LONDON, April 25 (Reuters) - Britain's most ambitious smart grid project is being built on a housing estate in Leighton Buzzard, a rapidly growing commuter town north of London.
UK Power Networks (UKPN), which owns and operates electricity cables and lines across southeast England, is installing a giant battery farm that will supply electricity to local users at peak times.
Around 240 tonnes of lithium-ion batteries are being installed in a specially designed building raised 2 metres above the ground to protect it from flooding by the nearby river.
And the battery room will be air-conditioned to keep the batteries comfortable at a steady 23 degrees Celsius to extend their working life.
The demonstration project, which is scheduled to begin operating in September, is jointly funded by UKPN and the Low Carbon Networks Fund, administered by the government's Office of Gas and Electricity Markets.
Once it is fully operational, Leighton Buzzard will have the capacity to discharge up to 10 megawatt-hours (MWh) of power into the local distribution network at a rate of up to 6 megawatts (MW), enough for 6,000 homes.
The aim is to test the technical and financial feasibility of using storage to reinforce the power grid and help meet peak loads as an alternative to the conventional approach of installing more substations and overhead power lines.
Many analysts have written off electricity storage as expensive and impractical. But interest in storage is growing rapidly.
California has instructed utilities to install or procure 1,300 MW of storage capacity by 2020 as part of the state's plans to increase renewable generation and reduce emissions. Germany, Italy and China all have ambitious electricity storage plans.
Remote island communities, where the alternative is running expensive diesel generators, are also prime candidates for schemes which integrate solar and wind with battery farms.
Britain's Scottish and Southern Energy has developed a scheme in the Shetland Islands off the north coast of Scotland to discharge 3 MW every day to help offset the evening peak.
Other island communities in the Azores, the Caribbean and the Pacific have also been identified as promising locations for integrated battery-and-renewables projects to cut blackouts and reduce reliance on diesel.
Unlike physical commodities such as oil, gas and coal, electricity cannot readily be stored, according to the traditional textbook account. The amount of power produced by generators must exactly match the amount demanded by customers on a second by second basis.
For a century, the electric industry has met variable and unpredictable demand from users by aggregating them together in large networks (customers' behaviour in aggregate is steadier and more predictable than individual users') and keeping lots of spare generation and transmission capacity on hand to meet surges in demand. Generation followed demand.
But the traditional model is being blown apart by the government's ambitious targets to combat climate change by electrification and decarbonisation. Over the next 30 years, Britain will need vastly more generation and transmission capacity and the power supply will become much more variable and unpredictable.
The government plans to replace gasoline and diesel-powered cars with electric vehicles and gas-fired home boilers with electric heaters which implies a six-fold increase in peak demand from the current 60,000 MW to as much as 370,000 MW by 2050.
At the same time, government plans to decarbonise the system by increasing the amount generated from renewables like wind and solar imply much more variability in supply because they cannot be scheduled in the same way as coal and gas-fired power stations.
Britain's generation and transmission system is already stretched to meet the combined heating and lighting demand on winter evenings. Enormous amounts of spare generating and transmission capacity are held in reserve to meet peak demand on just 100 hours per year.
LOAD SHIFT OR STORE?
In future, as consumption grows and supply becomes more unpredictable, it will be even harder and more expensive to meet peak demand. Policymakers and the industry are therefore considering how to adapt the traditional generation and distribution model.
One option is to smooth out the peak in consumption and make demand more flexible by introducing smart meters and time of use tariffs. Every household in Britain will have a smart meter installed by 2020. Smart meters will measure the amount of electricity consumed in every half-hour period.
In theory, once smart meters have been installed, suppliers could introduce higher tariffs for peak periods (generally 4 pm to 8 pm on winter evenings) to encourage customers to shift consumption to other times of day when demand is lower, which would make more efficient use of generation and transmission assets.
The other main option is to introduce more storage on the network. Storage units would absorb excess power overnight and when wind and solar production is especially high, then discharge it at peak times, smoothing the demand profile.
Britain already has some limited electricity storage in the form of pump-hydro. Dinorwig power station in north Wales, which became fully operational in 1984, uses off-peak electricity to pump water to an upper storage reservoir.
Electricity can then be supplied back to the grid by opening the sluices and allowing the water to drain back into the lower reservoir through six giant turbines. Dinorwig can produce up to 288 MW and reach maximum generation within 16 seconds, according to its operator First Hydro.
First Hydro also owns and operates a smaller and older facility nearby at Ffestiniog which can deliver 90 MW to the grid in about 60 seconds.
The problem with pump-storage is that it is enormously expensive and suitable sites are rare. Batteries are cheaper and can be scaled to any required size. Storage batteries can be installed at any scale - from an individual home to a street, or even directly onto the distribution and transmission networks at the substation level.
But batteries are still more expensive than conventional network reinforcement. In general, distribution companies find it cheaper to install extra lines and substations to meet peak demand.
UKPN puts the capital cost of the battery scheme at Leighton Buzzard at 11.2 million pounds ($18.82 million), compared with 6.2 million pounds for conventional reinforcement, with an extra overhead power line and another transformer.
"On a pure capital expenditure basis, energy storage can seldom compete with conventional options," the company admitted in a presentation back in 2011.
But the company hopes that battery storage could become more economic in future if costs come down with more experience.
Battery enthusiasts also hope their storage units can earn extra revenues by providing a variety of additional services to the grid, for which they would get paid.
Battery farms could earn extra revenue by providing balancing services like fast-response and participating in the short-term operating reserve, according to S&C Electric Europe, which has done much of the design and engineering work on Leighton Buzzard.
Battery farms could also help regulate voltage, supply reactive power to support the grid, and earn payments under government plans for capacity markets.
There are still some problems to overcome before battery farms can start unlocking all these extra revenue streams.
Britain's regulators consider electricity storage to be a form of generation. Under current rules, distribution network operators like UKPN are not meant to own "generation" assets directly, so it has to be organised through independent third parties.
Giant battery farms still seem outlandish. But storage will probably play a much bigger role in the smart electricity grid of the future. If it does, it will be thanks in no small part to Leighton Buzzard. ($1 = 0.5953 British Pounds) (Editing by Keiron Henderson)