fault level control. In addition, many microgeneration issues including metering have still to be settled.

Is the mountain moving? The British Wind Energy Association described 2004 as “a record year … with new capacity built in 2004 almost triple that of the previous year”. Perhaps more important, a member of one company who had been away for 18 months said DNOs who had been obstructive in the past had a new openness to connecting small generators and were enthusiastic about changing their networks. He thought he had come back to a different industry.