It was a big week for constraints last week.
- The ESO launched the Thermal Constraints Collaboration Project
- Our associate colleague Simon Gill published a new constraint report on behalf of Scottish Renewables
- And Regen was asked to give a briefing to the Energy Security and Net Zero Select Committee on the solutions to rising GB generation constraint costs
We had a full hour – pretty exceptional for a Select Committee briefing – but we came prepared for a struggle to keep on topic for that length of time. In fact, the MPs seemed pretty intent to find out about both what’s causing the recent rise in constraint costs and, more importantly, what can be done about it. We only veered off-piste to talk about heat pump costs in the last five minutes…
In the first part of the session, we were keen to get some numbers and facts on the table, so we had a common basis to discuss future reforms. There were a few surprises: for example, that constraint cost increases are correlated with the recent wholesale price rises, not a sudden increase in constraint volumes, and that the majority of costs relate not to payments to wind farms, but to the turn-up of mainly gas power stations to replace lost wind generation.
We also discussed the connection process and were keen to highlight that generators do not just pop up to build projects in areas without capacity and then automatically get constraint payments – they must have a connection agreement, usually several years in advance. So, the occurrence of constraints is more often down to planning and network capacity delivery – and sometimes a rational economic assessment that enduring constraints for a period is the right answer.
The main discussion, however, was on the potential solutions to reduce both the occurrence of, and cost of managing, constraints. This part of the session could have run all afternoon – there was lots to talk about and lots of potential solutions to cover. But we gave it a good go and managed to cover strategic planning, better forecasting, network investment delivery, locational signals, non-firm connections, active network management, T&D collaboration, competition in the balancing mechanism, batteries and flex, skip rates, local constraint markets, interconnectors, control room functions, digitalisation, and steps to stop gaming behaviour. Phew!
We hope the MPs came away with a strong impression that there’s lots that could be done, and already many useful initiatives that are under way. Constraints may be inevitable, indeed desirable to a point, but there is no reason why we should accept the inevitability of ever-increasing constraint costs.