Monday, 6 January 2020

Power Cuts: Free Markets Need Good Regulators

I bow to no man in my scorn for the way in which publicly-owned monopolies conduct themselves, having had detailed exposure to the workings of the old British Gas and CEGB, and still recalling the commercial bruises received at their hands.  One suspects that Labour's manifesto commitment to put the electricity distribution networks into the hands of local authorities and "open & democratic communities" played its part in crushing their hopes with voters, who also have views on the matter.

That said, open markets and natural monopolies need appropriate regulation; and this is never more true than in the electricity sector, being both enormously complex and absolutely life-and-death vital.  FWIW, my broad assessment is that Ofgem does a pretty fair job, albeit with some notable lapses(1); and that under the auspices of Ofgem (and Offer which preceded it), the National Grid and its various organs are pretty competent organisations(2).

Which brings us to last August's power cuts, and this month's official reports on the same.  The Grid is undergoing a lengthy period of forced evolution to accommodate the very new paradigm of "low-carbon" generation and its fundamental ramifications: and we're not to be surprised when it gets things wrong at the margins.

Still, the final reports on the power cuts (published at the end of last week), from Ofgem and the Energy Emergencies Executive Committee (E3C), contain more than just fascinating technical stuff.  It's pretty clear that not only the high-profile bad actors (├śrsted, RWE and a couple of the Distribution operators, all of whom have been invited to make £££ in "voluntary redress contributions") have been at fault here.  A unspecified number of players who should have been quicker off the mark with technical responses to the situation - because they are paid good money to be quick off the mark - were also delinquent.

Ofgem needs to be all over this, and redeem itself for some shocking recent failings(1).  Open markets are always the way to go wherever possible: but everyone is prone to getting lazy & cutting corners when things are quiet ... but that's exactly when you need to fix the roof.  The periodic sound of the cracking of the whip should be what ensures things never stay quiet for long.

ND

__________
(1)  By the standards of, e.g., other Eu energy regulators, Ofgem and the whole UK regulatory system is first-rate - and widely regarded as such overseas.  But that's not setting the bar as high as it needs to be.  Serious power cuts such as August's are proof enough: and the multiple recent failures among small energy suppliers are a genuine indictment (maybe more on this in another post).  Ofgem truly lost the plot on that one: "taking the eye off the ball" doesn't go nearly far enough as a critique.

(2)   My big beef against National Grid is perhaps more fairly levelled at government, which has legislated to give them a guaranteed return on "necessary" capital investments.  This incentivises Grid to endorse all manner of crazy "green" plans, because accommodating these schemes requires capex!  Again, Ofgem is supposed to be the hand on the tiller steering them away from costly nonsense, which is charged to us all.

21 comments:

Raedwald said...

Slightly OT but bear with. I have difficulty getting my head around the way that ENTSO-E works now, how our membership of an interconnected 'synchronous network' will be affected by Brexit, and who has authority to make decisions on transmission cuts in the event of a significant outage within an ENTO-E sub network. This may be more in the realm of electrical engineering than commerce - but for a layman, I cannot understand why the failure of a generator in August should have led to cuts if we could draw on reserve power from our interconnects? Are there limits? was it an engineering failure, or doesn't it work as a pooled generation network?

Who exactly regulates what happens within these 'synchronous networks'? have we lost control already?

microdave said...

"If we could draw on reserve power from our interconnects?"

If you look at sites such as Gridwatch you'll see that the 3 inter-connectors to the Continent are normally running flat out as imports. This means they cannot provide any "reserve power" in the event of another SNAFU like the one in August. Indeed, being HVDC circuits, they may very well trip out if the grid frequency starts dropping rapidly, rather than "Riding Through" as large conventional generators are generally more capable of.

Nick Drew said...

Perhaps our friend Gridbot can explain?

Elby the Beserk said...

FYI, from Paul Homewood's excellent Not A Lot of People Know That blog...


https://notalotofpeopleknowthat.wordpress.com/2020/01/05/the-role-of-distributed-generation-in-the-uk-blackout-of-9-august-2019/

Anonymous said...

Slightly OT, but I'd like ND's view on how much of the present ME unpleasantness is explained by US desire to maintain the dollar as the currency in which the world buys oil? It would explain the Libya shambles, as Gaddaffi was IIRC planning some kind of barter/gold for oil scheme and posed zero threat to Israel.

