The winds of change are tearing through our energy system, upending old assumptions about how it is run – and by whom.

The arrival of new technologies has altered the way we generate, distribute and consume energy, putting pressure on the old energy system and forcing it to evolve.

Smart meters, covered in the last Topic (Utility Week, 27 January 2017), are part of this transformation. But despite the time and investment being eaten up by this national programme, in reality, smart meters are just one tiny facet of the new smart energy world.
The wider realm of smart and flexible ­systems is made up of complex and sometimes uncomfortable interactions between energy networks, decentralising generation, and the electrification of transport – and possibly heat.

For networks, smart energy is now causing a fundamental rethink of their purpose and powers. A call for evidence from the government has given network operators and other players the chance to air their views around the scope for new system balancing responsibilities to be handed down to power distribution level. Meanwhile, gas ­networks are pushing for a blurring of the lines between different energy “vectors” and a ­bigger role in creating a smart “whole” energy system.

Such changes in the structure and management of the energy system hold big challenges and risks – but also great opportunities to deal effectively with increasingly intermittent renewable generation, the uptake of electric vehicles and the promise of an engaged demand-side market.

The government has recognised the criticality of smart energy systems to its national economic and social goals. Dynamic smart grids were at the heart of its proposed industrial strategy and a call for evidence on smart and flexible energy systems has captured the input of the industry’s disruptive new players, as well as its incumbents.

Business and energy secretary Greg Clark has stated that a smarter energy system could herald the end of “the age of exclusive control by big energy companies and central government”, breaking down barriers to competition in the energy system and opening the door to innovation.

In this Topic, Utility Week looks at some of the technologies and trends contributing to this exciting prospect.

Distribution system operators

Everyone agrees that DSOs in some form will be key to the future ­energy grid, but there is debate about exactly what this role will be.

Distribution system operators (DSO) will arguably be the lynchpin of a future smart system, but the industry lacks clarity on what exactly a DSO is in a UK context.

This issue emerged as requiring urgent attention in responses to the recent call for evidence from the government and Ofgem on the transition to a smart and flexible energy system.

In the rest of Europe, DSO is the generic term for a company that performs a role equivalent to that of a DNO in the UK, but it does not necessarily mean they are “smart”. In the UK, this is integral to its meaning. DSOs will have greater visibility and control of assets on their distribution systems, enabling them to get the most from their existing electrical infrastructure by contracting services from distributed energy resources. In this way, they can avoid costly network reinforcement and move away from the traditional redundancy-based model of energy systems.

The case for the market role of the DSO is well known. Rapidly increasing numbers of connection requests from renewables developers and other low-carbon generation technologies with variable outputs are creating technical challenges for DNOs.

There is also expected to be an increase in demand because of the electrification of a portion of the UK’s heat needs; increased multi-vector interaction between the energy, transport and waste sectors; and a need to allow incentives to emerge to enable customers to save money through active participation. This means DNOs can no longer remain passive when it comes to managing the energy flows on their systems.

However, opinion is divided over who is best placed to control the system. Should a central independent system operator have ultimate control? Or will DSOs, with enhanced visibility over the continually increasing amount of distributed generation attached to their distribution assets, be in a better position to balance the system and use services such as demand-side response and storage?

It cannot be both. Flexible methods of connection are being introduced by all DNOs, but it is possible that these active network management schemes will contradict actions undertaken by system operators through bilateral agreements with system users.

In the absence of policy, network operators are taking it upon themselves to map out the intended path. Last year, SP Energy Networks revealed that it plans to transition towards the “Total DSO” model, in which it will manage all distributed resources on the distribution network, responding to instructions from the system operator and managing its resources accordingly.

This solution would not be without its challenges. Regulation will be required to standardise the approach among DSOs to ensure a fair market, and the necessary changes to existing commercial and regulatory frameworks would be the most extensive of all the options.

Comment: Chris Clarke, director of asset management, HS&E, Wales & West Utilities

With electricity distribution network operators (DNOs) keen to become distribution system operators (DSOs), Wales & West Utilities (WWU) who, in practice, already plays that role as the gas distribution network for Wales and the southwest of England, thinks that distribution system operators in gas and electricity – and close collaboration between them – are essential to deliver the integrated energy system needed to deliver for energy consumers in the future.

