Project Summary
SIF Challenge
INCENTIVE is addressing the Whole System Integration innovation challenge by investigating and demonstrating how offshore wind farms (OWF) can provide inertia to the onshore networks.
Aligned to the aims of the innovation challenge, INCENTIVE is:
· Improving the coordination between onshore transmission networks and offshore wind developers, with a view of introducing innovative solutions to the GB energy system.
· Reducing complexity and bureaucracy by developing optimal business models that will be applicable not just for the Beta Phase demonstration but for national roll-out following the completion of the Beta Phase 1 and 2.
· Avoiding duplication by building a common understanding on the INCENTIVE solutions amongst a large consortium with all key stakeholders.
· Reducing complexity and bureaucracy by developing optimal business models that will be applicable not just for the Beta Phase demonstration, but for national roll-out following the completion of the Beta Phase.
· Reducing barriers to market entry for OWFs to provide inertia.
Network Innovation
The fall in inertia in the GB network is inherently a challenge that requires network innovation. INCENTIVE is focused on using OWFs to help stabilise the onshore network. Currently, no OWF is able to provide inertia to onshore networks globally. INCENTIVE will allow a step-change in capability for OWFs across the world, supporting the increase of renewable generation and delivering benefits to consumers.
Evolving from Alpha to Beta
In the Discovery Phase, four innovative INCENTIVE solutions were identified for further study. In the Alpha Phase, the commercial and technical feasibility of these INCENTIVE solutions were investigated, increasing the number of potential sub-options to nine. The Alpha Phase highlighted compelling economic arguments and high-level technical feasibility for the majority of the INCENTIVE solution options.
In particular, the Alpha Phase showed that the three solutions listed below can provide significantly cheaper inertia than current sources, in turn reducing the costs of operating the future energy system and reducing costs for consumers.
OWF with:
o STATCOM with supercapacitor energy storage and grid forming converter.
o Battery energy storage system (BESS) with overrated grid forming converter.
o Synchronous condenser with flywheel.
The Alpha Phase highlighted that these three solutions are of high technical readiness level (TRL) (but low integration readiness level (IRL) and commercial readiness level (CRL)) for demonstration in Beta Phase. The two-stage approach of this project (see question 7) will help investigate this further prior to the demonstration.
As well as finding promising solutions, the Alpha Phase evolved our understanding of the problem to be solved:
· There are technical, regulatory, grid code and market barriers that are inhibiting these solutions (including that offshore wind auction mechanisms require changes)
· There is a radical rethinking required by OWF developers to develop solutions that strengthen the networks: historically this has not been in the remit of OWF developers, and INCENTIVE is providing an opportunity to make this step-change in an industry-wide consortium.
· Engagement with OWF developers and INCENTIVE solutions suppliers has highlighted the need for first-of-a-kind demonstration for these solutions (which will be realised in Stage 2 of the Beta Phase).
The Alpha Phase identified possible sites for detailed feasibility studies in the Beta Phase, with a view of building up to demonstration(s) and also identified possible supplier-specific solutions to include in the Beta Phase demonstrations. The Beta Phase will build on the work of Alpha to address the remaining challenges stated above, and create a pathway to commercialisation for the INCENTIVE solutions.
Users
In Alpha Phase we identified the following users needs:
· OWF developers and INCENTIVE solution suppliers need to demonstrate the INCENTIVE solutions before they can be rolled out commercially.
· Networks need to understand their role in the implementation of INCENTIVE solutions, and whether they will be capable of owning and operating these assets in the future.
· The ESO needs to understand the technical performance of the INCENTIVE solutions and how they will participate in future markets.
· Consumers need low-cost inertia, and this need will increase in the future as more renewable generation is added to the network.
Experience
The consortium contains partners with all the necessary experience and capabilities to address the above needs:
· SSENT has the technical expertise to conduct the necessary technical assessments of the INCENTIVE solutions.
· NGESO has the expertise to provide insights on market access and grid code compliance.
· University of Strathclyde has experience in developing and assessing innovative control solutions for use on the GB network.
· Carbon Trust (representing 10 leading OWF developers, and with assistance from Frazer-Nash Consultancy (FNC), has the commercial and technical knowledge to develop business models to ensure commercial role out, and the developers have the capability to conduct the Beta Phase demonstration.
