Storelectric has identified a number of critical challenges for the energy transition, and their solutions. These are discussed below.

Intermittency

Most renewables generate electricity intermittency, i.e. when it wants to. This applies to wind, solar, tidal and wave energy. But we want the electricity when we want it: a constant “baseload” demand to which is added variable (time of day, day of week, and weather related) demand. Long-duration storage is needed at the same scale as renewable generation in order to turn its intermittency into on-demand (“dispatchable”) energy.

If grids are (very expensively) reinforced to cope with the ups and downs of intermittency, then not only are they building to 2-8 times the capacity that would be required if the renewables had connected through Storelectric’s storage, but also they would not have the balancing services or stability (inertia) injected at the point of greatest need – at such grid connection. Consequently, not only will the grid have to buy such services separately and more expensively, but also they would have to reinforce the grid to such other suppliers. This risks making the energy transition inordinately expensive in both capital and operational costs, disruptive in grid construction, and less reliable and resilient as the services are delivered far from where they would do most good.

Sufficiency

During “times of system stress” (i.e. high demand and/or low renewable generation), the UK already relies on imports through interconnectors to keep the lights on. Such times include after sunset on a windless winter evening; weather patterns can extend this for days or even up to a fortnight. Indeed, the kalte Dunkelflaute (“cold dark doldrums”) is a weather pattern that extends it for a fortnight over most of Europe, every couple of years; over only a few countries and a few days, it is much more frequent. However, the energy transition plans of all our neighbours (except Iceland, Norway and Switzerland) also rely by 2040 on imports during such times. So, if all are importing, who is exporting? So the only way reliably to keep the lights on is to have sufficient zero-carbon generation (e.g. nuclear, biomass, anaerobic digestion) and storage for such periods.

Brexit

The only factors compelling our neighbours to adhere to export contracts during “times of system stress” are the Single Market as enforced by the European Court of Justice. Neither will apply post-Brexit. So, during such times of system stress, it will become politically unacceptable for any continental utility to tell their government that a domestic blackout was because they could earn a few million Euros exporting the required energy to the UK. This actually provides a political imperative for our neighbours to cut off their exports to the UK in our times of greatest need. Therefore, unless we store sufficient electricity domestically, our lights will go out some time, sooner or later.

World-Wide Applicability

The Brexit conundrum does not apply solely to Britain. It applies to every single grid around the world, that depends on imports during times of system stress. This is because every exporting grid will (and, politically, must) prioritise its own consumers over exports. Therefore every grid globally should plan on storing sufficient electricity to tide it through its worst-case periods of high demand and/or low renewable generation.

Grid Reinforcement

Because of this intermittency, to accommodate peaks of generation wherever storage is built, grids need to be at least tripled in size. This is unaffordable and the new transmission lines would be a major blot on the landscape. However, in turning intermittency into dispatchability, large-scale long-duration storage can halve or even eliminate such reinforcement needs.

Grid Stability

From time to time, faults will always occur on grids. Any failure, where there is no natural inertia, creates a step change in current, voltage and grid frequency. Before the widespread black-outs in the UK on 9th August 2019, it was believed that DC connected systems (e.g. batteries, interconnectors, wind and solar) can provide “synthetic inertia” to replace the real inertia being lost by the closure of power stations. However “synthetic inertia” is a very fast response time; any response time whatsoever is a delay, which produces a spike on the mains known as a RoCoF (Rate of Change of Frequency) event. It is those RoCoF events that turned two initial trips into a country-wide cascade of trips blacking out a million people’s homes, infrastructure, hospitals and industry. While “synthetic inertia” is good for recovering from faults, only real / natural inertia can prevent them cascading.

Black Start

Grids need to put in place contingency plans for when the grid fails totally, and so doesn’t have the power for power stations’ start-ups, or frequency to which generation can synchronise itself. The UK National Grid has researched ways of delivering this from distributed resources and found that this is costly, exceedingly complex, greatly increases the time for restoration (to many hours, rather than minutes) and, in many cases, is impossible as lower-voltage grids often cannot provide what is required to energise the next voltage level upwards of the grid. Large-scale long-duration storage can do this, with suitable configurations.

What Is Needed

What is needed for all these challenges is suitably configured large-scale long-duration storage – as all such technologies are naturally inertial. And Storelectric has spent almost a decade developing a portfolio of the world’s most efficient, cost-effectively and widely implementable such technologies, based on Compressed Air Energy Storage (CAES), which is very profitable in today’s market and will become increasingly so as the energy transition progresses.

