I’m kitting out a new office and a relatively cheap and flexible way to get shelf space was, I thought, to buy some of those flatpack cubes to which shelves and drawers can be added. Each element could be purchased separately, shelves, drawers, boxes, doors and of course the cubic structure it all fits into. Such a contrast to the now seemingly old fashioned way of buying a complete cupboard ready assembled with everything you need.
Similar I think, to the changes we’re seeing in the electricity market. The old fashioned way was to buy a complete set of all you needed to run an electricity system and deliver energy to a consumer. You only paid for energy but got all the inertia, reserve, frequency response, load following, firm capacity you needed, ready assembled in one place – a thermal generation station.
The modern way, it seems is to separate out the parts (or grid services) and buy them separately, but this is where things can start to go wrong. It seems there are plenty of suppliers of energy, the basic shelves and drawer space you want, but in pricing their product there’s an expectation that the structure will be in place. They quote a levelised cost of energy, rather like a levelised cost of shelf space or drawer volume, but with no accounting for the cost of the stable grid or structure into which they fit. The flatpack drawer, they say, is so much cheaper per litre of space than that monstrous cupboard you have there. Following that logic it would be easy to end up with too many drawers (as you’ll see I have done from the picture) and insufficient supporting structure to take them. Particularly problematic for electricity market is that although the parts are sold separately some of the shelf supports and drawer runners (inertia and firm capacity) are in short supply but there’s a reluctance to pay for them, they are often labelled as subsidies.
So the question is should the electricity market move towards a more cost reflective model? Should a PV panel owner making use of the stable 50Hz signal to generate pay for that service? Should I, with a 10kW electric shower, pay a higher connection fee than my neighbour with a peak load of one kettle even though our annual consumption is similar? Should a large nuclear power station (naming no names) pay for the increase in reserve services that the grid operator now buys to cover its potential loss? Should it be paid for the inertia it is adding?
It would seem to me that a cost reflective model is the only fair way for the market to assess which technologies we should to use to decarbonise the system. But maybe that’s too difficult for a complex power system. Perhaps we just stop arguing over whether drawers are better than shelves and buying things piecemeal, and design and pay for a complete office furniture system instead.