An Advisory Panel of INCENTIVE solution suppliers has also been set up to ensure their expertise contributes to the Beta Phase.
Innovation Justification
State of the art
INCENTIVE will maintain the UK’s global leadership in offshore wind integration. Building OWFs that provide inertia to the grid is highly ambitious and doing so would be a world-first. Having OWFs provide inertia to the onshore network is not an incremental innovation but a step-change in thinking that could be replicated globally. SIF is the ideal mechanism to bring together the wide cross-industry consortium to perform the necessary innovation.
Regarding state of the art, inertia has historically been an inherent characteristic of the electricity system due to large numbers of synchronous (typically fossil fuel) generators. Due to increased renewable penetration, inertia levels are falling. If this fall is not arrested, it will prevent further renewable generation being added to the network; indeed, in GB renewable generation is already being curtailed due to low inertia. To begin to address this, ESO has launched a trial stability market (Stability Pathfinder) to procure inertia and other stability services. In this trial market, technology solutions (including BESS and synchronous condensers) have been procured by ESO to provide stability.
How INCENTIVE is innovative
At present, OWFs and other renewable generators do not provide inertia to the grid. Whilst BESS and synchronous condensers are known to be able to provide inertia, the combination of an OWF with a BESS or synchronous condenser has not been demonstrated to provide inertia, and there are significant technical and commercial risks in the combination of the assets.Further still, a STATCOM with supercapacitor storage has not been demonstrated to provide inertia anywhere on the network (standalone or in conjunction with an OWF).
Whilst early stability markets are being trialled (Stability Pathfinder), the incentive for OWF developers to participate in these markets has not been addressed directly. OWF developers’ main business focus is to develop OWFs to sell power to consumers, not to provide / sell stability services to the ESO. OWF developers are in a highly competitive space and always focus on developing the most cost effective OWFs as quickly as possible. OWF developers are privately financed and so naturally tend to seek the lowest risk, best-known solutions to ensure private investors provide finance to the developments. Any innovation that increases the risk profile of a £multi-billion privately financed asset will require a strong business case to be implemented.
Going above incremental innovation
All of these factors mean that pushing through inertia-providing OWFs to commercialisation is a highly ambitious innovation. It is not just an incremental innovation, but INCENTIVE is leading a step-change in thinking. Further, with The Department for Energy Security and Net Zero’s (DESNZ) Holistic Network Design, it is clear that DESNZ wishes OWF developers to take a stronger role in developing the future offshore network. Projects like INCENTIVE, which includes GB networks and most major OWF developers, can nurture the collaboration between networks and OWF developers to deliver optimal future network solutions.
From the Alpha Phase, we have survey data from many OWF developers and INCENTIVE solution suppliers who indicate that demonstration of INCENTIVE solutions is required before they can be commercialised.
IRL and CRL estimations
Raising the IRL and CRL of the INCENTIVE solutions is core to the INCENTIVE project’s aim to bring INCENTIVE solutions to BAU implementation.
Through the work conducted in Discovery and Alpha, the integration readiness of the INCENTIVE solutions has been raised from IRL 1 to IRL 3. Upon completion of the Beta Stage 1 tasks, we will raise this to around IRL 4-6, and then end Beta Stage 2 at IRL 7.
Through the work conducted in Discovery and Alpha, the commercial readiness of the INCENTIVE solutions has been raised from CRL 1 to CRL 4. Upon completion of the Beta Stage 1 tasks, we will raise this to around CRL 5-6, and then end Beta Stage 2 at CRL 7-8.
Funding source
INCENTIVE cannot be funded elsewhere in the price control or be considered as part of BAU due to the level of risk and ambition. Furthermore, it is likely that assets will not form part of a transmission owner’s regulated asset base, as they will belong to OFTO/OWF operator.
Competitive markets
INCENTIVE does not undermine the development of competitive markets, as it seeks to increase competition of future stability markets but provides additional sources of inertia for NGESO to procure.
Counterfactual solutions and approaches
Regarding counterfactual solutions, INCENTIVE was scoped to deliberately consider all possible innovative ways that OWFs can provide inertia, and to compare those against existing approaches for increasing system inertia (running CCGTs out of merit and the Stability Pathfinder results). Some innovative ways have been dropped from consideration due to low TRL. However, the three main options will be continued into the Beta Phase.