It's an alternative theory to the Occams Razor option, that the neocon advisers who have been in place since before 2003 are determined to take out any functional state with a half-decent military* in the name of defending America's Greatest Ally**.

* Egypt has not been a threat to Israel since 1976, when the Aswan dam was filled. Breaching it would kill nearly all the population and wash away Cairo. The Yom Kippur war was their last shot. Saudis (and to a lesser extent Egypts too) expensive US kit is I assume full of backdoors/kill switches/GPS tweaks in case they should ever use it against the wrong enemy.

** BoJo didn't get a courtesy call about the assassination, Bibi did. Admittedly Bibi is closer to the action, probably in every sense.

Nick Drew said...

Anon: the whole Dollar=World Currency thing is very interesting. That's another "another post"

but I doubt anything being planned by Gaddafi would have troubled anyone - that's at the MickeyMouse level, frankly

anyhow - another post!

GridBot said...

Part 1: I have difficulty getting my head around the way that ENTSO-E works now, how our membership of an interconnected 'synchronous network' will be affected by Brexit, and who has authority to make decisions on transmission cuts in the event of a significant outage within an ENTO-E sub network.

As microdave has stated, our connection to mainland Europe is via High Voltage Direct Current (HVDC) interconnectors. The Nature of direct current is that the voltage is nominally a fixed value in the instance of IFA1 270kV. By contrast the transmission system in both Europe and the UK is Alternating Current (AC), AC has both frequency and voltage, basically the polarity goes from a positive voltage to a negative voltage at a rate determined by the frequency, target frequency in the UK is 50hz.

DC power can’t just be added into an AC system it has to be converted from DC to AC and be synchronised with the AC transmission system. This is achieved by convertor stations situated on either side of the HVDC cables and provide the interface between DC and AC.
https://en.wikipedia.org/wiki/HVDC_Cross-Channel

long story short, there is effectively a DC bridge between mainland Europe and UK, this plus the capacity constraint of the interconnector IFA1 being (2GW) effectively forms a physical barrier between the networks.

With respect to who is in control of the inter-connector, my limited understanding is that it is agreed between the French SO and the UK SO, what the flows will be, based on supply/demand. However, in this example of IFA1, the French are well within their commercial rights to curtail exports to the UK should they need to.

GridBot said...

Part 2: This may be more in the realm of electrical engineering than commerce - but for a layman, I cannot understand why the failure of a generator in August should have led to cuts if we could draw on reserve power from our interconnects? Are there limits? was it an engineering failure, or doesn't it work as a pooled generation network?

In short; difficult question to answer without full information, but as microdave has stated, its likely that the interconnectors (which have a fixed capacity) were already supplying as much power as they could.

I don’t fully understand the nuance of how each generator was connected to the system and what the faults experienced were which will largely determine the answer to how generators interact, however; Further to Elby’s excellent link (https://notalotofpeopleknowthat.wordpress.com/2020/01/05/the-role-of-distributed-generation-in-the-uk-blackout-of-9-august-2019/):

Firstly, think of the electricity transmission system being protected from all demand (distribution networks and big industrial users) by circuit breakers, likewise all generators connected to the transmission system are also protected by circuit breakers. Simply, if there is a fault on a generator or a distribution network the circuit breaker will be tripped, thereby protecting the other generators and the distribution networks.
There are 2 types of generation – “Embedded/Distributed Generation” i.e this is generation that is connected directly to a distribution network, and generation that is connected directly to the transmission network.

Suppose that a fictitious distribution network is demanding 1000MW of power, this may be met by 500MW of embedded generation, meaning that the transmission system only sees a demand for 500MW of generation. Supposing the 500MW of embedded generation is tripped off, due to a fault, and can’t be brought back online fast enough, the transmission system effectively sees an increase of 500MW in demand meaning a total of 1000MW demand from the transmission system.

If this can’t be quickly matched by the transmission system, the frequency of the transmission system will quickly start to drop (this is important as most appliances and industrial equipment is designed to operate at 50hz). In this fictitious instance the load (demand from the distribution network) is shed thus preserving the rest of the transmission system (both frequency and demand/supply balance)

In the 9th of august example, it looks like the lightening fault on the embedded generation, caused a supply shortage and drop in frequency on the transmission system as it starts to see a spike in load. I think this may have contributed to the Hornsea wind farm fault. As far as I am aware, the little Barford Gas Generator trip was an unfortunate co-incidence.

