Notes on completion
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Ofgem will publish all the information contained within the Screening submission.
DNO Group
Participant DNOs
DNO area
Project title
Project summary
Estimated Project funding
Please provide an approximate figure of the total cost of the project and the LCN funding you are applying for.
Total cost of Project
LCN funding
requested
Low Carbon Networks Fund
Screening Submission Pro-forma
UK Power Networks
Eastern Power Networks Plc (EPN) / South Eastern Power Networks Plc (SPN)
Eastern Power Networks Plc (EPN) / South Eastern Power Networks Plc (SPN)
Smarter Network Storage (SNS)
Flexibility of the electricity system is recognised as vital for a low carbon energy sector.
Recent research, from the Energy Research Partnership and Centre for Low Carbon
Futures for example, now highlights the need to tackle market and regulatory barriers,
in addition to technical barriers to fully integrate flexibility for whole system benefit.
Energy storage is one source of flexibility that has significant potential to support the
system in a number of ways. However, as also identified in the Smart Grid Forum’s
strategic ‘Solution Sets’, commercial and policy barriers are severely limiting adoption.
To realise the potential, a practical demonstration is needed to quantify benefits across
a traditionally isolated value chain, and understand how they should be distributed.
The Project will explore these commercial, regulatory and market challenges to fully
optimise and integrate flexibility from storage, and develop novel commercial
arrangements that maximise the value across a range of whole-system applications.
The project will assess a variety of potential business models that ensure the most
efficient use of storage, and explore the role of a Distribution System Operator (DSO)
alongside other system participants in achieving integration and maximum value for
customers.
Smart optimisation and control systems will be developed that will allow the shared
utilisation and operation of the flexibility in order to maximise the value. Validating new
business models for storage and identifying necessary market changes will enable wider
adoption of storage as a cost efficient and effective means of both facilitating the
uptake of low carbon technologies and accommodating higher levels of intermittency for
the benefit of the networks and customers.
£19.3m
£15.2m
Problem
Please provide a narrative which explains the Problem(s) which the Project is seeking to address.
Method(s)
Please describe the Method(s) which are being trialled. Please outline how the Method(s) could solve the Problem. The type of
Method should be identified where possible e.g. technical or commercial.
The Government's Carbon Plan highlights increased electrification of heat and transport
to meet emissions targets, but this will lead to more pronounced demand peaks and
less efficient utilisation of distribution network capacity. Traditional reinforcement is an
expensive and inefficient way to accommodate increased short-term peaks in demand.
Electrical energy storage is one alternative for Distribution Network Operators (DNOs),
but despite many technology options, it is underdeveloped in the UK. For example,
deployment of storage at a 33/11kV primary substation would reduce demand spikes so
deferring costly reinforcement, however in isolation it remains a costly option with the
complete economic case unverified.
Decarbonising the electricity sector will also require around 35-50GW of new renewable
generation capacity by 2030, with new challenges for balancing supply and demand,
particularly in low or very high wind conditions. Storage can be deployed both as a
means of reducing peak loads on distribution networks, as well as providing support for
balancing supply and demand and accommodating shortfalls or excesses of generation.
Storage is potentially more diverse and reliable than other solutions, such as additional
(carbon based) generation or demand-side response, and is not dependent on end-user
behaviour. However, current commercial arrangements do not optimise the value of
network-connected storage and so inhibit the uptake of storage by DNOs.
Notwithstanding the technical challenges in deploying large-scale storage, current
market and regulatory arrangements make it difficult to predict value when operating
for both deferring reinforcement and active network management as a large-scale
demonstration has not yet proven the business case. Further, the impact of Electricity
Market Reform remains uncertain, lowering the value for any individual party. Business
models, incorporating the DNO as a more active system participant, need to be
explored and validated to ensure the value of storage can be maximised for customers.
