In the Victorian era, the economist William Jevons proclaimed that “the wind, as a direct motive power, is wholly inapplicable to a system of machine labour, for during a calm season the whole business of the country would be thrown out of gear.” Today, wind turbines are a core technology for power generation in the UK, with one former Prime Minister stating that we can become “the Saudi Arabia of wind power generation”. 

Overall, the UK energy system is unfolding as one where we will increasingly meet our energy needs from the practically infinite flows of renewable energy. Their source is the sun and its derivative wind and water cycles, rather than via the finite booty of fossil-fuels buried within the earth.

Consumption and production must be equal at all times on the grid to avoid black outs.

Jevons could not have been expected to foresee this change. However, his observation retains relevance. He understood the challenges of renewable energy systems. In electricity, these are acute. Consumption and production must be equal at all times on the grid to avoid black outs. In the past, this was largely achieved by the UK’s fossil-fuel power plants ramping up and down to meet time-varying demand.  Moreover, coal, oil and gas could be transported easily at scale, providing cheap storage across the broader energy system.

UK electricity demand will approximately double by 2050, driven by the increased electrification of transport and heat (both industrial and residential). As we convert these huge energy-intensive sectors away from the direct use of fossil fuels, we increase the balancing challenge on the electricity grid.

Increased short-term storage will be needed to stabilise voltage and frequency (in everyday terms, these can be thought of as ‘quality’ measures of electricity). Thankfully, various technological solutions are available, including batteries.

Alas, significant longer-duration challenges also exist, some more predictable, others less so. A lot of commentary focusses on just one such problem – so called dunkelflauten – dark nights or dull days without wind, especially in winter. These lulls may extend over several days. 

More generally, a renewables future implies energy supply will fluctuate with nature’s rhythms, not human needs. Meanwhile, our energy demand varies over the day, and significantly between seasons. It changes its pattern over even longer periods, driven by variables including population and climate. Overall, the net mismatch between supply and demand   - whatever its cause - needs to be balanced.

In addition, one critical issue lurking in the shadows reveals itself if we think dynamically about the likely behaviour of a renewable system on decadal time scales, rather than the traditional focus on daily or seasonal issues. 

Imagine the GB electricity market doubles in size by 2050 but is supplied solely by wind and solar. According to a recent Royal Society report*, it would require “tens of TWh” of very long-duration storage to protect system integrity (a TWh is a wholesale unit of electricity, a billion times the size of the kWh on our electricity bills). The underlying reason is that, over a long-enough periods of time (say decades), we are likely to see several years of low renewable electricity generation in a row. To use a coin metaphor, ‘tails’ outcomes in successive years.

To put that scale of very-long duration storage requirement in context, our existing pumped-storage hydro in the UK can store under 0.03TWh.

So overall, we will need many technologies working in harmony in various ways to secure our future electricity supply. These fall broadly into four types: flexible power plants (for example biomass); direct energy storage technologies (old and new, mechanical and chemical); inter-connectors with other countries; and demand-side response capabilities of consumers at the industrial and household level. They all have a role to play depending on the exact needs of the system viewed over many different periods of time.

Sometimes Net Zero is framed simply in terms of building renewables generation. It is much more.

The main challenge right now is to create the regulatory framework in energy to ensure the roll-out of a robust future energy infrastructure. Sometimes Net Zero is framed simply in terms of building renewables generation. It is much more. Storage and networks are at the heart of it, every bit as much as new power stations. 

With reference to the Global Financial Crisis, the Fellows of the British Academy, responding to the then Monarch’s question “did nobody see it coming?”, attributed the debacle to “the failure of the collective imagination of many bright people” who “failed to see the risk to the system as a whole.”

Blindness to the bigger picture has lessons that reach well beyond financial policy. Failure to prepare for the complexity of our future energy system, including its myriad storage needs, some over very long-term time periods, is a good deal more serious than the lights going out for a few hours. It might, quite literally, leave us sleepwalking on a path to a new Dark Age, humming a last lullaby as we go.

*Large-scale electricity storage, Policy Briefing - The Royal Society (Sept. 2023)


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Disclaimer: The blog does not aim to give investment advice, but is designed to afford relevant longer-term context to investors, encouraging a broad perspective where uncertainty is high and a spirit of learning is important. The views expressed are those of the author, not those of Investec.