Who exactly regulates what happens within these 'synchronous networks'? have we lost control already?

The answer for the UK is Ofgem, who are influenced by European legislation. It seems that National Grid have a positive relationship with EU regulators and are able to influence EU regulation. So no, control has not been totally lost.

End of thesis…

Nick Drew said...

Thanks, GridBot

@ how our membership of an interconnected 'synchronous network' will be affected by Brexit ... (Raedwald)

Not my special subject, but I'd be very surprised if it had any impact. As GB says, the French have various lawful ways of interrupting to protect their own technical position - although in the past they've also been found at fault when they withheld gas supplies for purely "commercial-protectionist" reasons, i.e. to stop prices going up in France. They had their knuckles firmly rapped by the EC, and it hasn't happened again to my knowledge

Interconnectors are an increasingly important feature of the international scene (some would say, too much so) - not just EU - and countries' dependency on everything working smoothly is pretty great, with reciprocity and technical harmony being central to this, on a wide multilateral basis. Even though we (and many other countries) are mostly in import mode from France (their nuclear surplus), the French are occasionally in desperate need of imports themselves (when nukes go down, characteristically in very hot weather, but also when unplanned maintenance is required, an ever-increasing issue for them) - so they've no strategic incentive to be anything other than a really good neighbour in such matters

If anyone is exposed to any weaknesses in the effective regulatory harmonisation that prevails right now (and I don't know of any), it is Ireland, who are right up a gumtree in electricity and indeed gas (and finance, and agriculture ...) if there's any serious falling-out with GB. They are 100% dependent on being comprehensively hooked up with the GB grid

Edward B said...

How much should we accept failure of start up retail energy suppliers as part of a functioning market?

Surely this is acceptable, even desirable, so long as supply is not interrupted?

GridBot said...

Edward B - my understanding is that when a small supplier goes under, the costs end up being passed on to other suppliers (need schooling on the exact mechanism) but effectively you end up with a situation where some customers are getting a subsidy at the expense of others.

I think the regulation that is needed is to ensure that new entrants to the market don't grow their customer base, beyond what they are capable of managing if/when the wholesale market turns against them.

i.e If they don't have sufficient financial muscle to bear increased wholesale costs when supplying customers at a previously agreed and much lower contracted rate/kWh, they go under.

Joe Public said...

Hi GridBot

Thanks for your explanations.

Further to the Jan 2020 final reports from Ofgem and the Energy Emergencies Executive Committee (E3C), and Paul Homewood's "The Role of Distributed Generation in the UK Blackout of 9 August 2019" - there is a statement I've had difficulty getting my head around:

"Since the transmission-connected generation lost comprises Hornsea and Little Barford, and this totals 1,384 MW, we can infer that somewhere in the region of 1.5 GW of Distributed Generation disconnected in several closely proximate phases over the entire event. That is itself a significant quantity, and suggests that, as the E3C remarks (p. 9), the total generation loss during the blackout was a monumental 3 GW."

Could it be concluded/assumed from your Part 2 explanation ...

"Suppose that a fictitious distribution network is demanding 1000MW of power, this may be met by 500MW of embedded generation, meaning that the transmission system only sees a demand for 500MW of generation. Supposing the 500MW of embedded generation is tripped off, due to a fault, and can’t be brought back online fast enough, the transmission system effectively sees an increase of 500MW in demand meaning a total of 1000MW demand from the transmission system."

... that the opposite can / did occur?

i.e. a distribution network is demanding 1000MW of power, this may be met by 500MW of embedded generation, meaning that the transmission system only sees a demand for 500MW of generation. Supposing the 500MW of DISTRIBUTED generation is tripped off, due to a fault, and can’t be brought back online fast enough, the transmission system effectively sees an increase of 500MW in demand meaning a total of 1000MW demand to be met from EMBEDDED generation? This 2nd tranche of 500MW from EMBEDDED doesn't exist, so the entire system trips?


Nick Drew said...

Edward B - another post coming on this very topic ...

rwendland said...