Smarter Network Storage will address the Problem by building on experience of
previous projects to develop a viable business model for storage and develop novel
commercial frameworks and platforms that fully integrate and optimise storage for the
whole system. Exploration of new business models, incorporating the DNO as a more
active system participant will maximise future deployment and encourage the efficient
and economic uptake of storage for facilitating the decarbonisation of the electricity
sector.
The project Method is to optimise use of electrical energy storage and unlock the full
value across the whole system through novel commercial arrangements between key
system participants. Through smart optimisation and control systems, storage capacity
will be dynamically optimised and dispatched in order to provide both reserve and
response services, whilst providing network security and deferring reinforcement at a
local network level.
A primary substation at Leighton Buzzard (in EPN) has been identified as a possible site
to trial the Method, where new demand from low carbon technologies would require
costly reinforcement. Subject to planning constraints currently under investigation,
alternative sites are available in SPN. Both technical and commercial aspects are
involved:
Technical
- Procurement and installation of grid-scale energy storage device connected at 11kV,
sized at approximately 4MW/16MWh based on the projected energy at risk
Method(s) continued
Funding commentary
Provide a commentary on the accuracy of your funding estimate. If the Project has phases, please identify the approximate
cost of each phase
Specific Requirements (please tick which of the specific requirements this project fulfils)
A specific piece of new (i.e. unproven in GB) equipment (including control and communications
systems and software) that has a Direct Impact on the Distribution System)
A novel arrangement or application of existing Distribution System equipment (including control and
communications systems software)
A novel operational practice directly related to the operation of the Distribution System
A novel commercial arrangement
- Demonstration of grid-scale storage for reducing peaks, thereby providing network
security, improving power factor and a range of other system-wide services
- Building on previous collaborative UKPN research, such as the FENIX project, to
develop smart optimisation and control systems for integrating storage into the
system and optimising across a range of additional applications
Commercial
- Development of novel commercial arrangements that balance the risks and
opportunities in allowing storage to serve multiple applications
- Implementation of these arrangements to assess the viability of a system-wide energy
storage operator and alternative business models which can extract value from all
available opportunities.
- Validation of real business models for fulfilling this role, incorporating a future DSO or
other industry participant
- Assessment of real value from a range of services, including how it can be optimised
and any barriers to doing so within current market and regulatory frameworks
- Recommendations for amendments to market and regulatory arrangements to enable
the optimisation of flexibility
The Solution the project will demonstrate is the economical and efficient use of storage
capacity that is optimised across the full electricity value chain. Validating and
demonstrating real business models for storage and identifying necessary market
changes will facilitate the adoption of storage, supporting The Carbon Plan for the
benefit of customers and the networks.
The project is estimated to cost £19.3m over four years and is based on initial
discussions with technology and service providers. A contingency element of 10% has
been included in this total reflecting the nature and scale of the project. UKPN is
committed to contributing 20% towards the project, including any Direct Benefits that
will depend on the final site to be selected. At this stage we have around a 75%
confidence in the cost forecasts which we will continue to refine prior to Full Submission
and we continue to seek complementary funding sources.
To ensure value for money, and reflecting the project's focus on commercial and
regulatory factors, the storage hardware (which is expected to comprises up to
approximately £11m of the funding request) will be procured through a competitive
tender process.
Key funding phases across the project duration are estimated below which will be
further refined throughout the bid process:
- Setup and Design Phase: £4.7m (est. months 1-12)
- Detailed Design, Development & Installation Phase: £8.6m (est. months 13-21)
- Operational Phase: £6.0m (est. months 22-48)
Accelerates the development of a low carbon energy sector & has the potential to
deliver net financial benefits to existing and/or future customers. Merged evaluation
criteria, as set out in decision letter.
The DNO must demonstrate that the Solution makes a contribution to the Carbon Plan and has the potential to deliver
financial benefits.
By progressing the development of energy storage, the project contributes to the
following aspects of The Carbon Plan (TCP):
Low Carbon Power Generation through the mitigation of intermittency
The `higher renewables, more energy efficiency' pathway of TCP implies a significant
increase in the need for additional reserve and response capacity beyond 2020 to
account for the variability in output. The Method of optimising storage for the whole
system aims to contribute to this, enabling low carbon generation to displace
high-carbon generation and reducing shedding of renewables.
