Spencer Thompson, CEO of Eclipse Power, discusses the need for further competition in the transmission network and how successfully innovates the grid depends on recognizing the problem -solving role of independent network innovators.
The British electricity transmission network has a problem. Started in the 1920s, extensively in the 1950s, and designed for an era of coal -fired power, today’s grid tries to serve the electricity requirements of the 21st century with Fundamentals that date from the coal age.
But the coal force has disappeared, renewable energy sources bloom and the electrification of heat and transport remains Apace. As the nation strives to meet its net zero obligations, the transmission network must quickly adapt to the variability of wind and solar energy, customers with large demand, new centers for power generation and new consumer needs.
Do the miracle start to show cracks? The transmission system must be modernized and reconsidering to be suitable for the goal, let alone in a nearby future where our strength is renewable, and our heat and transport needs are mainly met with electricity. Yet the transmission network in Great Britain is almost completely owned by three companies, each a natural monopoly.
A grid history
It pays to understand a bit of the history of power transmission in Great Britain. In his children’s shoes, the electricity of the leading role was generated relatively locally and only distributed among users in the neighborhood – often municipal street lamps. As the generation and use were distributed more, localized schedules arose, but there was no coordinated national system. This changed with the 1926 Electricity (Supply) ACT and in 1938 the first national grid.
The young schedule ran at 132kV, but in 1950 it was upgraded with 275kV interconnectors, which offer lower losses and make thinner cables possible for a certain amount of electricity. By 1965 the need to send more electricity over longer distances was tackled with new 400kV links.
This became very much the model for the British power transfer through the seventies and then, because large coal, gas and nuclear power stations provided almost all electricity requirements of the country. However, the expansion of renewable energy is two major challenges.
Firstly, large wind and solar projects are not bound by the same fuel needs as coal or gas-fired stations, so large projects that require large connections, can be far from the existing grid infrastructure and large power users. Secondly, the exit of wind and sun is inherently variable, which means that the power transmission system needs flexibility to guarantee balance, consistency and reliable operation.
New requirements, new power
All this is without taking into account the extra challenge to change the use and the growing demand. The government has set an ambitious target for almost completely renewable power under the Clean Power 2030 Action Plandescribe this as ‘key to a growing economy, our national security and improving our standard of living’. Achieving it is of vital importance as a renewable electricity is to relocate fossil fuels for transport and for water, space and industrial process heating – all needed for the UK to meet its net zero obligations.
At the same time, the UK is a leader in data centers. It is the world’s third largest market for AI (after the US and China) and the leader in Europe. The country has the potential to consolidate its position and to take advantage of billions of pounds in new data centers, unlocked by the government of the AI growth dances. Nevertheless, AI is famous energy -hungry and delays in connecting new projects can threaten this very valuable sector.
While the United Kingdom is leaning on clean electricity to order transport and heat carbon, commercial and domestic users need more power, sometimes distributed to new places such as large-scale EV charging points on the highway network. These new requirements are far away from that of the grid to serve, and it needs a quick change to meet it.
Regulation and supervision – a necessary evil?
And yet, when was large -scale national infrastructure ever moved quickly? The British Power Transmission Grid is today owned by three companies: National Grid Electricity Transmission, ScottishPower Transmission and Scottish Hydro Electric Transmission Limited (Shetl). National Energy System Operator (NESO), the grid operator for very large -ritain, manages the electricity market – this takes the challenge to balance the changing supply and supply.
The transmission system is effective a monopoly, runs to strict rules and heavily regulated by OFEM. The industry is slowly moving and risk-suffering-it has undergone a relatively modest infrastructure development, because most transmission activa were installed 45-60 years ago.
Despite the urgent need for several important upgrades, under the current system transmission projects have a limited appeal to investors. They move slowly, are confronted with bureaucratic obstacles and bear the risk of regulatory penalties that can get a huge bite from the returns.
In this environment it is difficult to innovate and a challenge to deliver new opportunities to the grid. It is currently virtually impossible to expand transmission assets for large customers for one-time use without a significant change in the regulations. We urgently need an updated electricity law and a coordinated approach to industrial authorities.
The current setup is not what we need to decipher the electricity grid, or to take advantage of investment options in the AI sector and elsewhere. With a lack of flexibility and a limited track record when delivering large infrastructure upgrades, the established operators of the transmission industry are at risk of becoming the bottleneck in the plans of the UK. They need support and various non-monopoly solutions to deliver these huge infrastructure upgrades.
Adjust and Innovate
If the Power Transmission network of the UK is to complete the switch of renewable energy sources, while it adapts to rapidly changing usage patterns, it needs enormous commotion. New schedule capacity must come online within a few years, not decades. Investors in large power consumption or generating projects need the reassurance that they get connections within a viable time frame or they will place their money in other countries where they can.
Since a few years, or gem has been investigating the potential of competition to stimulate the necessary changes. Neso does indeed push ahead with the implementation of competition for selected projects that are:
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Clearly defined (their design and construction can be separated from the system)
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Not integrated with the rest of the grid in a way that means that only existing established operators can deliver them
The key for this is the concept of ‘early competition’, which is hoped that innovation will stimulate, and results in new ideas and improved technologies. The other objectives for competition include lower costs for consumers and projects that are more attractive to investors, which accelerates their financing and delivery. It is certainly progress, but if The first project is being exercised on tender for the time being, it is going slowly.
Competitive time
Yet our experience in the connecting space-de so-called ‘last miles’ distribution between the transmission network and its consumers and suppliers see us see that competition is exactly what is needed. Competition in distribution was opened in 2000 so that the established distribution network operators (DNOs) were now confronted with competition from independent distribution network operators (IDNOs) such as Eclipse and Independent Connection Providers (ICPS).
Thanks to this competition, Dynamic Market participants who are not bound by geography in the same way as DNOs. Independents can plan, provide and accept new connections with the grid in the British Power Network. And although still regulated by Ofem, we enjoy a greater flexibility to design innovative solutions that can lower costs or delays, or even contribute to the overall viability of new projects.
This has had a measurable advantage for companies and investors who want to connect critical infrastructure, such as EV loading points, Battery Energy Storage Systems (Bess), Housing and Commercial Developments and Data Inents. It also has a positive influence on the service levels of Monopoly DNOs, and improving cost -effectiveness and services for customers.
We need an equivalent change – now – in the transmission network. Although steps to early competition are welcome, they are too little, too slow, to deliver the changes we need in the time we have. New independent transmission owners operators must be created and permitted to build the grid offering points that require large energy customers, projects in two to three years do not deliver the 10 to 15 that they could otherwise take.
By using the same innovation and flexibility that independent operators have taken to the distribution market, the VK can get its transmission infrastructure on schedule. But the status quo does not encourage established grid operators to stimulate change, and the supervisor has been insufficiently introduced and lacks the capacity or adjusts for this. Without change, the sector cannot offer the progress we need, the government’s commitments will not be assumed and the UK will miss opportunities in the field of wealth creation.