At peak times, more than 80 per cent of heat and power demand is met by the gas network. As a business we want to see that continue – and we think it is essential it does, so that as an industry we can meet the energy trilemma to deliver affordable, secure and sustainable energy to customers while also delivering on our carbon reduction commitments.

Our belief in gas is not based on assumptions or wishful thinking on our behalf. Working with leading consultants, we’ve built an energy simulator – unique among gas and electricity networks – that models future energy supply and demand in an integrated energy network. It also calculates the need for energy storage or interconnection requirements, depending on the future energy pathway that is chosen.

The conclusions are clear: whether delivering energy in the form of gas direct to boilers and cookers in homes across the nation, or as a fuel for power stations (be they baseload or peaking plants to enable widespread use of renewables) and therefore serving as an energy battery, an integrated energy network, with gas and electricity system operators collaborating closely, is essential to deliver for energy consumers.

We’re working together with Western Power Distribution on ­Project Freedom, which could pave the way for a hybrid heating system that could meet a home’s energy needs by switching between an air source heat pump, a boiler powered by mains gas, and an electricity connection – depending on what was most cost-effective at the time. If this sort of solution was to be rolled out around the UK, it would further increase the need for a collaborative approach to system operation.

With distributed electricity generation entering the electricity grid across the country and green gases being injected into the gas network in an equally distributed manner, it is clear that the traditional, top down system operator and distribution operator relationship has changed in both sectors for good. It’s equally clear that gas – whether that’s green gas, biomethane, BioSNG, or a hydrogen blend, is going to play a central role in not only electricity generation, but also in continuing to deliver affordable, secure and sustainable heat to homes for many years to come – and as a key enabler in meeting our decarbonisation targets by supporting renewable energy generation.

So DNOs becoming quasi-system operators like we are is a welcome step, and a key enabler to further collaboration, so together we can deliver what energy customers right across the country need and expect – energy that is affordable, secure and sustainable.

DSR and storage in the smart system

The ability to store excesses power and turn demand on and off according to supply conditions will be a game-changer as the energy system adapts to cope with intermittent renewables, says Tom Grimwood.

As Britain decarbonises, the growth of intermittent renewable generation will mean that matching supply with demand, getting power to where it is needed and maintaining the stability of the energy system will become increasingly challenging. By shifting demand and supply from one time to another, aiding the efficient use of our networks and providing a range of ancillary services, demand-side response (DSR) and storage will have a key part to play in making this low-carbon transition cost-effective.

The costs of integrating renewables are in general “relatively modest”, a recent report by the UK Energy Research Centre concluded, but vary enormously depending on the flexibility of the system. Think-tank Policy Exchange estimated that deploying DSR and storage to create a smarter, more flexible energy system could deliver savings of up to £8 billion by 2030.

Included in these cost estimates is providing backup capacity for when the sun is not shining and the wind is not blowing. DSR and storage are already part of the solution, having won hundreds of megawatts of contracts in the capacity market auctions that have taken place. They are likely to perform even better in future, particularly as the price of battery storage continues its steady decline, and could eventually become a cheaper, low-carbon alternative to much of the fossil fuel generation that would otherwise be needed.

On the other side of the coin, there is the cost of curtailing excess renewable generation when the sun is shining bright and the wind blowing strong. Storage is able to save this excess power for later, and demand-side response to use it at the time, thereby reducing demand in the future. In the past few months, National Grid launched a tender for a demand-turn-up service to enable DSR to absorb surplus wind generation.

The restraints of the transmission network mean excess wind generation is already being curtailed – or rather wasted – in parts of the Scotland because of the limits of the electricity network. DSR and storage can not only mop up excess power supplies across the energy system but in specific parts, help to make the best use of existing assets and avoid expensive reinforcement. Western Power Distribution has indicated an interest in using containerised batteries as “interim” reinforcements – providing a stop gap measure while it assesses whether it needs to invest in a permanent solution.

Then are the costs of short-term balancing and other ancillary services. As the volatility of the energy system increases with more renewable generation, the need for many of these services will increase. Currently they are largely provided by dispatchable thermal generation, but again DSR and storage have the potential to provide a cheaper, low-carbon alternative.

Last year, National Grid held a tender for a new “enhanced frequency response” service to maintain the system inertia – or resistance to change in frequency – which is currently provided by the spinning machinery in thermal generation plants, and would otherwise decrease with the rise of renewable generation. The competition was dominated by battery storage, which won 61 out of the 64 contracts. Two went to DSR and just one to thermal generation.

