This document discusses the need for a smart, flexible energy system in the UK and actions being taken to enable it. Key points:
- The UK energy system faces challenges from increasing distributed generation, intermittent renewables, and electric vehicles demanding more flexible solutions.
- A smart energy system using energy storage, demand side response, and other flexibility can address these challenges.
- BEIS is taking steps to remove barriers, catalyze innovation to lower costs, and develop supply chains through funding competitions, analyzing evidence, and considering regulatory changes.
- Over £500 million is being invested in energy innovation including at least £50 million for smart energy projects focused on areas like demand response, storage, and vehicle-to
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Why do we need a smart, flexible energy system?
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Increasing distributed generation
Increasing intermittency & inflexibility in generation
Increasing demand – Electric Vehicles & heat
Changes in consumer behaviour
Smart Energy Solution:
A smart energy system,
including energy storage,
DSR and other flexibility
solutions, can address
these challenges and
deliver secure affordable
and clean energy now
and in the future.
Energy System Challenges:
Most models forecast significant increases in electricity demand and in the proportion of generation from low
carbon sources (generally more inflexible or intermittent) (National Grid, Future Energy Scenarios 2016)
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Technology and market changes support a
smart & flexible energy system
• Opportunities for
storage in delivering
new EFR
• Potential to go further
through multiservice
contracts
• Power Responsive
campaign outcomes
• Diverse business
models are emerging:
• colocation of
storage with
renewables
• domestic consumer
offerings through
aggregators
• Dramatic cost
reduction of Li-ion
technology – around
14% pa from 2007-
2014 and likely to
reduce further.
Comparable with drop
in solar costs
Smarter Network Storage facility,
Leighton Buzzard
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Key Enablers
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• Removing policy & regulatory barriers – “levelling the
playing field”.
• Using innovation to help drive down costs & optimise
performance.
• Developing supply chains.
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Enablers - Policy & Regulation: BEIS/Ofgem
Call for Evidence on Smart Energy
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/576367/Smart_Flexibility_Energy_-
_Call_for_Evidence1.pdf
•Clarify role of aggregators,
•explore the need for policy intervention and regulatory oversight,
•evaluate and address barriers to ownership and utilisation of storage
Removing barriers to
storage and DSR
•Consider ways in which we can encourage and reward consumers to offer their
flexibility (e.g. half hourly settlement, smart appliances, etc)Improving price signals
•Ensuring HMG’s innovation funding supports those areas critical to the
development of a smart energy system, including evaluating the public sector’s
role in supporting smart.
Catalysing innovation
•Considering what institutional and market frameworks may be required in a future
smart energy system to maximise benefits while managing the risks; and how roles
and responsibilities may need to change in light of these (e.g. from DNO to DSO).
Assessing changes to
roles & responsibilities
•Considering the costs and benefits in more detail; how much flexibility might be
‘least regrets’; and identifying evidence gaps more broadly in this area.
Developing our analysis
and evidence base
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Enablers - Innovation
BEIS Innovation Programme:
• BEIS Innovation Programme:
Further details below. (https://www.gov.uk/guidance/funding-for-
innovative-smart-energy-systems )
Innovate UK:
• Infrastructure Competition and Catalyst Competitions;
European – H2020 funding:
• HMT has indicated that it will underwrite H2020 funding offers in place
before Brexit;
Ofgem:
• Network Infrastructure Competition & Allowance – projects led by network
operators; also plans (set out in the CfE) to introduce “innovation spaces
for experimentation”.
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Enablers - Industrial Strategy
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Focus on:
• R&D and Innovation, specifically including ‘Smart Energy’ – including
energy storage and smart grid technologies;
• Industrial Strategy Challenge Fund announced;
• Including £246m over 4 years for the ‘Faraday Challenge’ – “to
help UK businesses seize the opportunities presented by the
transition to a low carbon economy, to ensure the UK leads the
world in the design, development and manufacture of batteries
for the electrification of vehicles”.
More information:
https://www.gov.uk/government/news/developing-a-modern-industrial-strategy
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BEIS Energy Innovation Funding
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- £500m budget overall for Energy Innovation;
- Overall Energy Innovation Programme will include innovation support for the
following areas:
- Nuclear;
- Smart Energy (Government has committed at least £50m for Smart
Energy innovation over the next 4-5 years; further details of the Smart
Energy Innovation Programme overleaf),
- Built Environment;
- Industrial Efficiency (e.g. Industrial Energy Efficiency Accelerator);
- Renewables (e.g. ERANET Cofunds for OSW and Bioenergy); and
- Cross-Cutting (e.g. Energy Entrepreneurs Fund).
