Q2 2017: Bypassing the grid

by Dr Iain Staffell – Imperial College London 

Britain is moving towards a decentralised power system as a tenth of June’s electricity did not use the national grid. 

Small renewables (particularly solar) make up a growing portion of electricity supply. These are embedded into local distribution networks rather than connected to the high-voltage transmission system. They can meet demand locally if output comes at a useful time, though they do not necessarily reduce the need to have those transmission wires available for other times. 

The proportion of generation that bypasses the grid has been steadily rising, surpassing 10% for the first time in June. More than 25% of demand was met by ‘embedded generation’ for 41 hours over the quarter, primarily on sunny weekend afternoons.

Some of this embedded generation would be consumed “behind the meter” where a building with solar panels runs appliances while the sun is shining. These consumers make no contribution towards the cost of the network when they are doing so. Since these costs are largely fixed, tariffs have to rise for everyone else, making it ever-more attractive to bypass the network: a phenomenon known as the “utility death spiral”. 

National Grid and the other transmission companies collect much of their revenue on the basis of the peak demand measured on the transmission system. There are still times when embedded generation provides less than 1% of total demand, so this peak is falling much more slowly.

Companies that buy power from embedded generators at peak times reduce their metered demand and hence their charges, passing on these “embedded benefits” to the generator. National Grid is still allowed the same amount of revenue, so charges for everyone else go up. Ofgem, the regulator, has recently ordered a change in the way some of the charges are calculated, and embedded benefits will be gradually reduced from April 2018.

Share of demand flowing through the transmission system in each month. Circles highlight June in each year

Authors: Dr Iain Staffell, Professor Richard Green, Dr Rob Gross and Professor Tim Green