Electricity grids and markets: current status, problems, and opportunities for the Faraday Grid

Executive summary

Almost all countries around the world have committed to reduce carbon emissions significantly, most recently in the Paris Agreement. Almost inevitably, this requires very high proportions of wind, solar, and other intermittent forms of renewable generation. However, integrating high levels of intermittent generation using current technologies is costly.

The increased intermittency of generation requires, among other things, an increase in reserve capacity, which has been estimated to increase electricity costs by as much as £45/MWh, or £16B annually in Great Britain, at a relatively modest renewable penetration level of 50%.

Other markets have already seen reserve costs increasing and are likely to face similar costs. In addition, the efficiency of remaining thermal power plants may be reduced by as much as 20% at higher renewable penetration levels.

Renewable energy has to be curtailed (currently already 3-4% of production in Britain at a cost of £90M annually, which is expected to increase substantially), and additional measures are necessary to maintain system adequacy in a market with a large share of low-marginal cost generation. In Britain, this is currently facilitated through the capacity markets, which are estimated to cost £1B over the next 15 years.

In addition to the costs associated with intermittency, there are costs that result from an increase in generation volatility – variations in output over very short timespans of milliseconds to minutes. An increase in volatility leads to increasing frequency response costs, which are currently already significant (£12M/month in Britain and similar in other places); lower system inertia, requiring further investment in synthetic inertia or renewable curtailment; and increasing voltage control cost (currently £6-7M/month in Britain, and up to $55M in Australia).

There are further costs in distribution networks, which have to be upgraded to deal with reverse power flows, fluctuation voltages and harmonic variations that threaten expensive equipment. Increasing proportions of renewable generation increase locational imbalances (in Britain, these already cost around £320M annually), and increase electricity prices, which reduces economic growth. As a result, not only is the amount of renewable generation that can physically be integrated in networks in the short term without breaching regulatory thresholds limited; the amount that can be economically integrated in the longer term is, too.

The Faraday Grid proposes a solution that resolves some of the above constraints rather than mitigating their effects, as is the case with most existing solutions. The Faraday Exchanger can replace transformers in electricity grids. In contrast to traditional transformers, it can provide decentralised local control over power factors and voltages simultaneously at very short timescales, as well as being able to form the basis of a decentralised control and communications system (the Faraday Grid), consisting of a network of Faraday Exchangers which work together and have the ability to communicate with generators and consumers.

Simulations show that the Faraday Grid can already deliver significant economic benefits in the short term through a reduction in losses by around 12%, saving a market the size of the UK around £170M annually through a decrease in reactive power flows. Other short-term effects of increased grid capacity include an increase in the efficiency of generation, including a reduction in renewable curtailment, potentially leading to substantial further savings. The Faraday Grid can reduce volatility, reducing or even eliminating the need for some ancillary services, including reserves and frequency response, both of which are costly.

In the longer term, the Faraday Grid can avoid at least part of the additional costs associated with intermittency and volatility, including the additional costs of increasing reserve requirements, and transmission and distribution infrastructure. It can also enable other technologies that address longer-term volatility, including energy storage, to be integrated more efficiently, and allow higher levels of renewable generation to be integrated without breaching regulatory limits.

In this way, the Faraday Grid could prevent a doubling or tripling of the electricity price, which would have significant implications for economic growth, while enabling more renewable capacity to connect. At the same time, its decentralised nature can increase the reliability and security of the grid. It therefore has the potential to increase significantly the amount of renewable generation capacity that can be physically and economically integrated in electricity grids.

Download the full paper here: Electricity grids and markets: current status, problems, and opportunities for the Faraday Grid