A flexible outlook on energy

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Leeds at night

Flexible energy systems are necessary to support decarbonisation across our economy. Whether facilitating a shift to electric vehicles (EVs) or to heating our homes and businesses with electricity, biomass or hydrogen, flexibility is crucial to maximise the chances of achieving a net zero economy by 2050, and of doing so cost effectively.

There are still some questions around how flexibility will be delivered at scale and a cross sector consortium has come together to explore these in the Flexibility in Great Britain project – with findings due to be published in spring. However, we are already seeing quite fundamental shifts take place in our energy system.

We ran a webinar series to better understand what changes are already underway and to get views on the road ahead from some key energy system stakeholders. The following is a summary of these discussions.

Local energy systems

Drawn from a discussion with:

  • Steve Atkins, DSO transition manager, Scottish and Southern Electricity Networks (SSEN) 
  • Rick Curtis, Programme Manager, Smart Energy Systems, Greater London Authority

From a Distribution Network Operator’s (DNO) perspective, local energy systems aim to match energy supply and demand within a defined geographical area for the benefit of a particular organisation or community. The market for these local energy systems is fairly nascent and so often their development is driven by values other than simply profit – for example, reducing carbon emissions – and that’s why SSEN is seeing a high level of interest from community groups and local authorities. 

The emergence of local energy systems and the transformation of DNOs to Distribution System Operators (DSOs) go hand in hand. DSOs will take more responsibility for managing the flow of energy on the network, as well as maintaining the assets that carry it, so flexibility offers an opportunity for networks to smooth pinch points on the grid without simply resorting to building more or bigger assets. Consumption of energy closer to the source of generation can also mean a reduction in network losses, an increase in local resilience and possibly cheaper electricity.

However, there are some barriers to unlocking the full potential of local flexibility. The FlexLondon project, for example, found that it can be a struggle to build a long term revenue stream in order to ensure a business case is viable. It also found that the value of flexibility to the DNO is very location dependent and non-energy benefits, such as carbon savings or air quality improvements, are also very hard to build into the business case.

Working at a local level

DNOs can play an enabling role, supporting local stakeholders to deliver local energy systems. SSEN provides education support, streamlines processes, and helps with the data needed to understand how best to maximise opportunities. It engages with community groups, energy hubs and the Local Enterprise Partnerships that support local authorities and it seeks to remove barriers for businesses operating in this sector that need to access revenues from a number of sources to make participation possible.

Coordination with local authorities is also absolutely essential, as they are going to have an increasingly important role, whether that’s directly or through third party solution providers.  The Greater London Authority is committed to running a range of local energy pilots to help understand what tools and actions are needed locally to unlock flexibility and the roles of the different organisations that come together to deliver this. This includes local area energy planning, and innovative flexible energy pilots such as Home Response and E-Flex. It is also considering what powers and resources local authorities need to be able to drive flexibility at a local level.

A lot of local authorities are deploying flexibility now whether they realise it or not – deploying electric vehicle charge points, for example – so they can build on this experience. Securing meaningful data is also an important early step. FlexLondon found that identifying the right data sets, pulling them out of proprietary systems and getting them into a format so that a solution provider can propose a solution, took a lot of time.

Transport

Drawn from a discussion with:

  • Vincent De Rul, Director of Energy Solutions, EDF Energy
  • Evie Trolove, Innovation Project Lead, UK Power Networks

UK Power Networks is forecasting that there will be 4.5m Electric Vehicles (EVs) by 2030 and EDF noted that sales of electric vehicles in the UK in June 2020 were 160% higher than the previous year. The shift from petrol & diesel cars to electric is accelerating and energy companies, such as EDF, need to be ready in terms of customer propositions and charging infrastructure. 

EDF Energy has started moving its entire fleet to electric vehicles, and is also helping its employees to switch to EVs utilising support from the government, such as the salary sacrifice scheme and tax incentives, and deploying charge points on its sites to ensure employees can charge their cars at the office. It is also working closely with its customers, in particular seeking to play a role in the huge challenge of electrifying the public sector fleet, as well as offering city dwellers and councils good access to charging.

Significant investment is going to be required in charging infrastructure to enable a widespread EV rollout. In addition, network companies are increasingly adopting a ‘flexibility first’ approach – testing new innovations to make efficient use of existing network assets, as well as investing in new network capacity where needed. Key to understanding the types of charging infrastructure that will be required is clarity on the customers' needs – whether they are at home, in the office, at a destination such as a shopping centre or at a restaurant, or on a long journey.