Starting Now

All large-scale long-duration storage takes years to plan, build and connect to grids. Therefore to keep the lights on in 2030, grids need to start building their first such plants in 2021 in order to have enough built by 2030. And as these plants will be a requirement for 2050 Net Zero grids, starting now is the best way to minimise the costs and disruption of the energy transition.

By Mark Howlet CEO of Storelectric

Source: Stoelectric

SELECT, Scotland’s largest construction trade association, has once again joined forces with more than 40 contractor and trade association members in writing to the UK Government demanding the withdrawal of proposed Reverse Charge VAT legislation.

It is the second time the influential trade bodies have felt the need to press the case for a rethink with the Chancellor of the Exchequer, Rishi Sunak, MP, in the absence of a reply to a detailed argument they sent him in a letter dated December 20 last year.

The latest appeal, sent on January 13 this year, reiterates the fact that Reverse Charge VAT will restrict cashflow in a vital and socially contributory industry, especially to the smallest firms, at just about the worst possible time.

The letter, led by the Federation of Master Builders, again emphasises that the policy – due to come into force on March 1 – risks reversing what modest recovery the industry has made from the pandemic and will limit the scope for protecting and creating jobs at a time when the country needs this most.

John McGhee, SELECT’s Director of Finance and Resources and Association Secretary, acknowledged an earlier delay in introducing the changes and also other UK Government aid to the sector, but said: “Introduction of Reverse Charge VAT now would be seriously detrimental to the economic recovery.”

VAT reverse charging means that businesses which are both VAT and Construction Industry Scheme registered will no longer pay VAT to most of their subcontractors.

Instead, VAT will only be paid to firms which supply only labour (employment businesses) and to the merchants and businesses that sell building materials only without any fix.

Mr McGhee said: “The proposals will substantially increase the burden on business and restrict cash flow in what is already an extremely difficult economic climate.

“The changes will particularly impact SMEs that provide both services and materials. This is because they will have to pay VAT on the materials they purchase, including extremely costly elements such as steel, cladding and concrete, but will not be paid the VAT by their customers. For a significant number of companies this will be unsustainable.”

SELECT and the other trade bodies argue that their member companies are already subject to independent scrutiny which limits fraudulent behaviour and the introduction of Reverse Charge VAT unfairly penalises those that pay their VAT and comply with their obligations.

The campaigning electrotechnical association has also alerted its 1,250 member companies to the gravity of the situation and its imminent implementation and has pledged to continue to fight for fair treatment for responsible firms.

 www.select.org.uk

ONS report overview

• Construction output grew by 1.9% in the month-on-month all work series in November 2020, because of a 3.5% increase in new work that more than offset the 0.6% fall in repair and maintenance; this was the seventh consecutive month of growth since the record decline (40.7%) in April 2020.
• The level of construction output in November 2020 was 0.6% above the February 2020; with repair and maintenance work 7.4% above and new work 3.1% below its pre-pandemic level.
• The monthly increase in new work (3.5%) in November 2020 was because of growth in all new work sectors apart from public new housing and public other new work, which fell by 2.4% and 2.8% respectively.
• The monthly decrease in repair and maintenance (0.6%) in November 2020 was because of a 6.0% fall in private housing repair and maintenance, despite growth of 5.7% in public housing and 1.9% in non-housing repair and maintenance.
• Construction output grew by 12.4% in the three months to November 2020 compared with the previous three-month period, because of growth in both new work (11.9%) and repair and maintenance (13.2%).

FULL DETAILS OF THE REPORT CAN BE VIEWED BY CLICKING HERE

Commenting on this morning’s, ONS construction output data Fraser Johns, finance director at Beard, said:

“For the first time we’re seeing output returning to pre-pandemic levels which is clearly cause for cheer, particularly as November was a lockdown month.

“In recording a seventh consecutive month of growth, the construction sector has bucked the national trend where the economy shrank overall during the period. But what is also encouraging is the reverse in the slow rate of growth that we’ve seen, going from 1.0% in October to 1.9% in November.

“But while we hope that the vaccine rollout and a Brexit trade deal in place should lead to less uncertainty broadly, we are still faced with new strains of the virus and a national lockdown, with the impact that has with schools closed and restrictions at every level.

“Realistically the fallout for businesses from Brexit could yet take months to fully understand which means an element of volatility in the short to medium term. However, the new business secretary’s open letter to the construction industry is welcome reassurance in this current period.

“As we now face several more weeks of lockdown, it’s clear that the construction sector has had to adapt but that keeping sites open and projects going was the right thing to do, for jobs and the wider economy.”