Benefits
System stability services are critical to supporting increasing volumes of non-synchronous renewable generation. The current provision is through redispatch of synchronous generation, which carries significant financial and environmental costs, and the development of new, standalone assets procured through Stability Pathfinder (SP). Published figures suggest that the £1.3bn contract cost from SP3 could deliver benefits of £14.9bn between 2025 and 2035.
INCENTIVE will deliver benefits over and above those achievable through SP by developing generation and network assets with in-built stability provision. Benefits include:
· Introducing design alterations to requisite/planned assets to enhance stability service provision for only marginal cost increases.
· Capturing co-development cost savings, e.g. in shared network, access, and planning considerations
· Potential acceleration in connection of renewable assets by proactively addressing stability at the outset.
· Creating a more liquid market for stability services, potentially driving down market prices in the long-term.
The CBA is based on a system capacity of 250 MVA, consistent with a 750MW offshore windfarm. The counterfactual is the cost of procuring similar levels of stability services via a SP tender. The benefits are the system-wide savings that would accrue to both the network operator and asset owner, with apportionment between these parties dependent on the nature and liquidity of future stability markets.
STATCOMs with supercapacitor energy storage – Impacts and Benefits
Cost Savings
Adding supercapacitor energy storage and grid forming converter to a conventional STATCOM would carry a lifetime cost of £7.85m and would deliver stability services that would cost an estimated £32.4m to procure via SP – a cost reduction of 75%. GB has a pipeline of up to 68GW of offshore wind. Assuming 50% will be AC-connected via a STATCOM, widespread adoption of the STATCOM with supercapacitors could meet around 5% of GB inertia needs and in doing so deliver savings of around £1.0bn over 30 years compared to SP procurement.
New-to-market products, processes, and services
This is a new technology, requiring large-scale demonstration before BAU adoption. The positive economic case is clear-cut, but the commercial case requires clarification owing to:
· Regulatory complexities related to ownership.
· Route-to-market concerns resulting from the relatively small amounts of stability offered at each location.
BESS
Cost Savings
There are multiple design and operating variables to consider when assessing the economic case for BESS (e.g. stacking of multiple services which can alter the optimal battery output from day to day). Alpha deliverable 2.6 models this in detail.
The benefits of uprating power converters to provide additional operating headroom, and hence additional capacity for inertia, are clear: A stand-alone 250 MW battery requires a 263 MVA converter to be grid code compliant and can deliver stability services with a lifetime SP procurement cost of £298m. Uprating this to 353 MVA would cost ~£5.9m. Assuming an 80:20 split between delivery of active power and delivery of stability services (actual split would be operational decision for battery asset owner), the uprated system would deliver 2.9 times more inertia. The lifetime SP procurement cost for this extra inertia is ~£195m.
New-to-market products, processes, and services
BESS is a maturing technology with the capability to provide stability services yet to be proven at scale. Areas of uncertainty needing to be resolved include:
· Testing and compliance of these systems to advance maturity.
· The technical benefits of oversizing converters needs further testing.
· Longer term commercial uncertainties exist around the future stability market and how batteries could contribute to these over different time scales.
· Co-location with offshore wind point-of-connection is novel use-case, which may bring Grid Code/STC and commercial implications.
Synchronous Condenser with Flywheel
Cost Savings
This is the most technologically mature option, although installation with a flywheel is less common. A flywheel may be added to a synchronous condenser for around £4m. In return, the inertia delivered by a 250 MVA installation increases by 1.25 GVAs. This extra inertia would cost £113m to procure via SP, over the asset lifetime. This is partly offset by increased energy losses.
New-to-market products, processes and services
There are outstanding questions about the impact on grid stability and connection should these systems be deployed at the point of onshore connection of offshore windfarms.
New to market products and services
All INCENTIVE solutions will be new to market products, providing new, low-cost inertia services to the ESO.
Carbon reductions – direct or indirect (MTCO2e)
SP solutions provide significant improvement over redispatch of fossil synchronous generation, however the dominant SP solution is synchronous condenser-based and therefore suffers power losses of 1-3%. INCENTIVE STATCOM and BESS solutions do not experience these losses, thereby delivering additional environmental benefit. Switching away from a 250 MVA synchronous condenser potentially saves 178 ktCO2 over a 30-year lifetime.
We will demonstrate each concept and potential returns in Stage 2 of the Beta Phase so that investors have the confidence to invest in scaling up the service.