Low Carbon Buildings through low carbon heating
During the 2020s, technologies such as heat pumps will begin to expand at scale into
residential areas, placing significant new demands on distribution networks. Cost
effective storage will allow these peaks to be flattened without the need for primary
system reinforcement, facilitating the adoption of these technologies without delay.
Low Carbon Transport through electric vehicles
The rapid uptake of low emissions electric vehicles will have implications for energy
security, with increased demands likely to be placed on the grid. Conventional
reinforcement to accommodate short-term spikes for charging may be increasingly
inefficient and costly. Energy storage to accommodate these peaks will ensure that
primary distribution infrastructure does not inhibit the uptake of this technology.
Delivering Benefits
Traditional 11kV reinforcement at the preferred Leighton Buzzard site involves
installation of a third circuit and transformer at a cost of circa £8m, although none of
the system-wide benefits associated with accommodating renewables is realised from
this traditional approach. Further, the delivery time could be several years, particularly
as additional cable routes or overhead lines are required.
Price pressure through economies of scale and investment in R&D is expected to
generally bring costs of many storage technologies down significantly, with some
research expecting up to 40% reductions by 2015. Therefore, once proven successful
and assuming savings on replication (for example project management and
dissemination), the cost of replicating the SNS Method is estimated to also be around
£8m. However comparing this to the Base Case costs of traditional reinforcement alone
does not capture the additional system wide benefits delivered through:
- Simultaneous provision of reserve and response capacity, mitigating costs of
additional generation and facilitating the increase of renewables into the mix.
4MW/16MWh of storage is conservatively estimated to provide additional system-wide
benefits valued at around £200k annually, for example from reserve and frequency
response services - the project seeks to validate this in practice;
- Reducing costs in the generation market by displacing high-carbon peaking plant and
reduced shedding, saving on capital, carbon and fuel costs. Simple displacement of
OCGT using Ofgem's annualised capital cost estimates of £58/kW/yr would yield
c.£230k per annum before any operational savings. This is expected to grow further
as levels of intermittency increase and demand shapes evolve and a study by Poyry
estimates additional gross savings of around £0.8m annually by 2030 for 4MW of
storage;
- The above gross savings include carbon emissions savings of c.1.3kt annually by 2030
associated with displacement of a proportion of CCGT and OCGT by storage
- Faster connection of low carbon technologies for customers without constraints from
primary distribution infrastructure
Has a Direct Impact on the operation of the distribution network
A Second Tier Project must demonstrate that the Method(s) being trialled will have a Direct Impact (as defined in v.4 of the
Governance Document) on the operation of a DNO's Distribution System.
Generate knowledge that can be shared amongst all network operators
The DNO must explain the learning which it expects the Method(s) it is trialling to deliver. The DNO must demonstrate that it
has a robust methodology in place to capture the learning from the Trial(s).
The Method will trial storage that has a Direct Impact on the operation of the
distribution network, with the storage device connected at 11kV at a primary
substation. Subject to planning permission, Leighton Buzzard has been identified as one
potential site suitable for distribution-connected storage. Sized to meet the expected
demand profile into the future and simultaneously be of value for wider-system
services, storage rated at 4MW / 16MWh will maintain network security for the loss of
one transformer circuit and increase peak capacity headroom by reducing demand
spikes.
Secondly, the device will also support the network by providing reactive power to
increase utilisation, and provide additional increased capacity.
Importantly, the Method is also exploring how storage flexibility can be utilised and
integrated for the benefit of the whole system. The project will therefore allow the
impact on both the transmission and distribution systems to be assessed when flexibility
is leveraged for multiple benefits, including providing reserve and response services to
balance the national system. The Method is also exploring the range of viable business
models that may evolve around energy storage, including the role of a DSO in a low
carbon electricity future. This will help understand implications for the way distribution
business are operated and define the interfaces needed to optimise and control the
impact of storage on the distribution and transmission networks.
