Electricity generation policy statement 2013

ANNEX B: MODELLING

1. In order to gain a better understanding of the implications of the 100% target, Scottish Government commissioned independent consultants Sinclair Knight Merz ( SKM) to model generation scenarios and power flows ⁷³ . Since the modelling was commissioned, a number of modelling assumptions have evolved but the principle findings of the model are still valid.

2. The electricity system is constantly evolving. Over the last 12-18 months, we have been working with partners across the industry to develop and build an electricity dispatch model to allow us to better understand this evolution. The Scottish Electricity Dispatch Model ( SEDM) will be completed during 2013 at which point it will be subject to independent peer review.

3. The SEDM represents the UK's first regional electricity dispatch model and will allow for far greater scrutiny of the issues affecting Scotland's electricity generation than any alternative model. Rather than commission further analysis from one of these less suitable models while the SEDM is being finalised, the final Electricity Generation Policy Statement retains the modelling presented in the original draft document. This modelling is presented below.

4. Over the coming months and years, we will continue to develop and enhance our understanding of the complex interaction of policies and investment decisions that will impact upon the electricity sector and we will report these findings in subsequent EGPS publications.

5. The SKM modelled scenario is one that outlines a plausible generation mix that could broadly achieve the Scottish Government's current 2020 renewable target. This generation mix does not represent an expected or preferred generation mix rather a plausible mix based upon known projects in construction, planning or scoping. Table B1 shows the resulting modelled generation capacity mix in Scotland over the period to 2030. Clearly other alternatives are possible, and the final outcome will depend upon a range of factors such as, for example, deployment rates, capital costs and load factors.

6. The total generation plant required to ensure that demand is met and security of supply is maintained is determined by a GB generation dispatch model. Once built, plant is dispatched by the model on the basis of marginal cost. Using both market knowledge and the model we can determine, based on our assumptions of electricity demand growth, total generating capacity required, the location and output of this capacity to ensure the system remains in balance and demand is met and security of supply maintained.

Table B1: Scottish Generation Capacity (MW)

MW	2010	2015	2020	2030
Fossil Fuels	4,708	3,606	3,035	120
Fossil Fuels with CCS	-	-	571	2,284
Nuclear	2,289	2,289	1,215	-
Other thermal	173	50	50	39
Pumped Storage	740	740	1,040	1,340
Biomass	65	117	150	200
Hydro	1,308	1,364	1,500	1,700
Offshore and Onshore Wind	2,383	6,000	13,000	16,500
Tidal and Wave	21	51	700	1,770
Other renewables	103	103	103	103
Total	11,790	14,321	21,365	24,057
Renewables as % total capacity	33%	53%	72%	84%

Source: Scottish Generation Scenarios and Power Flows - SKM, January 2012

7. Key generation capacity changes that occur include:

• In the model, Scottish installed generation capacity almost doubles over the 10 year period to 2020 - with wind (onshore and offshore) accounting for around 13GW of capacity in this scenario. This growth rate represents a significant challenge but is consistent with the trajectories identified in the Renewables Routemap ⁷⁴ and Marine Scotland's Blue Seas - Green Energy ⁷⁵ report.
• The analysis assumes that some additional renewables also grow, including marine generation and, to a lesser extent, small scale biomass. The ambitious growth rate in marine generation is consistent with the targeted financial support provided to the sector through the ROS and national renewables infrastructure plan.
• The scenario assumes one unit of carbon capture and storage is installed. Following failure to secure investment at Longannet, Peterhead is now in a very strong position to demonstrate CCS technology on gas subject to success in obtaining funding from the UK Government's CCS Demonstration competition.

8. Table B2 shows the generation output by plant type over the period to 2030.

Table B2: Scottish Generation Output (TWh)

TWh	2010	2015	2020	2030
Fossil Fuels	19	13.9	9.7	0.2
Fossil Fuels with CCS	0	0	3	12.7
Nuclear	16	16	8.5	0
Other thermal	0.9	0.2	0.2	0.2
Pumped Storage	1.2	1.2	1.8	2.3
Biomass	0.4	0.7	0.9	1.2
Hydro	2.3	2.3	2.4	2.5
Offshore and Onshore Wind	5.8	15.4	35.6	45.7
Tidal and Wave	0	0.1	1.6	3.9
Other renewables	0.6	0.6	0.6	0.6
Total	46	51	64	69
Renewables as % total gross consumption	24%	49%	100%	125%

Source: Scottish Generation Scenarios and Power Flows - SKM, January 2012

9. The key observations from the modelling scenario are to estimate that total Scottish electricity output rises by around 40 per cent by 2020, primarily due to the increase in output from renewable capacity - in particular onshore and offshore wind with wind generation accounting for 55% of Scottish electricity generation output by 2020.

10. Total Scottish generating capacity rises markedly, increasing from around 11.8 GW today to over 21 GW by 2020 and 24 GW by 2030.

11. The 2020 target of generating the equivalent of 100% of Scotland's own electricity demand from renewables is achieved as renewable capacity and output increases.

12. The modelling work also considered the power flows between Scotland and GB. As explained in Box B1, positive values in the chart correspond to power flows out of Scotland (exports) and negative values represent power flows in to Scotland (imports).

Box B1: What the graphs show:

• The charts show the economic dispatch of a specific generation mix scenario based on merit order using a half-hourly GB dispatch model. The blue line in the chart below represents one generation mix scenario in one year.
• The power duration curves show the amount of time that power flows are above a certain value (net exports would equate to the time above the line minus the time below the line in the example below it would be the green area minus the red area).
• The charts also show the transfer limit for export and imports given the current and proposed interconnection limits, (represented by dotted grey lines).

