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Energy: STOR the birth of a rip-off

2013-07-10 04:32:40

For several days now, we have been putting most of our resources into researching the story of STOR, the National Grid's Short Term Operational Reserve, and the only thing that is stopping the increasing volume of wind-generated electricity destabilising the grid and bringing the whole system down.

There has always been something like STOR, a system for balancing out the fluctuations in the grid supply dealing with the sudden peaks that the big power stations cannot deal with. This used to be called the "standing reserve", the operation of which is exemplified in the 2008 BBC video extract above.

Mainly, as can be seen from that video, balancing has been the job of "pumped storage", hydroelectric power that can be switched on at a moment's notice, with the reservoirs replenished by pumping the water back, using off-peak electricity.

However, even with that, there was always a need for fine-tuning the system but, in the days of publicly-owned utilities, the electricity suppliers tended to run their own (small) fleet of generators to top up the system when needed, to save having to start up another big power station, just for a few megawatts over an hour or so.

However, with the privatisation of the electricity industry also came restructring, following which much of the grid balancing was farmed out to private suppliers - just as wind energy started to make an impact, confronting the industry with its next great challenge, the supposed "decarbonisation".  The inherent intermittency and the unpredictability was to impose huge demands on the balancing system. 

The challenge was met in a novel way. With the advent of reliable broadband internet connections and the wider availability of computer control technology, it became possible to buy up unused capacity from remote standby generators. This could be switched on and off by a computer in the grid control centre. All it needed was the technology packages to be prepared and the contract structure devised, and STOR was born, coming into operation on 1 April 2007.

Yet, after less than a full year of operation, though, it was clear that the system wasn't working and, in 2008, the National Grid undertook a comprehensive review, then introducing 10 year-contracts to incentivise potential service providers to join the system.

By October 2009, however, the National Grid was back in the review business, noting with alarm forecasts of a significant rise in the Short Term Operating Reserve Requirement (STORR). This was driven in the main, by "a greater penetration of intermittent generation and a higher infrequent loss risk of 1,800MW (up from the current value of 1,320MW) ". Wind power was beginning to exert its influence on the system.

Amongst the changes proposed were even longer service periods, of up to 15 years and guaranteed utilisation volumes. In the pipeline were much higher prices. Also to come was a new system of "aggregators", firms which could assemble small packages of power and send them up to the Grid in useable lumps of more than 3MW.

So a new industry was born. So lucrative had become the business opportunity that it was now viable to buy and run equipment specifically to serve the balancing market. 

This is an industry that markets "phantom megawatts" in transactions that have been described as "Money for Nothing". The market is now set to increase to 1 billion a year, the cost set to add five percent to the average electricity bill, passed on to the consumer through Balancing Use of System Charges (BSUoS) operated by the National Grid.

The system keeps running, but at a huge price.