Re "getting lazy & cutting corners when things are quiet", things are not really quiet on this front as I guess a major project is underway at National Grid to plan for Hinkley Point C in due course increasing the maximum credible single failure point by 40%, which sizes the maximum reserve services needed (immediate Frequency Response and then STOR). Currently the largest credible single failure point is about 1.2GW (Sizewell B, the large HVDC connectors discussed above at 1GW, and just now Hornsea 1), increasing to 1.65GW for one reactor at Hinkley Point C dropping out when it gets going.

On 9 August 1GW of Frequency Response was contracted (I guess 1.2GW Sizewell B was offline for refueling), and it coped with the initial outage Hornsea (737MW) and steam turbine at the Little Barford gas-fired power station (244MW) dropping out after the lightning strike, but unfortunately a minute later Little Barford gas turbine GT1A (210MW) tripped then 30 seconds later GT1B (187MW) was manually shutdown and Frequency Response could no longer cope with this plus regional network units dropping out.

So perhaps the one good consequence of Hinkley Point C will be an increase in the contracted Frequency Response to 1.65GW which probably would have coped with the 9 August event! I'd be interested to know if the costs of increasing Frequency Response for HPC are charged to HPC, or if it is regarded as a cross-system cost for the good of all which might be resonable. Interesting to know if had Sizewell B been running with 1.2GW Frequency Response contracted, whether National Grid could have coped on 9 Aug.

GridBot said...

Joe Public

Starting to get to the limit of what I can remember from the power grid for dummy’s course I once took; but here goes.

To add a further nuance to my fictitious example, lets suppose the 500MW of embedded generation comprises of two 100MW wind farms and a mix of 50MW Solar/Wind plants. The exact mix is immaterial, suffice to say these assets can be described as having low inertia (think about the rotating speed of wind turbines that you see when driving along the M1.)

The loss of just one of the 100MW wind plants could cause enough of a frequency dip, as the load starts to literally put more drag on the generators of the other wind plants, upsetting the frequency and leading to tripping of plant.

By contrast, imagine a large steam turbine connected to a generator, this set would be spinning at several thousand rpm and with significant mass in the steam turbine, up to a point increasing the load on the generator, won’t materially affect the inertia of the steam turbine and therefore the frequency of the system. (here is an example of steam turbine that had too much inertia… http://www.therisktoolboxshop.com/LiteratureRetrieve.aspx?ID=83701)

So the point is not that the embedded generation doesn’t exist, it is that because embedded generation is low in inertia, it is sensitive to frequency variation, and therefore if an embedded generator is lost, and supply can’t be found elsewhere (either load shed or supply from the transmission system) then the frequency drop can trip other embedded generation, a domino effect.

A great example of a frequency response tool on a transmission level is the Dinorwig power station, this can very quickly be turned on and provide frequency/supply balance, relatively easy to do on a centralised transmission system, much harder when generation is embedded in the distribution network.

I must stress this is a fictitious example of what can happen in a given system.

Joe Public said...

Thanks GridBot, for taking the trouble to provide the extra info; much appreciated. ;-)

Raedwald said...

Wow. I'm bookmarking this - too much to take in at one reading.

It's, erm, quite complex isn't it?

Matt said...

@ND

Another one interested in why retail energy suppliers failing is a problem.
The customers are protected by the Ofgem Supplier Of Last Resort process so don't get cut off.
The problem (suggested by Gridbot) is that the Last Resort Supplier Payments from Ofgem means that some customers subsidise others.
Put another way, an entrant to the market charges less than wholesale, get a lot of customers and takes there money. Then goes bust and leaves the rest of the distribution network to pick up the tab.

You could argue that the dead hand of government regulation is the problem here...

GridBot said...

Having done a bit of research on the matter, I stumbled across this excellent article. It does a better job of explaining grid inertia and frequency, than I can.

https://www.renewableenergyworld.com/2019/10/25/grid-inertia-why-it-matters-in-a-renewable-world/#gref

Enjoy!

GridBot said...

Raedwald - another interesting read about a frequency problem experienced across Europe:

https://www.next-kraftwerke.com/energy-blog/who-is-disrupting-the-utility-frequency

As you say, it is a complex subject!

Nick Drew said...

Hold tight, Matt - post coming