A LETTER TO CONSTRUCTION

To everyone working in the UK’s construction sector

On 4 January, the Prime Minister announced new national lockdown restrictions across the country to help us control and push back against the spread of a new variant of Covid-19. This brings new restrictions, including asking people to stay at home apart from essential travel.

As the new Business Secretary, I would like to take this opportunity to restate the Government position, which is that firms and tradespeople in the construction sector and its supply chain, including merchants, suppliers and product manufacturers, should continue to operate during this national lockdown.  I would also like to make it clear that where it is essential to travel or to stay in accommodation, whether to get to your work or for the purposes of carrying out your work, those in the industry are able to do so.  It is vital that construction continues through these unsettling times and I want to reassure you that the Government values the crucial contribution your sector is making.

Whether delivering on large or small construction sites, and in peoples’ homesacross the country, in builders’ merchants, designing and project managing schemes or producing construction and mineral products, you are making a major contribution to the economic recovery following Covid-19.

To help ensure that it is safe for you to operate whilst carrying out your work, the Construction Leadership Council has published the Site Operating Procedures (SOP)and Branch Operating Procedures, which reflect the latest guidance from Government.  The Government and devolved administrations continue to update their safe working guidance which can be found on GOV.UK.

My Ministerial team and I are in regular contact with industry leaders about the risks, issues and challenges you face. Thank you again to everyone operating in the UK construction sector. You are making a hugely valued and critical contribution to our country.

Yours sincerely,

THE RT HON KWASI KWARTENGMP,

Secretary of State for Business, Energy & Industrial Strategy

The Impact of Brexit on the Construction Industry – an overview

On the 24 December 2020, the European Union (EU) and the United Kingdom finally agreed a post-Brexit trade agreement, the Trade and Cooperation Agreement (TCA), which came into effect on 1 January 2021.

In the years following the 2016 Brexit referendum, the construction industry has had to grapple with a number of challenges. In addition to Brexit, the fallout from the collapse of Carillion, skills shortages, and ongoing challenges imposed by COVID-19 are just a few examples. When assessing the impact of Brexit, it is important to do so in light of these pressures.

Despite the uncertainties, there are signs that fundamental change is happening within the industry. The shift towards offsite manufacturing, the increasing use of digital technologies and the growing urgency to address climate change, will hopefully result in increased collaboration and the creation of a more sustainable industry.

Construction Products and Materials

The TCA has introduced measures that attempt to ease restrictions on the flow of goods between the UK and the EU following Brexit. Despite these measures, increased customs checks, double product conformity assessments and restrictions on products, which do not originate from the UK or the EU, are likely to slow the progress of construction projects. Parties operating within the construction industry are also likely to incur additional costs due to delays in relation to goods and materials.

With large quantities of building materials currently imported and exported from the EU, parties will need to take into consideration the additional costs from duties, or the possibility that there might be limits on quantities of goods imported into the UK.

Construction Workers

The restrictions on the freedom of movement of people will be felt widely across the construction industry. The new points-based immigration system, introduced by the TCA, is likely to exclude roles such general labourers. With the UK already suffering from skills shortages and around 37% of London’s construction workforce coming from EU countries, project costs could be driven up, if the demand for labour outstrips supply.

Procurement

The UK’s procurement legislation is based on overarching EU Procurement Directives, which remain in force following Brexit. Despite this, there has been some consequential amendments to UK regulations. One notable example is the removal of references to notices being published in the ‘Official Journal of the EU’ and the introduction of the new ‘Find a Tender Service’ notification system.

The above examples are just a few ways in which Brexit is likely to result in additional costs, delays and challenges for the construction industry. In light of the agreed position under the TCA, parties should check existing contracts for potential exposure to additional costs or penalties for unexpected delays. Parties should consider any change in law provisions, force majeure/frustration provisions, fluctuation provisions, termination provisions and dispute resolution provisions under existing contracts to see where the commercial risk lies.

When negotiating new contracts, parties may wish to consider specific contractual provisions dealing with Brexit related risks. Contractors will need to look at ways of balancing the uncertainty around financial risks and the need to win work. Moreover, employers will need to weigh up the need for cost certainty against their risk exposure.

Opportunity for collaboration

The environment in which the construction industry operates will undergo significant change in light of Brexit and the TCA. By their very nature, construction contracts are concerned with risk allocation and will need to be alive to new risks posed after 1 January 2021.

Brexit, along with the other ongoing challenges faced by the construction industry, will alter the appetite of contracting parties to take on risk and may result in difficulties in parties reaching a mutually acceptable deal. As such, it will become even more important that all parties in the industry operate on a collaborative basis and ensure that there is an ongoing dialogue to work through risks together.

Source: Lexology