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BEIS Smart Energy Innovation
BEIS Innovation Programme:
• Smart Innovation – possible priority areas (set out in the CfE):
o commercial and residential DSR - to catalyse innovative DSR services for residential
and SME customers; could explore approaches involving intelligent automation of flexible
loads;
o flexibility trading/optimisation platforms – support approaches which can optimise
flexibility solutions (including storage & DSR) & mitigate prioritisation conflicts between
multiple users of flexibility;
o storage costs - innovation support to catalyse the development of alternative storage
technologies; e.g. with potential to be more cost-effective than established technologies
in future for a range of grid-scale flexibility applications; could be demonstrators of large-
scale storage technologies, e.g. compressed air or power-to-gas, or support for
component level development, manufacturing process, or efficiency improvements; and
o vehicle to grid - innovation to test availability and cost of infrastructure, viability of
stacking services, and models that work for both business fleets and private consumers
as well as to encourage development of offerings which could incentivise EV owners to
shift charging away from the peak loads.
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BEIS Smart Energy Innovation Competitions
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Three new Competitions launched in January 2017: two supporting
energy storage and one for non-domestic DSR innovation.
Funding for energy storage cost reduction and feasibility studies (£9.6m)
In January 2017, Government launched two energy storage competitions: with
up to £9 million available to reduce the cost of energy storage technologies
(including electricity storage, thermal storage, and power-to-gas technologies).
And a further £600,000 to support feasibility studies for a potential first-of-a-
kind, large-scale future storage demonstrator.
(Outstanding deadline for applications for the energy storage cost
reduction competition is 17:00 on 8 June 2017)
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BEIS Smart Energy Innovation Competitions
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Funding for innovative non-domestic Demand Side Response
demonstrations (£7.6m)
Government has also committed up to £7.6 million for innovative
demonstrations of energy demand side response technologies in UK
businesses or public sector organisations to reduce their energy use in peak
times and provide flexibility to the energy system.
The Competition will seek to identify and demonstrate controllable, flexible
demand in real commercial, industrial, public, third sector or community non-
domestic environments which can be replicated at significant scale in identical
or similar applications.
(Deadline for applications is 17:00 on 18 May 2017)
NG Future Energy Scenarios show relatively modest potential overall demand increases up to 2030 – but very large potential increase in the percentage of intermittent or more inflexible low carbon generation.
Almost every car new car zero emission by 2040 (Manifesto)
5th carbon budget (2028-2032) scenario for 70% ZEV sales by 2030
2.6million new car registrations in the UK in 2015…….
Almost every car new car zero emission by 2040 (Manifesto)
5th carbon budget (2028-2032) scenario for 70% ZEV sales by 2030
A ‘smarter’ electricity system offers the holy grail of…..a reduced cost energy, low carbon and secure energy system.
DECC published “Toward a Smart Energy System” on 17 December 2015 – this slide is taken from it, and sets out and starts to quantify the benefits of a smart energy system – Storage, together with the other technologies which deliver flexibility will help us to realise there potential savings.
Focusing for a moment on where the market is now for flexibility and storage in particular – we’re already seeing rapid changes in response to the opportunities to deliver storage from the NG EFR tender and their commitment to review multiservice contracts and with DNO seeing connection requests in excess of 19GW we are seeing a diverse range of business models coming forward, battery production at scale and a virtuous cycle with falling technology costs.
And we’re seeing a diverse range of business modesl for storage at different scales from distribution level through to models for aggregated dispatch of fleets of Evs.
And much of the recent interest has been spurred in part by dramatic cost reductions in battery technology in recent years – estimates will vary but the reductions are significant. Looking ahead, with the further scaling up of battery production for electric vehicles and in-home usage, battery costs are expected to continue to decline.
We saw some fascinating figures from Aurora on Tuesday suggesting that costs of £100/KWH for Li-ion by 2020 were not unreasonable
DECC published “Toward a Smart Energy System” on 17 December 2015 – this slide is taken from it, and sets out and starts to quantify the benefits of a smart energy system – Storage, together with the other technologies which deliver flexibility will help us to realise there potential savings.
BEIS and Ofgem are committed to energy policy that works for households and businesses. A smarter and more flexible system offers significant benefits for consumers; done right, the system will be more secure, more affordable and easier to decarbonise.
The forthcoming Call for Evidence will set out our approach to delivering these benefits and will invite views and evidence in response to our proposed approach.
Price Signals: Elective half-hourly settlements are expected for consumers from early 2017;
Government and Ofgem will consider the need for and consult further on mandatory options for half-hourly settlement.
Roles: (FPGA) Future Power Generation Architect analysis of functions (IET and Energy Systems Catapult)
Set against this market context I’d like to go through what Government is doing now – we’re working closely with Ofgem and will shortly be publishing our Call for Evidence on Smart Energy.
Our focus has been embedding smart as a key tool for ensuring security of supply and to enable and ease our transition to a low carbon system.
We want to ensure that new and existing technologies can compete on a level playing field and facilitate effective competition – whether that’s through network charging or in the arrangements for ownership of network assets.
We’re also focusing on putting the right enablers in place to allow developers to take up and realise the flexibility which could be on offer through the system via the introduction of wide spread half hourly settlements.
Alongside this focus on the markets we’re working to develop our evidence base and support innovation and research.
But central to all of this, as David made clear, is that we can’t do without partnering with industry to deliver change of this scale and at the pace required.