Smarter Network Storage will build upon the technical learning from our own and
others' existing LCNF projects, and seek to tackle the commercial and market barriers
to the successful integration of flexibility for whole-system benefit.
Specific questions we seek to explore and answer include:
- What is the value of large-scale storage from a range of system-wide applications?
- How can the value be maximised by leveraging and optimising multiple applications
simultaneously? What are the synergies and conflicts in doing so?
- What are the possible ownership and operating models needed to maximise the value
of storage for customers, and what is needed to make these viable?
- What are the regulatory, legal or market barriers preventing these business models
and how could they be resolved?
- What commercial and contractual frameworks need to be implemented?
- What control and operating platforms are needed to optimise the full range of value
streams, and handle synergies and conflicts in the optimised use of storage?
- How can storage contribute to security of supply when integrated and what changes to
ERP2/6 and/or ETR130 are required?
- What is the impact on lifetime and degradation of specific storage technology when
used for a diverse set of applications?
- How does energy storage compare with other measures, such as DSM and based on
learning from existing LCNF projects?
Durham University will provide specific support to ensure maximum learning is captured
for the industry. Building on the experience from our existing Low Carbon London
project, all partners will facilitate the dissemination of work.
Please tick if the project conforms to the default IPR arrangements set out in
the LCN Fund Governance Document?
If the DNO wishes to deviate from the default requirement for IPR then it must demonstrate how the learning will be
disseminated to other DNOs.
Focus on Methods that are at the trialling stage
Demonstrate why you have not previously used this Solution (including where the Solution involves commercial
arrangements) and why LCN funding is required to undertake it. This must include why you would not run the trial as part of
your normal course of business and why the Solution is not R&D.
IPR arrangements are most relevant to the control and optimisation platforms, and we
have at least one supplier which has agreed to the default IPR arrangements. It is
therefore our ambition that default arrangements will apply to this piece, provided value
for customers can also be demonstrated when compared with other competitive offers.
This project focuses on the commercial and regulatory innovation required to make
economical and efficient use of storage capacity that is optimised across the full
electricity value chain. Although storage technology has been previously trialled by
DNOs and is therefore at a Technology Readiness Level appropriate to LCNF, none have
addressed bulk energy purchases and sales and the provision of ancillary network
services. Previous smaller-scale examples include the Li-ion storage device tested in
EDFT1001. However, the comparatively small scale of the device means it has limited
value for additional system-wide applications, such as frequency response. There has
been some modelling of the technical and system-wide capabilities of storage, but these
remain untested and the commercial behaviour associated with unlocking the full value
requires practical implementation.
The current regulatory framework does not include provisions for how the commercial
arrangements of a DNO as a system-wide operator of a storage device should be
managed. Thus, the project will seek to investigate this more active role of a DSO and
develop and implement such arrangements which will be disseminated and shared with
the industry.
Whilst the Solution remains unproven, the capital requirements and risk of storage for
network security remain greater than those of traditional reinforcement due to lack of
economies of scale and uncertainties around the additional value in new commercial
arrangements. As a result a DNO would not seek to trial these Methods under
business-as-usual and we believe LCNF funding is required to facilitate future
deployment.
Project Partners and external resourcing/funding
The DNO should provide details of any Project Partners who will be actively involved in the Project and are prepared to devote
time, resources and/or funding to the Project. If the DNO has not identified any specific Project Partners, it should provide
details of the type of Project Partners it wishes to attract to the Project.
Derogations or exemptions
The DNO should outline if they consider that the Project will require any derogations, exemptions or changes to the regulatory
arrangements.
Durham University will provide trial design, analysis and ensure learning is captured
and maximised throughout the project, building on experience from EDFT1001.
Imperial College London will leverage expertise in whole-system modelling of storage
assets and evaluate the technical impacts of storage for security of supply.