Customer choice

EV owners have the potential to contribute to a flexible energy system through allowing their vehicle to participate in smart charging or vehicle-to-grid schemes. However, customers will need to clearly understand what this involves and trust that they can still use their vehicle in the way they want to. 

Customers will have concerns that using their battery as a flexible asset, through vehicle-to-grid services, will degrade the battery. EDF is doing a lot of research to simulate the impact on a battery of using it as a flexible asset rather than using it (only) to power the car and is also working closely with Nissan to address this topic. 

The customer needs to be able to have control of their vehicle, including the ability to override smart controls to decide when their battery is charged. Saying to your customer: ‘let me play with your battery as a flexible asset and I will tell you when you can drive it, because I am the one who controls it’, is not going to work. The smart energy proposition needs to adapt to that and create as much value as possible with the battery when it is available to be a flexible asset. In addition, customers need to have a share in the revenue that comes from providing those grid services. 

Heat 

Drawn from a discussion with:

  • Matt Watson, Innovation and Low Carbon Networks Engineer, Western Power Distribution
  • Keith Owen, Chair of the Hydrogen Committee, Institution of Gas Engineers and Managers (IGEM), and Head of Systems Development and Energy Strategy for Northern Gas Networks

The Committee on Climate Change 2020 Progress Report to Parliament stated that the government must make low carbon heating the dominant form of new heating installation by the early 2030s if the UK is to remain on track to become net zero by 2050. Achieving this transition is going to be incredibly challenging in its scale – the sheer volume of energy that is required to heat homes and businesses in the UK – and complexity. We know the challenges posed by EVs, but heating is even more complex as there is far more diversity in demand, in terms of the building stock and the climatic conditions within the UK. 

The UK is currently highly dependent on natural gas for heat and all domestic gas boilers will need to be replaced with a low carbon solution. The options available range from electricity solutions via heat pumps, hybrid gas boilers/heat pumps solutions, and hydrogen gas depending on property type.

There are 30 years left to achieve net zero and, from a utility perspective, that feels like next week in terms of planning and development of infrastructure change programmes. The transitions will be complex and it would be extraordinarily easy to add cost if we don't get clarity quickly. For the energy industry, it means it can invest with confidence in the necessary plant and production facilities and in the research for future products without ending up with stranded assets and lost capital. It also reduces exposing customers to excessive costs and risks from investment. 

Flexibility will clearly play a significant role, including the potential to store heat within buildings, and there remain challenges around the technologies that will be needed and work required to understand consumer behaviours and needs. 

It is important to have open and positive conversations with both domestic and business consumers and it’s vital to work with stakeholders to get that communication right. It doesn't matter how good the technology is, if the customer doesn't want it or can’t see how it helps them, we will not get far. 

Collaborative approaches

The gas and electricity networks are working together to deliver low carbon heat and flexibility services, such as on the Open Networks Project where electricity and gas teams are discussing whole system solutions. This approach is crucial as the scale of the challenge is so enormous - we will get nowhere fast by arguing it's one route or another, it’s all the routes, at once, in order to break the back of the climate challenge and set the UK on the right path. 

Another good example of collaboration within the gas sector is the recently launched Gas Goes Green project. All the major networks are working together with the Energy Networks Association on multi-million pound projects that are seeking to understand the technical challenges of transitioning from natural gas to a 100% hydrogen and blended hydrogen/methane systems.

Meanwhile, work with local authorities is proving to be a key area of focus. Many local authorities have set net zero by 2030 targets but, to achieve this, they are increasingly looking at electrification of demand as a short to medium term solution. However, many are also aware of the developments within the gas sector to establish hydrogen gas networks and work is beginning to shape their longer-term decarbonisation strategies. A co-ordinated approach between national and local government will help to develop decarbonisation pathways and minimise the risk of stranded assets. 

There’s a lot of work to do in the energy sector to understand how to support local authorities with their ambitions. The energy sector can help by providing the information needed to make good decisions, such as the levels and locations of reinforcements required and the feasibility of certain technologies depending on the local demographics and geographies of different local authorities. 

To hear more on these discussions, you can view recordings of the Webinar series: Flexible energy systems in the UK.

Related links

Briefing - Flexible energy systems

How can a flexible energy system help delivery net zero?

Can storage help reduce the cost of a future uk electricity system?

Capturing the benefit of a smart flexible energy system

Heat pump retrofit in London