Residential flexibility can ‘save £6.9bn’ a year, report finds

A report into decarbonisation by Imperial College London and Ovo Energy has found increasing residential flexibility could cut costs by almost £7 billion.

The “Blueprint for a Post-Carbon Society” report states that its “Future Survival” decarbonisation scenario will save a total of £6.9 billion in whole system costs, or £256 per household.

This scenario includes a high uptake of both electric vehicles (25 million) and electric heating (21 million homes), in addition to a high penetration of low-cost renewable power generation (93 per cent).

The report says this scenario has “near complete electrification of residential heat and transport” and demonstrates the “greatest value of residential system flexibility”. It adds this “ambitious” scenario would result in a carbon emissions reduction of 65 per cent.

Vehicle to Grid (V2G), it says, leads to savings of £3.5 billion annually, compared to smart charging at £1.1 billion. Smart heating leads to savings of £3.9 billion a year resulting from the displacement of carbon capture and storage (CCS) with other low-carbon generation.

The headline £6.9 billion figure is based on a scenario where all technologies are working together, which accounts for an overlap on the benefits each technology provides individually.

Meanwhile residential battery storage can contribute savings of £2 billion from displacing Open Cycle Gas Turbines (OCGTs) and CCS, the study found.

The savings are achieved by limiting the need for expensive grid upgrades and reinforcements and enabling a higher penetration of low-cost renewable energy such as wind and solar.

The impact of EVs on the energy system is one of the challenges to the rollout that is most often cited. The report however demonstrates that new vehicle charging technologies will “alleviate” the impacts.

Further analysis shows that compared to a less ambitious “Burning Platform” scenario, the estimated cost of the “Future Survival” scenario is £5.6 billion per year less, meaning potential savings of £206 per year per household.

In total the report looks into three different scenarios, each with varying levels of residential flexibility.

Flexibility is the ability to adjust generation or consumption to maintain the secure operation of the energy system.

Ovo believes that most flexibility will be found at a residential level via behind-the-meter (BTM) technologies. This includes battery storage or demand side response associated with smart EV charging or smart residential appliances.

The three scenarios are:

• Burning Platform: a steady state system that sees a grid carbon intensity of 200g per kWh
• Stepping Stone: progress made on decarbonisation and a grid carbon density of 50g per kWh
• Future Survival: one of the most ambitious low-carbon system scenarios for the UK ever conceived and a grid carbon density of 25g per kWh

Dr Toby Ferenczi, OVO’s director of strategy, said: “Electrification and the intelligent use of residential energy technologies are absolutely critical to bringing down emissions and powering the future sustainably.

“This research shows that households up and down the country can each play a role in creating a balanced, flexible, and almost completely renewable energy system while at the same time saving over £200 a year.

“Ovo continues to call for the government, regulators and the industry to work together and adapt to this new energy system where demand flexibility makes energy cheaper for everyone.”

Goran Strbac, professor of energy systems at Imperial College London, added: “This analysis demonstrates that cost effective decarbonisation can be achieved not only through the deployment of low-cost renewable energy such as wind and solar but also by improving system flexibility through the use of behind-the-meter technology. Achieving this would require changes in regulations and market rules that the UK should act on.”