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Zero‑carbon electricity is a pre-requisite for decarbonisation of the wider economy and many scenarios envisage rapid expansion of renewables. IEA estimates a need to double the annual rate of investment to 2030. A rapid transition to low carbon electricity creates a risk to investors because projects being financed now will generate their revenue in a zero‑carbon electricity system for which there is no track record of price formation. Although the cost of renewable power has fallen greatly, future revenues from renewables are still affected by market price risks that are often outside the control of generators. If risks are difficult to quantify, they may be mis-priced, leading to inefficient premiums being added to the cost of capital, which could increase the overall cost of the transition. In this context many countries around the world provide support for low carbon energy, such as the UK Contracts for Difference. In this paper we investigate exposure to price risk caused by uncertainty over the mix of technologies used to achieve decarbonisation, which we term 'transition risk', and how this varies under different technology mixes, and for different policy regimes. We show that exposing investors to transition risk could increase the cost of delivering the renewables needed for a zero‑carbon electricity system by around 25% or £7bn/year compared to policy options that reduce exposure to wholesale market price risk. The paper concludes that as long as transition risks remain high, de-risking policy mechanisms can help to minimise the overall cost of achieving net-zero. • We characterise the current stage of the low-carbon transition as a 'build phase', requiring large volumes of investment • Uncertainty over the final physical state of the decarbonised system causes significant financial risk to investors • 'Contracts for difference' (CfDs) help to manage this 'transition risk' and reduce the cost of capital for projects • Exposing projects fully to transition risk could increase costs by a third, and raise the cost of transition by £7bn per year [ABSTRACT FROM AUTHOR]

This paper presents a novel agent-based, stochastic model, which uses game-theoretic principles to simulate Contract for Difference (CfD) auctions. The framework has use cases and implications for policymakers and renewable generators alike, and can be used by developers to prepare bidding strategy and for policymakers to empirically test auction design. The model is demonstrated through replication of the offshore wind CfD Allocation Round 3 (AR3) pot, and utilises high-level cost modelling distribution data to estimate bid prices for the competing projects. The model produces a distribution of most likely results which better categorises uncertainty, and through comparison of AR3 and simulation results, demonstrates how outcomes can be predicted with reasonable confidence by developers. Analysis show that the transmission network and grid connection charges are a significant barrier for projects in some geographical regions to be awarded a CfD contract, potentially hindering renewable deployment in those areas. Moreover, this paper demonstrates how players can use probability theory to select an optimum bidding strategy which maximises expected profit while factoring the uncertainty inherent in CfD auctions. Results show that a 1200 MW wind farm development can increase potential profits by £135 million over the CfD contract length in exchange for a 25 p.p. chance reduction in being awarded a subsidy. • A novel simulation approach is introduced for analysing the UK's CfD auction • We show how players can attempt to optimise their bid based on expected profits • We demonstrate how uncertainty in auctions can be characterised by developers • Transmission charges act as a barrier for offshore wind projects in some regions [ABSTRACT FROM AUTHOR]

Offshore wind energy is experiencing a rising importance for many electricity markets. While the effects of wind energy overall on electricity prices have been thoroughly studied, it remains unknown if offshore wind has a different impact on electricity prices than onshore wind. The aim of this paper is therefore to estimate the effect of offshore wind energy on wholesale electricity prices and how it differs to the impact of onshore wind. For this purpose, we propose three time series models to describe the development of electricity prices in Germany, Western Denmark and Great Britain from 2015–2018. We focus on the impact on the level and volatility of electricity prices using different time series models such as AR-GARCH or ARMA. Following these models, we can identify that onshore and offshore wind power do have a significantly different impact on wholesale electricity prices in the investigated countries. Based on our results, we discuss the implications of our findings for electricity markets and policy makers. • The results indicate different impacts of off- and onshore wind on wholesale prices • Offshore wind tends to reduce price levels and price volatility more than onshore • The differential impact of offshore wind is mainly due to a more constant feed-in [ABSTRACT FROM AUTHOR]

In order to pursue the low-carbon development around the world, a large scale of renewable generation will be connected to the power systems. Take the Great Britain (GB) as an example, the GB power system has a large wind energy integration potential. The intermittency of wind generation will have great impact on the system frequency stability. Electric vehicles (EVs) have a crucial role in decarbonizing the transport sector. To increase the utilization of wind energy, EVs are suggested to provide frequency response service to the power system due to their quick power reaction characteristic. This paper proposes a general dynamic EV frequency control strategy considering the travelling behavior of the EV users. A droop control method is used to regulate the EV charging/discharging power according to the frequency signal. A Forced-Charge Boundary (FCB) and a Forced-Charge Area (FCA) are proposed to guarantee sufficient energy in the EV battery for user’s travel at the plug-out time. A dynamic Virtual Energy Storage System (VESS) is developed to evaluate the frequency response capacity of the EV clusters. In the case study, the model of the GB power system is used to investigate the frequency control effect of the control strategy. The simulation results show that the proposed strategy provides effective EV frequency response to the power system and thus is able to facilitate the integration of wind energy. [ABSTRACT FROM AUTHOR]

