Project Summary
High impact low probability "extreme events" can have serious impacts on the GB energy system. The GB energy system is rapidly transitioning, with an increased dependency on renewable generation and an increased reliance on electrification: a combination which will lead to greater system vulnerability. The increasing frequency of extreme weather events along with influences of other geopolitical events (COVID / war) can have both direct and indirect impacts on the system. This project sets out to better understand how whole-energy system resilience can be impacted by extreme events, identifying vulnerabilities, and informing future investment planning decisions.
Innovation Justification
A novel, innovative solution
The cross-sector impacts of extreme events, such as pandemics and severe storms, necessitates a modelling approach with a broader scope than that of current industry tools, which mainly cover subsets of energy system assets. Our proposed solution will allow the FSO to be proactive in assessing the impact of low-probability events and identify interventions to improve energy system resilience, with the potential for significant cost savings by reducing the impact of system failures. This project addresses the Innovation Challenge of 'Improving Energy System Resilience and Robustness' by enhancing the approach to the identification and analysis of extreme events and their impacts on the GB energy system.
Built on a powerful modelling approach
We considered a range of modelling approaches during the Discovery phase (e.g. Bayesian modelling, system dynamics modelling). We propose that Model-Based Systems Engineering (MBSE) is the best framework to construct a prototype system resilience model due to its flexibility and ability to contain and display complex information in an intuitive way. Our stakeholder engagement has highlighted the case of the Common Infrastructure Model, which is also built using an MBSE approach and could be leveraged to provide datasets for Alpha phase. We will develop the proposed model from its current TRL 2 (technology concept formulated) to TRL 7 (system prototype development in relevant environment), building a platform for further development in the Beta phase toward business-as-usual operation.
Informed by experience
We have the advantage of experience across a range of current and previous SIF projects, which we have used to inform our approach to this programme. In particular, conducting early and proactive cross-sector engagement with stakeholders representing electricity, gas and finance industries has allowed us to maximise the value of project partners during the Discovery phase. Our Alpha project will seek to build on this, engaging with the water industry to understand how loss of the energy system impacts other essential utilities. Our project delivery will recognise the complementary synergies with other SIF projects (WARN & CReDo+) and continue work collaboratively to align the inputs and outputs of each model.
In collaboration with stakeholders
We built a coalition of industry partners with expertise across the GB energy sector and have leveraged this to propose an innovative modelling approach to understand resilience at a whole-system level. We have conducted group workshops and individual interviews to gather stakeholder views and enable challenge of our work, which has allowed early addressing of issues and improvement to the Discovery phase outputs.
Ideal for the SIF programme
This project involves developing a novel approach that cannot be resourced via existing business practices. It can deliver significant benefits to the way energy system reliability is managed but must be developed and tested separately to business-as-usual tools and processes to ensure it does not impact on current security of supply. It brings together project partners across the electricity, gas, and water sectors, as well as academia. This unconventional coalition has offered a uniquely diverse range of thought during the Discovery phase and will continue to do so in the Alpha phase. This project takes cross-industry holistic approach that cannot be undertaken by a single network/ organisation. The strategic innovation fund is therefore the ideal vehicle to both develop and deliver this approach and share outcomes and learning between networks.
Impacts and Benefits
The pre-innovation baseline is the networks' current approach to planning for resilience. This is based upon models and assumptions established ~50 years ago, relevant to a less interconnected world with more centralised, large GB generation and lower societal dependency on electricity. The current approach is reactive and siloed, and leaves networks unable to assess the full extent of the disruption that could result from HILP events, and therefore unable to prioritise projects and response plans that would deliver maximum benefit in terms of minimising impacts to the GB energy consumer.
The proposed modelling solution will give the energy companies, Government, and the regulator the information that they need to effectively plan and enact changes that will optimise energy system resilience with lowest cost to the GB consumer. The benefits of this are intuitively obvious yet difficult to quantify: There are two possible sets of unknown resilience-building interventions, one resulting from the innovation, the other from the baseline, provide a set of unknown benefits should some event, with unknown low probability, occur.