Pöyry Management Consulting brings expertise in market analysis and will assist in
analysis of the commercial and regulatory aspects of the project.
National Grid will provide guidance in evaluating and identifying ancillary service
opportunities for storage, and support recommendations for regulatory changes.
KiWiPower will build on experience as a leading aggregator of flexibility to jointly
leverage storage for multiple applications as a system-wide energy storage operator.
SmartestEnergy will provide innovative routes to market and jointly work with UK
Power Networks to leverage storage for multiple applications as a system-wide energy
storage operator.
Swanbarton Limited will provide general support to the overall project development
and specialist electrical energy storage expertise.
Confidentiality agreements are currently in place with all of the above Project Partners.
Initial discussions have taken place with storage technology providers to assist in
developing the funding estimate, however the final supplier will be selected through a
competitive tender process prior to full submission to ensure value for money.
UK Power Networks is also in discussion with several parties with relevant expertise in
providing smart optimisation and control platforms, but welcomes further proposals
from interested parties in this area.
The information and learning that will be generated as part of Smarter Network Storage
may lead to specific proposals for changes to the wider regulatory arrangements across
the system that need to be clarified or amended to facilitate the true integration of
flexibility.
For example, the definitions for generation capacity and supply are not well suited to
energy storage which time-shifts energy. If storage and other flexibility were to be
aggregated at scale across a distribution network by a future DSO, current
arrangements would suggest generation and/or supply licences may be required without
new additional exemptions. However, a generation or supply licence is not required for
the trial as the maximum power of the storage device will be no greater than 5MW.
Currently Engineering Recommendation P2/6, which describes the level of security
required for distribution networks, does not take flexibility such as energy storage
contributions into account. The project itself aims to generate knowledge that will
inform potential revisions of ERP2/6 and/or ETR130. Based on current load growth
expectation it is not expected that the group demand for this site would require a
derogation from P2/6 during the life of the project. If this changes we will liaise with
Ofgem at the earliest opportunity.
Customer impact
The DNO should outline any planned interaction with Customers or Customer’s premises as part of the Project, and any other
direct customer impact (such as amended contractual or charging arrangements, or supply interruptions).
Please use the following section to add any further detail you feel may support your
submission.
Throughout the project there will be planned engagements with the Transmission
System Operator, for the purposes of leveraging the storage device for ancillary
services. Reflecting the valuable learning for the whole system, National Grid are part of
the set of partners for the project.
One of the preferred sites for the location of the storage device is adjacent to a large
primary substation in a predominantly residential area. Subject to accommodating the
storage device within existing permitted development rights, steps would be taken by
UK Power Networks to minimize the visual impact of the device as much as possible, for
example by ensuring the structure blends into the existing environment and existing
perimeters are improved.
It is not anticipated that any supply interruptions will be required to connect the storage
device.
The longer term impact of Smarter Network Storage for Customers will be a reduction
in reinforcement costs and more cost-effective use of storage for tackling network
challenges. The additional value that can be extracted from storage will help to increase
the return on storage assets, reducing costs for customers. Facilitating the increase in
intermittent renewable generation will further help support the transition to a low
carbon economy.
UK Power Networks believes that energy storage has a strong role to play in enabling
the transition to a low carbon electricity sector.
However in order to progress beyond individual trial demonstrations of technical
capabilities, the commercial and regulatory barriers to full system integration and
cost-effective implementation need to be fully understood and removed.
We believe that a range of research and workshop reports which also identify these
issues, including for example those listed below, support the overall focus of the
Smarter Network Storage project and make it a timely innovation project that
progresses the development of storage.
- Pathways for energy storage in the UK, Centre for Low Carbon Futures, March 2012
- The future role of energy storage in the UK, Energy Research Partnership, June 2011
- The Future of Energy Storage: Stakeholder Perspectives & Policy Implications, The UK
Energy Research Centre , May 2011
Contact name
Contact Address
E-mail
Direct telephone line
Job title
Energy House
Hazelwick Avenue
Three Bridges
Crawley
RH10 1EX
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