Ofgem, the regulator for gas and electricity markets, will implement new price controls (RIIO-2) for network companies. These controls will come into force in 2021 (gas) and 2023 (electricity), and the current price controls will cease to be valid. As a part of wider set of targets, it can be implied that energy security is at the core of RIIO-2.
There is an inescapable question though; how much do we value energy security and what measures are we prepared to take to ensure the uninterrupted supply of electricity? This is the topic which we will be discussing at our next Centre for Energy Policy ‘Energy Conversation’.
The energy security and the role of the transmission network
But what is energy security? Energy security can be examined by different viewpoints but one of the most commonly considered is security of supply. The International Energy Agency describes energy security as “…the uninterrupted availability of energy sources at an affordable price. Energy security has many aspects: long-term energy security mainly deals with timely investments to supply energy in line with economic developments and environmental needs. On the other hand, short-term energy security focuses on the ability of the energy system to react promptly to sudden changes in the supply-demand balance” (IEA). This brings us to considering what the transmission network’s function is in providing energy security.
The actual transmission network, i.e. the power lines that transport electricity, enables nearly instant movement of large quantities of high voltage electricity over space from varying centres of supply to demand hot spots. Through this capability, a sophisticated transmission network is able to indirectly deliver electricity (i.e. through the distribution network) to various types of consumers such as industry and households.
The delivered electricity is coming from increasingly decentralised generation (e.g. solar panels in rooftops), but also from centralised power plants such as nuclear or gas turbines. Therefore, a resilient transmission network contributes to energy security by ensuring an uninterrupted supply at all times; let it be in times of high supply or high demand.
Energy security as a part of the economy
The service provided by the transmission network is not solely ensuring energy security. By contributing to the former, the network also enables industry to operate constantly and without costly interruptions, which allows them to keep their current location and consequently sustain local jobs. A wide spanning transmission network further enables to transport remotely generated renewable energy, which supports a country in meeting their environmental targets. The efforts on decarbonisation have also helped to create a renewable energy industry in this country. This comes with many other benefits such as job creation and economic growth. This list of services and benefits could be continued.
The challenges of the energy transition
The contributions of the transmission network then are significant, but are the services provided and the network itself appropriately valued? What is the social and economic cost of a major system disruption? What is the capacity of the network to recover from a black start? Do current market mechanisms give the necessary certainty for investing in energy security?
These questions also need to be seen in context with the coming energy challenges, which include an increased share of intermittent renewable energy sources within the energy mix, the planed large-scale uptake of electric vehicles, a potential electrification of heat, as well as further direct or indirect shifts of energy demand from other sectors of the economy onto the electricity system (e.g. by the production and use of hydrogen). The main question remains: will the system be able to keep the lights on? And if so, at what cost?
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Mr Constantin Brod |
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Dr Christian Calvillo Research Associate, Centre for Energy Policy christian.calvillo@strath.ac.uk |
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Dr Antonios Katris
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