Example 1: Hypothetical Power Flows Diagram

• One point that should be drawn from the example chart above is that the green area where the power duration curve is above the dotted line and the red area where it is below the dotted line represents output that would be constrained off, as it cannot flow over the interconnector.

13. Figure B1 shows the cumulative power flows between Scotland and GB from 2015 to 2030 resulting from the generation portfolio considered in one of the modelled scenarios. Positive values in the chart correspond to power flows out of Scotland (exports) and negative values represent power flows in to Scotland (imports). The analysis includes only existing interconnections to England and those reinforcements that are under consideration at the current time. Clearly if Scottish renewable generation expands substantially, then further reinforcements and interconnection may be required. Examples could include the ISLES project and interconnection to the Continent.

Figure B1: Scotland to England Power Flows 2015 to 2030 - All plant

Source: Scottish Generation Scenarios and Power Flows - SKM, January 2012

14. The power flow results shown in Figure B1 highlight a number of key issues, namely that:

• security of supply is ensured and no security of supply issues will arise providing the Western HVDC link is constructed as planned.
• Scotland has the potential to be exporting almost 100% of the time to 2020 and 96% of the time by 2030. Such is the potential for Scottish generation, further additional system management options over and above the proposed Western and Eastern HVDC links could help fully exploit this potential.
• despite the construction of the HVDC transmission upgrades currently proposed, 'excess' Scottish generation occurs from 2015 onwards (shown as the shaded area on the chart). As confirmed by the Scottish Energy Storage and management Study, in situations of excess generation, there are a number of system management options that could be employed:
• energy storage/demand side measures. As noted previously, it is critical that storage and demand side measures are incentivised through the EMR mechanisms. Demand side measures would help to reduce our aggregate energy requirements while storage solutions would help to maximise the benefits of the natural resources bestowed on the nation through supporting better management of localised and intermittent generation.
• additional transmission capacity is one mechanism through which increased levels of Scottish generation could be managed. Providing an export route for Scottish generation, increased interconnection represents a highly desirable outcome and justifies and explains our involvement in the ISLES project and Adamowitsch Working Group. The modelling estimates that, in isolation, at least one additional link will be required by 2020 with a further two links required by 2030.
• generation is constrained off. As is currently the case in the short term due to the grid constrained network in Scotland ⁷⁶ , additional constraint payments would be required during periods of peak generation. Following the efforts to reduce grid congestion through the delivery of improvements such as the Beauly Denny upgrade, this would represent an inefficient and undesirable outcome which we would look to avoid where possible.

15. It is not possible to look at these three mechanisms in isolation because ultimately unlocking Scotland's potential will require a combination of all three mechanisms. The need to provide an exact balance between demand and supply of electricity on a second by second basis means that constraint payments represent a necessary and essential component of the balancing system. This will continue to be the case in the future but such payments will be minimised through increased use of demand side measures coupled with storage solutions to help balance the grid and increased interconnection to maximise Scotland's export potential.

16. The balance of contribution from each will be determined by a complex interaction of factors including market forces and locational factors. e.g. significant demand for high levels of wind generation to complement high levels of Norwegian pumped storage help to make a persuasive case for North Sea transmission upgrades while localised storage solutions linked to generation would help to reduce network demands and reduce the need for network upgrades.

17. The results of our analysis indicate that, by 2020 up to 1.5 GW may need to be constrained off the system if energy storage or additional transmission capacity is not available. As a result constraints could occur for around 10% of the time. By 2030, in the unlikely absence of additional storage/ DSM or transmission upgrades, over 5 GW may need to be constrained off the system (the shaded area on the chart), leading to constraints occurring around 28% of the time.

18. In order to attempt to mimic the impact of relying wholly on renewable generation, the model constrained all thermal plant off the system with Figure B2 shows the resulting power flow. The results show that, even if Scottish thermal generation is not operating (or doesn't exist), then by 2020 power flows are beginning to be constrained. Beyond 2020 the constraints rise (the shaded area in Figure B2). As a result, given the generation mix, if no energy storage/ DSM measures or additional transmission upgrades are instigated, even in a renewables only mix then beyond 2020 renewable generation may need to be also constrained off the system.

Figure B2: Power Flows without thermal plant 2015 to 2030

Source: Scottish Generation Scenarios and Power Flows - SKM, January 2012

19. The results show that:

• Beyond 2020, as the contribution of renewables in scenario 1 increases, then without energy storage/ DSM measures or additional transmission upgrades, over 4 GW of renewable output may be constrained off the system. As a result constraints could occur for up to 18% of the time, in addition to fully constraining all output from thermal plant.
• Even in this hypothetical model with no thermal generation, both the Western and Eastern HVDC links will be required by 2020 to ensure security of supply. By 2030 two further HVDC links (or other system management options), would be required over and above the two 'bootstraps' already planned in order to maximise the benefits accruing to Scotland are maximised.
• If the transmission upgrades are delayed or not undertaken, then the output of thermal plant in Scotland may need to be constrained off the network. Constraining thermal plant in Scotland and replacing with output from plant in England is likely to incur costs of around £70/MWh in the long term. Constraining renewable plant is more costly due to costs incurred from incremental generation in the South, but also the lost Renewable Order Certificate ( ROC) income (or equivalent subsidy system) incurred by the constrained renewable generator - currently around £55/MWh - giving total constraint costs of around £125/MWh. As a result conventional plant will always be constrained ahead of renewable generation. In addition renewable generation should have 'priority access' over and above conventional thermal generation.