Bears hibernate in the winter, when their environment becomes unpleasant. Here in the UK, the market environment for coal means it is becoming a seasonal creature too. In the case of coal though, it’s winter that allows it to be active and summer when it is largely slumbering; because now is not a good time to be out.
Coal’s summer inactivity is driven by the collision of a number of factors: lower demand, the growth of renewables and a policy environment that financially punishes carbon emissions.
Below I present some charts to illustrate the seasonality of coal, and briefly highlight some issues and questions that arise as a result. The data I’ve used comes from Elexon (here) and, to include embedded solar and wind in the data, National Grid (here).
Winter vs Summer
Diving straight in, here are two charts showing the major sources of power generation used in two weeks last winter and two just recently, in summer. The vertical axis is in MW, based on half-hourly (HH) data.
Figure 1a: Winter
Figure 1b: Summer
With both charts using the same vertical scale, an immediate takeaway is that the second chart doesn’t go up nearly as far as the first: the UK uses a lot less electricity in summer compared to winter. So the size of the available market is much smaller.
In both periods, the UK’s nuclear power fleet operates at a fairly steady output throughout, as does “other”, which mainly includes various biomass power sources. The term “net IC” refers to the total net inflow through the UK’s four interconnectors (including a big chunk of nuclear power imported from France). There’s a bit of up and down, but it might be steadier than you expected.
So what of the more variable sources of power?
In the winter period chosen, wind (in blue) played a game of two halves: plenty happening in the first week, but a poor effort in the calmer second one. The two summer weeks were both pretty windy, though with some big variations (Most of July 25th was calm, for example).
In winter there wasn’t much sun (in yellow, at the top), though it was more consistent in that calmer, clearer second week. In summer though, consistent and sizeable blobs of yellow show through the course of each day.
To fill the gap between changes in the level of overall demand and the (low-carbon) sources mentioned above are two fossil fuels – coal (brown) and gas (red). There’s also a tiny bit of hydro and pumped storage, but I haven’t shown them on these charts.
Since demand is lower in summer, the market for these fossil fuels is squeezed. Gas is still there, ramping up and down each day, but with its output much reduced. However you may struggle to see coal at all on the summer chart! Open it in a new window and you will see a thin and intermittent sliver of brown between the areas of wind and gas.
Focus on Fossil Fuels
To see those fossil fuels more clearly, here are two charts for those same two weeks, just showing coal and gas generation:
Figure 2a: Coal & Gas, Winter
Figure 2b: Coal & Gas, Summer
When the market size is being squeezed in summer, coal is cut out almost entirely. Gas is much reduced, in line with overall demand; and is also being specifically eaten into during the middle of each day, where the UK’s large installed base of solar PV gets in on the action.
It all means that summer is a good time if you’re concerned about carbon emissions from UK power generation. As I write, at around 13.30 on a reasonably sunny day, UK power is being generated at an overall emissions level barely above 200g of carbon for each kWh of generated electricity.
In my two selected winter weeks, it’s also worth noting that the total market for gas and coal was lower in the first week than the second. Remember from figure 1 that the first of our winter weeks was significantly windier than the second. Yet it appeared to be gas as much as coal that accommodated this reduction in fossil fuel burning. It’s an important reminder that it’s hard to assume the same relative behaviours of different power sources in every situation. The market is more complex than this, with the power mix at any point determined by a range of factors: from marginal costs (fuel costs) to technical constraints (such as ramp rates) to grid constraints (such as inertia requirements).
To finish the story of coal’s summer demise, here’s a final chart plotting the half-hourly generation data just for coal, through the year from January 1st until August 10th. (Although it leaves a lot of blank space, I’ve kept the vertical axis the same as the previous charts, for ease of visual comparison).
Figure 3: Coal through the year (MW, HH intervals)
Finally, here are some brief, future-gazing thoughts and observations worth pondering:
The UK government is committed to building new nuclear. Add another 3.2GW of nuclear (the capacity of the contracted Hinkley Point C plant) to the grey areas at the base of Figures 1 and 2 and – unless demand rises significantly – coal is completely wiped out in the summer months (with the market for gas eroded too). That’s fine: government policy is to wipe out coal completely – at all times of year – by 2025. A good chunk of winter coal use could go too, but not all. Some combination of other solutions – more nuclear than just Hinkley C, more renewable power, more long-duration storage, more gas, more interconnectors, lower demand etc. – will need to be found to replace that winter coal.
