The National Grid Electricity System Operator (ESO) under the UK's National Grid plc recently proposed a £58 billion grid upgrade plan to improve grid operations to incorporate clean electricity better. In recent years, the existing grid capacity in the UK has gradually reached full load. Coupled with significant underinvestment in the transmission system over the past decade, this has led to increasingly severe bottlenecks for integrating renewable energy.

Grid Overload

In its report, the National Grid ESO noted that UK electricity demand is expected to increase by 64% by 2035. Therefore, a large-scale grid upgrade is urgently needed, including the construction of new infrastructure and connections between offshore wind and onshore facilities.

According to the plan, the UK needs to build approximately 4,000 miles of subsea cables and 1,000 miles of onshore lines, including a new high-capacity line extending from northeastern Scotland to northwestern England. This will increase the transmission capacity for low-cost clean electricity and enhance grid stability.

Underutilization of Storage Systems

The Financial Times reported that the utilization rate of battery storage systems in the UK's grid balancing mechanism is very low. Battery storage operators have expressed concerns and doubts about the grid's balancing mechanism, which has consistently overlooked the electricity services provided by battery storage systems.

The UK Electricity Storage Network wrote to the National Grid plc, stating that between November 2022 and May 2023, the average "skip rate" for large battery storage systems in the grid balancing mechanism was as high as 80%.

John Pettigrew, CEO of National Grid plc, stated, "We are at a critical juncture. The energy transition process over the next decade may be unprecedented. We need to make significant investments quickly; incremental upgrades are not enough, we need transformational changes."

Funding and Approval Concerns

Notably, the £58 billion grid upgrade plan still needs approval from the UK government and relevant regulatory authorities. If approved, it will be the first major upgrade of the UK's high-voltage transmission network since its establishment in the 1950s. However, the uncertainty surrounding the funding source and the potential for high-level investment costs being passed on to consumers adds to the uncertainty of the plan's implementation. The National Grid ESO estimates that if the upgrade plan is formally implemented, it will increase annual energy bills for UK households by at least £20 to £30.

(Source: Transformer Circle)