Insights into the benefits of the modelling could be gained from NGESO's current performance metrics and Regularly Reported Evidence (RRE). Once a functional model exists (Beta Phase), it may be possible to perform a post-event analysis to identify whether the outcomes could have been predicted in advance.
For now, our approach to quantifying benefits has been to develop a prototype benefit model. This assesses the increase in benefits realised through optimising the selection of options based on information, rather than selecting randomly. This suggests (indicative only) that, on average, good information can increase the benefit of resilience interventions by a factor of 3. Work to improve the quantitative basis and sophistication of this model will continue in Alpha to allow a more robust evaluation of benefits to be developed.
Qualitatively, the benefits from the model are:
- Financial -- optimising future cost of operating the network
This project will aid investment and planning decisions by providing greater certainty over likely future costs from extreme events and assessing the most cost-effective mitigation strategies and 'future-proofing' actions. It will help limit the severity of detrimental impact to the energy system, and reduce long-term costs from remedying unexpected issues. These improvements should feed through to the procurement process, with better planning will enabling more competitive tendering for products and services.
- Environmental -- direct and indirect CO2 savings per annum
Modelling may allow improved forecasting of potential power shortages, reducing reliance on fossil-fuelled backup plants; hence reducing carbon emissions.
- Revenues -- creation of new revenue streams
It is possible that the approach taken can be exported to system operators in other countries, whose energy systems face the same challenges as GB's.
- New to market -- services
The ESO has been at the forefront of pioneering smart approaches to system flexibility over recent years. This project can identify areas where similar smart approaches are possible for system resilience. This will provide benefits by further opening up the energy market to new participants, products and services to replace existing high-cost items with more innovative solutions.
- System benefits - Improved system resilience
Improved understand of system vulnerabilities to extreme events will inform the investment and planning for improved system resilience, reducing potential future costs incurred should a disruptive event occur. The benefits of these savings could be any combination of financial, environmental, or social.
- Operator benefits -- Regulatory Compliance
Anticipated license conditions of the FSO will require the ability to both assess system resilience and provide recommendations to improve system resilience. This project seeks to address both requirements.
Impacts and benefits
The Cost Benefit Analysis (CBA; WP5) undertaken in the Alpha project indicated that the approach had the potential to save consumers and taxpayers hundreds of millions of pounds over the next 25 years. This would be enabled through NESO acquiring the capability to recommend cost-risk optimal system-wide changes (such as the creation and adoption of resilience standards) based on identified system vulnerabilities. Our literature review showed that this would be a more effective approach than asset-specific hardening, which does little to mitigate the costly cascading failures from extreme events.
The GB-wide monetised net benefits (P50) from this project were estimated to be at least £978m over 45 years. The key benefits of this project arise from the possibility of avoiding or reducing costs from large, whole energy system outages, alongside reducing the chances of economic and political damage to the UK. This is on the basis that resilience investment decisions will be improved through insights gained from the resilience model outputs, and therefore there is the potential to either reduce or eliminate the impacts of major whole energy system outage events.
Extreme events happen very rarely. They typically give rise to singular sets of impacts that are potentially wide ranging, affecting consumers, the economy, infrastructure and so on, in unpredictable ways. So, although costs are potentially large, it is not possible to define a typical set of consequences, even less to monetise them.
The approach adopted therefore quantified and monetised only a portion of the benefits - those that arise from reducing electricity system fault occurrence. We estimated that using the model to reduce the frequency and severity of electricity distribution faults could lead to a 22% reduction in the expected number of customer minutes lost through ‘large’ events each year, once the whole network has been upgraded in line with model recommendations. This gave an estimated saving of £39m per year. However, this is only a fraction of the likely total benefits as it does not include impacts that extend to other elements of critical infrastructure, such as the gas network, telecoms, transport, etc.
It should be noted that there is extremely high statistical uncertainty surrounding the level of benefits that may be realised from improvements in resilience. Benefits will only be observed if an extreme event occurs and if the extreme event is one for which we have made preparation. There is no way to mitigate this uncertainty.
