“Cleaner energy will take some costs”: Balance Power on grid infrastructure
Smruthi Nadig talks to Balance Power CEO Phil Thompson about deficiencies in grid connections, and how they could threaten clean energy investment.
Phil Thompson, CEO Balance Power
Renewable energy and battery storage developers have warned of a 13-year waitlist to connect to Britain’s energy grid, raising the prospect of a generation of renewable power projects being disconnected from the country’s energy mix.
The fear of this delay has threatened the clean energy investments and has undermined the transition away from fossil fuels, at a critical time in which the UK is looking to encourage investments in its energy mix. This year, the government announced $252.2m (£205m) in funding towards its latest round of contracts for difference, frameworks to encourage more investment in clean power generation by fixing the price at which electricity can be sold.
With concerns that some wind and solar projects may have to wait until 2036 for a connection, improving access to power, and reinforcing the UK’s energy grid, will be a critical prerequisite for any more ambitious changes to its power mix, challenges that firms such as Balance Power, which provides equipment and solutions to the power industry, are keenly aware of. The company’s CEO, Phil Thompson, is eager to address this challenge and more.
Smruthi Nadig: How can grid connections delay clean energy investments in the UK?
Phil Thompson: There was a lack of planning regarding what a net-zero system needs to look like, how much generation and capacity will be needed to be connected and the speed that will need to be delivered. There was a little bit of an assumption that the old projects, or retiring capacity from the network, would free up new capacity, and hence, many of the projects are being kept on standby.
So even though they're not operating, they're still connected to the grid and holding that capacity, and they probably will do for a very long time. So this is where our drive to run a net-zero system is. It conflicts with the security of supply.
I'll give the example of you having a gas-fired power plant that runs 99% of the year and may generate 300MW that are being replaced with 300MW of battery that can only operate for one hour a day. We are now getting connection offers for projects funded until 2040. We're applying for connections that will go for solar and wind, and that's the standard connection date now.
There is a lot they can do to free up some space on the network to connect more generations, but a lot of everything else will wait a very long time to connect. It was a lot of what can be done at a national level to say we almost need to double or triple the existing grid infrastructure capacity to make this all very smooth in the future.
Smruthi Nadig: What should developers focus on when making clean proposals to the national grid?
Phil Thompson: They're not being under-ambitious or [over-ambitious] as everything in the market exists in a delicate balance that needs banks, investors, energy companies, and the national grid. So if the connections span that long [10 years], what do we know about that far and in time? Everyone is pushing hard to deliver that capacity, but the current grid bottleneck is probably the biggest.
The solution is almost a national plan, which isn't for us. Planning needs to have some changes for project developers and energy companies. There needs to be a national loosening of planning so the national grid can start building this infrastructure.
Smruthi Nadig: In January, the UK government announced a $40m fund to support cutting fossil fuels across various industries. How can the government help achieve that?
Phil Thompson: A false sense of security has been created over recent years. So when the subsidies were removed from wind and solar in 2016, no new applications for solar and wind were made.
Then slowly, we were doing some gas peaking projects, those could all be connected in, you know, a one-year, two-year time frame. Couple that with the security of supply issues and increased power prices, leading to more applications. And all of a sudden, net-zero applications started coming, and nobody knew what to do with them.
From a funding point of view, I want to see money made available to build this system that can be recouped from energy developers. Energy developers are very enthusiastic about investing and building projects. [We need] government support mechanisms to build the new infrastructure. The more capacity we connect, the security of supply goes up, and people's energy bills go down. Everybody's happy.
Smruthi Nadig: Do you think the Russian invasion of Ukraine also accelerated the energy transition, and made renewable power more attractive to governments?
Phil Thompson: Yeah, if we have a look at the energy trilemma, as we've seen it, you have the three elements of that for the last ten years. It all [about] clean. So let's just make the energy supply our energy supplies clean because it's always been cheap. And it's always been secure.
But suddenly, since the invasion of Ukraine, we've realised that our energy supplies aren't cheap because they're not secure. This has enhanced that push for renewables.
If we did have more renewables, more storage, and these other technologies connected to the system, we'd have less of a problem. So when that is encouraged, we know we're never returning to the abundant Russian gas. We now just need to invest in clean energy because that is now definitely the future.
Smruthi Nadig: Do you think the UK has the potential to produce its domestic clean energy to meet its energy needs?
Phil Thompson: Absolutely. And it can be done quicker than we think. When a blockage is identified, that halts the progress. These are achievable targets; companies like balance power and energy developers must build clean energy projects. We just need a system that can take it.
Because of grid connection delays and our experience on the grid scale, large businesses constantly tell us that you're building a solar farm or a battery project that only needs a little money. We’re looking at our large energy projects and [wondering] how we get this cheap and clean.
They're also suffering from increased energy bills, which is decreasing competition and putting pressure on them to make cuts and savings elsewhere. Many companies opting for renewable energy want cost reduction, but shifting to cleaner energy will take some costs.