Control of Demand
The market for fossil-fuel generation (coal or gas) is being squeezed by low-carbon sources from two sides: steady nuclear and biomass, along with variable wind and solar. But the real killer when comparing summer with winter is the difference in demand.
How much further can efficiency (of domestic appliances and lighting for example) outweigh population growth, device proliferation or other factors? How high might short-term levels of demand go, in a particularly cold winter for example? (2016/2017 was not one of those). How quickly will electric car growth contribute to new demand?
On the other hand, what about demand reduction and management, through demand-side response markets (DSR), smart meter and tariff-based incentives or other mechanisms?
If we want to move the hibernation of coal to – unlike bears – its eventual extinction, demand will have as important a role to play as alternative supply.
In the week of January 16th 2017 (the right-hand side of Figure 1a), wind and solar didn’t offer much help in meeting high winter demand with sufficient supply. It was largely gas that stepped up to fill that gap.
Remove coal from that chart and fail to reduce demand (or see it rise), and gas would find itself with a bigger market share to fill. Good news if you’re in the business of selling gas-generated power?
Summer is a different story though. The market has already been shrinking, by combination of demand reduction and daytime solar. If the government’s nuclear plans come to fruition on one side and solar and wind continue to grow, gas may find itself becoming the next seasonal, winter-loving animal. How to persuade investors to back power plants that may remain essential on some winter days, but surplus to requirements for large periods during the rest of the year? Why would anyone invest in a fossil-fuelled market share which government policy seems intent on shrinking as time goes by? It’s no secret that the UK government has been keen to encourage investment in new gas generation, important as it is to both winter capacity and system flexibility, but has been struggling to achieve it.
The answer is almost certainly a continuation and expansion of today’s capacity markets. Given criticisms of that market’s outcomes recently, such as contract wins by diesel generators, reform of its rules is certain. Nonetheless, a viable business case for new power plants, based on some mechanism to reward availability and capacity not just energy generation, will be needed.
The electricity storage market has been growing rapidly, and there’s no doubt its continued growth and decreasing costs (for batteries at least) will have a major impact on shaping the future electricity market in the UK and elsewhere.
I mentioned earlier that I’d left hydro and pumped storage off the electricity mix charts. Here they are, for those two winter weeks. In summer, they follow a similar pattern but on an even smaller scale.
Figure 4: (Not much) hydro and pumped storage
While storage is making impressive impacts already on some short-timescale markets – such as grid frequency response – it isn’t about to gallop over the horizon as the white knight of bulk energy shifting; not on a daily and certainly not on a seasonal level. That’s not to say it won’t contribute hugely in the long run – and I’m a big fan of it – just that it provides no quick fix to country-scale power shifting.
It will be some time, and probably involve the scaling up of new technology solutions (power-to gas or power-to-fuel, perhaps?), before storage starts to have a big impact on the seasonal differences we’ve seen here; in both demand and power generation requirements.
Coal is already going into hibernation in summer in the UK, on the way to becoming fully extinct in less than a decade’s time.
The demise of coal, while not difficult to envisage in isolation, is just one part of the UK’s evolving and interconnected electricity market and so will have significant impacts elsewhere. Demand management, new sources of supply and time-shifting of both supply and demand through storage will all have roles to play in replacing it. (That’s just from an energy mix perspective too; developments in solutions such as synthetic inertia will be needed to replace some of its grid management properties).
Even when coal is gone, the challenge of big seasonal differences in power demand will remain.
Thus so too will remain the various business case, regulatory and market operational challenges that this seasonal contrast brings with it. In particular, gas may find itself as the next supply option to be squeezed in the summer but essential to keep available in the winter. That will require capacity-based business case mechanisms in order to encourage investment: so capacity markets – albeit in some reformed guise – are here to stay.