Utility Week

32 | JULY 2021 | UTILITY WEEK Analysis Co-locating hybrid tech: does it always stack up? Is there a firm future for co-located hybrid technologies on generation sites – or is it a passing fashion? Denise Chevin moderated a Utility Week roundtable discussion in association with Addleshaw Goddard to find out. M oving towards a net zero grid, and more intermittent forms of power, means generators need to think dif- ferently in order to maximise investment. As part of that new thinking, we are seeing innovative coupling of co-located technolo- gies that can help smooth out the load on the grid, reduce network charging, provide different income streams and reduce risk for generators themselves. Scottish Power, for example, has plans to invest in solar, which it will co-locate with batteries to capture and store excess energy. And Shearwater Energy is developing plans for the former Wylfa plant in Anglesey in north Wales which will combine small nuclear reactors and a wind farm. But to what extent will this become the norm across major generation sites? Are the business models in place to drive this form of investment and what more needs to be devel- oped to make such schemes viable? These were just some of the discussion points debated at a Utility Week roundtable, held in association with Addleshaw Goddard. Those taking part were drawn from across the energy spectrum, with a high proportion involved with generation and storage and some with co-located projects. Participants agreed that talk of co- location was fashionable, and that the scope was certainly there. "We're looking at the installation of solar, hydrogen, EV charging, and battery storage, and these are ideal for heat pumps to be located as well… utilisation of the grid connection is key," said a National Grid ESO representative, adding: "We need to design optimised local energy markets, sup- ported by baseload, with solar and storage co-location in those environments. Investors normally look at these projects case by case, but as a network and as a country we need to be thinking more holistically, and looking at a group of investments." But an emerging consensus was a ques- tioning of the starting point, and what the benefit would be of co-locating different technologies, such as solar and battery stor- age, when technically they could work just as well on different sites? "I spend my time looking at various pol- icy aspects that affect investment in various parts of the electricity market," remarked one renewables specialist. "You have to look for specific advantages that come from putting things on the same site. Most of our projects today are still independent, not co-located, but there's a huge amount of interest from the industry to start looking at co-located assets." Talking about the company's proposed project in Anglesey, a representative of Shearwater Energy remarked: "Much will be made about co-locating a low carbon asset with, say, hydrogen generation, and one of the issues we're looking at now is if we build a nuclear plant, can we make use of some of the heat there? Can that be used to improve the efficiency of the electrolysis process, besides just the obvious stuff like putting batteries and solar on the same site? "We have to look at all the opportunities: what are the advantages of hybrid projects?" he added. Participants said it was crucial that funders grasped the business case. "We've been doing hybrid projects for several years, and lots of those haven't worked. They o"en fall when it comes to bringing in external investment, because they become so com- plex that funders don't understand and they can't get behind it," said one guest. "You need to be absolutely clear of the benefits of co-location for any given project, and be able to articulate the case properly and that is o"en about keeping it simple and the revenue streams clear." Making co-location stack up A range of factors can make co-location of hybrid technologies beneficial. Participants talked about the sharing of grid connection costs, one planning permission rather than two, and only one project management team and one set of construction facilities. But it was felt these were not game changers. One guest commented: "In my view, the game changer is on the revenue side. In today's market, there aren't clear rev- enue synergies between solar and storage, because a solar plant will be almost entirely wholesale market revenues, with a little bit of ancillaries on the top. Whereas a storage project will be almost entirely providing grid services, and having little bits of top up in wholesale balancing." Another agreed: "The technical argu- ments in favour of co-location are gener- ally weak, especially when you look at the sophistication of the grid. There are some operational savings to be had at one site instead of two, but they're not significant." There were also warnings about making a decision based on any economic benefit that might stem from a quirk in the current regulations. "Ultimately it's down to the market invest- ment signal. If the signal is there, plants will get built. Yes, regulation can slightly distort that market, for example if you've got an emerging technology and you want to give it a boost and get it going quickly, you can sub- sidise and that might change the game. "But ultimately, mass decarbonisation needs to be on a merchant basis, so de-risk- ing rather than subsidy.

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