Associate Feature: Moving mountains to tackle climate change
The need to reduce our carbon emissions is clear, but how to make net zero a reality whilst also having a power grid which is secure, affordable, and sustainable is now the central question facing policymakers in Holyrood and Westminster.
This set of interrelated and potentially competing goals are the complex set of challenges known as the ‘energy trilemma’. Each of these three outcomes must be balanced in order to ensure that energy systems are resilient, efficient, and effective.
In the last decade, the UK has decarbonised its power grid faster than any other major economy thanks to the growth of biomass, wind, and solar power. But what happens to our power grid when the wind doesn’t blow, or the sun doesn’t shine? How can we have a green grid but at the same time have secure power supplies at an affordable price?
At Drax, we believe pumped storage hydro is a critical technology which is perfectly placed to help solve this trilemma. It’s the only proven grid-scale technology which can store vast quantities of energy for long durations. These sites act like giant water batteries, using excess power from the grid to pump water to an upper reservoir where it is stored, before re-releasing it to generate electricity when demand requires.
Each year, the UK spends hundreds of millions of pounds constraining wind farms as there is either too much power being generated versus demand, or there are bottlenecks on the transmission system meaning it can’t be transported. An independent report, commissioned by Drax in 2022, found the cost of these constraints reached a record annual high of over £500m.
We can’t afford to let renewable power go to waste. That’s why Drax is progressing plans to build a new pumped storage hydro plant at our existing Cruachan facility in Argyll. Like the existing plant, the new power station will be built underground inside Ben Cruachan. This will be done by creating a new hollowed-out cavern which would be large enough to fit Big Ben on its side.
The development – which could be the first newly constructed plant of its kind in the UK in more than 40 years – will give the UK a more secure, affordable, and sustainable power grid.
Unlocking investment, enabling renewables
In pumped storage hydro, we have a tried and tested solution to the energy trilemma, but unfortunately there are barriers to unlocking private investment in such transformational projects. While the UK’s policy and market support mechanisms have evolved to enable new build renewables, the current framework isn’t suitable for pumped storage projects. That’s part of the reason why no new plants have been built in the UK since 1984.
Alongside other developers of long-duration electricity storage projects, Drax is calling on the UK Government to take action to help secure billions of pounds of private investment to get these projects off the ground. The case for introducing a new policy mechanism to provide revenue certainty to these types of projects, such as a cap and floor, is overwhelming.
This mechanism is tried and tested and has been integral to supporting the roll-out of cross-border interconnectors over the last decade. It enables private equity to see the project’s maximum and minimum revenues over an extended period, which reduces risk and uncertainty and helps attract investment.
Under this type of scheme, operators would hand back profits in excess of the cap. On the other hand, support would only be given in the event revenues do not meet the floor level, providing value for money for consumers
We need big, bold solutions to solve the energy trilemma. Drax is ready to move mountains to make a more secure, affordable, and sustainable power grid.
Ian Kinnaird is Drax’s Scottish Assets Director
This article is sponsored by Drax.
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