16 February 2018

How can we make our energy system more democratic, decentralised and decarbonised?

What will the transition from Distribution Network Operator (DNO) to Distribution System Operator (DSO) mean for community groups and local energy stakeholders?

Communities and small generators have a lot of potential to balance supply and demand for electricity at a local level, reducing impact on our electricity network and helping us avoid paying for costly upgrades. Markets for this flexibility are designed for large scale big players, so how will domestic customers and small-scale energy generators be able to interact with flexibility markets, and extract value in the future?

At our event in Nottingham this week we were tackling these big questions head on with communities, local authorities, academics, businesses and Western Power Distribution (WPD). We heard from some leading thinkers involved in local flexibility market trials and explored some of the innovation projects being delivered by WPD that involve communities.

First up was Project SCENe, Nottingham's flagship community energy project in a new housing development in the Trent basin, that will demonstrate a new and scalable model of doing energy and housing more sustainably and equitably. It will do this through the UK’s largest community energy battery (2.1MW); rooftop and ground mounted PV; arbitrage between heat and power using heat pumps; a reduced tariff and a shareholder offer to residents; and grid services, energy demand and supply optimisation through a local energy services company (ESCO), expert support and ongoing consumer participatory engagement, research and co-design. The shareholders agreement gives rights to the community from day one to buy shares in or own the ESCO outright. Project SCENe are currently applying for a supply licence exemption through Ofgem’s regulator sandbox, they are choosing not to build a private microgrid so that residents can choose their supplier and the energy is optimised and benefits the whole system. “We want a cookie cutter model that doesn’t need public finance, so that every developer will want to do this in the future.” Charles Bradshaw-Smith, SmartKlub.

Ben Aylott, from Carbon Co-op defined flexibility as “the ability to increase and decrease demand dynamically.” For example, if you had an electric vehicle (EV), you can move when the car is charged to create flexibility. Doing this activity is potentially cheaper than building new distributed generation and reinforcing the network. The best way to incentivise flexibility is through time of use tariffs, direct contracting, auctions or potential for new markets. “Most flexibility is procured in a marketplace, we want this to be more accessible to domestic and smaller prosumers.” The role of aggregators is key as they can club together smaller scale flexibility, manage the metering, monitoring, billing, and manage the risk of potentially not being able to provide the flexibility when needed, thus incurring penalties. Ben talked about the Energie Koplopers trial in the Netherlands, which shows benefits for the supplier and network operator. The UK smart metering system is key and could bring the cost for consumer and aggregators down once metres are in place. But do consumers want to participate in these markets and want people controlling flexible loads in their households?

Carbon Co-op have won funding from the BEIS Flexibility Markets Feasibility Study Competition, for a project that will explore the feasibility of an aggregation service based on the value and ethos of the community energy movement. This would be a trusted, citizen owned and controlled model, locally focused, operating on a regional scale and with a national reach, called the Energy Community Aggregator Service (ECAS). The idea is by clubbing together/aggregating domestic loads that this service would be able to use new DNO revenue streams as they start to procure this sort of flexibility.

Rachel Stanley, from Open Utility, a software company facilitating the market, talked about PICLO, an online marketplace for flexibility trading and partnerships. Open Utility started with the vision for people with PV to be able to sell electricity to their neighbours, “but regulation got in the way, so it has become a pseudo peer to peer marketplace that uses half hourly settlement.” Starting from first principles, how can we create a true marketplace? We can either build more cables or start to be more flexible. So Open Utility are developing an online marketplace for flexibility trading and lowering barriers for flexible providers.

Yiango from WPD’s future networks team said “we need to completely change our energy system architecture and make it smarter, reconfiguring the system in real time, ensuring the network operates as optimally as possible.” She talked about how WPD deliver their innovation strategy through trials like Electric Nation, which explores the impact of EVs on the network and is helping develop tools to plan and be ready for more EVs in future.  Plugs and Sockets is WPDs strand of the Cornwall Local Energy Markets project which is developing a flexibility platform that will enable prosumers to trade consumption or generation to benefit a third party. Open LV is about developing apps to access and share data from local low voltage substations, this will enable us to see what the demand is, and the real time thermal rating of the substation. Academics and community groups have been invited to come forward with ideas for how the data and apps could be used and developed. Communities are taking part in these trials and more. As WPD develop from a fairly passive DNO to a DSO they will increasingly involve communities in their trials, interact more with customers and look to procure flexibility services for local balancing between supply and demand. They will be publishing a paper on this in the summer and in the meantime will be continuing to engage communities and local energy stakeholders through more Democratic Decentralised and Decarbonised events in Cardiff on 20 February, Birmingham on the 1 March, and Devon on the 9 March, more connections surgeries and online tools and resources.

Author: Jodie Giles, senior project manager - communities

Email: [email protected]