The electricity market in the UK has been reformed over recent years resulting in the introduction of 'Contracts for Difference' as an option for wind producers. They can use these contracts only if at the same time they enter into other market contracts, i.e., Power Purchase Agreements or participation in the wholesale market. Most wind producers prefer the option of holding a long-term Power Purchase Agreement with another party. However, these agreements do not always offer the best terms for a wind producer due to them selling energy at lower electricity prices than those of the wholesale market spot prices. In addition, direct participation in the wholesale market can lead to high imbalance costs for the wind producers. In this paper, we propose an optimal dispatch model solved via dynamic programming optimisation to examine these two different business cases for wind operators alongside the existence (or not) of subsidised Contracts for Difference. A case study with an onshore UK wind farm and a lithium-based battery is provided. The proposed methodology was designed flexibly, so that it can be applied to different wind farm and battery configurations, as well as energy market structures. It is found that it is not always more profitable for the wind operator to hold a Power Purchase Agreement with another party than owning a battery storage unit and trading wind energy directly into the wholesale market. The discount rate of the Power Purchase Agreements, the capital cost of the wind farm and the strike price of the Contracts for Difference are critical factors affecting the profitability of both business cases. In addition, if subsidies are totally removed from both of them, then these are no longer economically justifiable, unless significant reductions are achieved in the capital costs of wind farms and battery storage units. Lastly, we show that considering only the calendar life of the battery (and not the cycle life) leads to significant underestimation of the investment costs. • Dynamic programming proposed for optimally valuing battery storage for wind farms. • Annual revenue of wind farm increased with the battery storage unit. • Bilateral contracts are not always more profitable than trading in wholesale market. • Without subsidies, the investment in wind battery storage is not profitable. • Neglecting battery's cycling life leads to undervaluation of the investment. [ABSTRACT FROM AUTHOR]

Although the penetration of renewable energy in power systems has been substantially increased globally in the last decade, fossil fuels are still important in providing the essential flexibility required to reliably maintain the system balance. In 2019, more than one quarter of power generation in Europe and over 40% of the UK's electricity generation was from fossil fuels (mainly gas). For achieving the net-zero greenhouse gas emission target around the middle of this century, these fossil fuels have to be decarbonised in the coming decades. Bulk-scale energy storage has been recognised as a key technology to overcome the reduced dispatchability associated with the decrease of fossil fuels in generation. Taking the UK power system as a case study, this paper presents an assessment of geological resources for bulk-scale compressed air energy storage (CAES), and an optimal planning framework for CAES in combination with solar and wind to replace fossil fuels in the power generation system. The analysis reveals up to 725 GWh of ready-to-use capacity by utilising existing underground salt caverns in the UK. These potential CAES sites with added solar and wind generation equal to the generation from fossil fuels in 2018 can reduce carbon emissions by 84% with a cost increase by 29%, compared to the system in 2018. The results indicate the plausibly achievable cost-effectiveness of CAES as bulk-scale energy storage for power system decarbonisation in countries the geological resources are available. [ABSTRACT FROM AUTHOR]

• Tank size and temperature set point of 1.2 m3 and 75 °C are optimal system design. • Should charge storage at 3am and 2pm for morning and afternoon demands, respectively. • The best load shifting positively affects the grid. • Achieve running costs and CO 2 savings with the best load shifting, compared to oil boilers. Cascade air-to-water heat pumps may have good potential for retrofitting UK domestic buildings because they can directly replace existing fossil-fuel boilers without the requirement of considerable modifications to heat distribution systems. A widespread uptake of these heat pumps, however, would pose challenges to the grid. Furthermore, wind power generation has increased in the UK to achieve the target of decreasing CO 2 emissions by 2050, but there are high levels of wind curtailment due to the mismatch between electricity supply and demand. In this paper, a load shifting study for cascade heat pumps coupled with thermal energy storage addressing these issues is presented. The main objective is to find the best tariff-based schedule load shifting for cascade heat pumps, which can help to avoid peak demand periods while obtaining enhanced system energy efficiency with minimised running costs and reduced wind energy curtailment. How the retrofit performance of the cascade heat pumps with load shifting is further investigated. TRNSYS was used to simulate the system performance validated against experimental results. Northern Ireland (UK) was selected as the evaluated scenario. Simulation results showed that the tank temperature set point of 75 °C and the storage size of 1.2 m 3 could wholly shift the cascade heat pumps' operation to off-peak periods. The best times to start the cascade heat pumps to charge the storage were at 3 am and 2 pm for the morning and afternoon heating demands, respectively. Compared to oil boilers, the cascade heat pumps with load shifting could obtain lower running costs (16–34%) and carbon emissions (20–37%). [ABSTRACT FROM AUTHOR]