By fulfilling a plethora of roles – balancing supply with demand over the long and the short term, ensuring the smooth operation of the energy system and enabling the best use of assets – DSR and storage will be indispensable tools in the transition towards a low-carbon power sector. Without them, it will be harder work and a lot more expensive.

Comment: Steven Burns, Institution of Engineering and Technology, energy sector

What can smart cities and IoT learn from smart grids?

Ten years ago, the smart grid was born with the ethos that it would transform passive infrastructure into a dynamic and responsive facilitator.

Skip forward a decade, and a raft of cutting-edge schemes were delivered and valuable learning captured. Smart grids are yet to be ubiquitous and the hype around the revolution in distribution has cooled. The smart grid experiment hasn’t failed, but unrealistic expectation has given way to a maturing of the market and novel techniques to meet specific challenges.

New kid on the block

Within the past couple of years, smart cites and the Internet of Things (IoT) have been generating a buzz. Could IoT succumb to the same hype as smart grids? What can we learn from the smart grid market to help negotiate this tricky ground?

The first year of the Low Carbon Networks Fund (LCNF) saw plans to demonstrate a complete picture of the future grid. However, many of the projects struggled to deliver. What emerged was a realisation that smart grids are not one uniform template, but the development of practices that complement established solutions. Thus, the market has matured and projects have moved from simply testing technology, to developing targeted solutions.

Data, data, data

Daily operations for networks are generally run through centralised operations centres with powerful software systems. The assumption is that if data is being measured, it should be collected. This led to two notable trends in smart grid data applications. First, distribution networks have begun to invest in analytics to unpack the bits and bytes. Second, there is an emerging trend towards distributed intelligence.

Similar trends are also appearing in smart cities. Cities are beginning to collect vast amounts of records and huge data stores are taking shape. Positively, some organisations are making data sets publicly available. It is hoped this will lead to innovative applications drawing on a wider creativity pool, and delivering further benefits.

We need to talk

For many years, electricity grids have relied on communications infrastructure to improve reliability and aid operations. However, communications are being pushed further down the network while their performance requirements are increasing.

This has been one of the key challenges for smart grid, namely how to provide the last mile communications to the furthest reaches of the network.

Communications cannot be an afterthought. Defaulting to the easiest option will ultimately lead to limitations and reduce benefits. There needs to be clarity on performance and functionality requirements. These must include appropriate levels of cyber-security designed from the ground up. And, any choice of communications must be one that can grow with future requirements.

So where is this smart grid?

One frustration often levelled at smart grid is that the speed of change is too slow. LCNF has demonstrated some marvellous technology, but for everyday deployment it must deliver a positive business case. R&D funding can create an artificial bubble that allows technology to develop in an environment insulated from commercial reality.

For those companies attempting to navigate the unworn paths into IoT deployment, the risks are clear. Attempts to define the defacto smart city are already pulling organisations away from defining clear and deliverable use cases. Huge data warehouses are being produced with the view that one day, the data might be useful. With huge data requirements come huge communications requirements, not to mention the challenges associated with ensuring the solutions are resilient to cyber-attack through the entire solution.

However, it’s not all doom and gloom. On the plus side, IoT and smart cities do indeed pose a huge opportunity to revolutionise civic infrastructure through the development of targeted use cases. Multi-application platforms leveraging the same infrastructure will in turn deliver real benefits with the correct use cases, which will differ from city to city.

Time will tell as to how quickly the IoT industry will mature, and more importantly for those pioneering organisations, who the winners and losers will be. As for predicting who those will be? Ask me in ten years.

The heat is on

Comment by Jeff Douglas, strategy manager, Energy Systems Catapult

Household space and water heating in the UK contributes around 100 million tonnes of CO2 annually to the atmosphere, which is 20 per cent of the country’s total CO2 emissions and the equivalent of 3.5 tonnes per household. So heat decarbonisation is vital for emissions reduction, and when viewed from an energy system perspective is likely to be more cost-effective than undertaking deeper cuts in transport and industry.

The question is how to move from a system that provides good service but burns natural gas, to one which is also secure and affordable but with near-zero emissions and still providing the warmth and comfort.

The customer is king

The starting point should be not “how much energy do you use” but “what is it you are seeking to achieve when you are using energy”? This sounds simple, but there are many different building types, with many different occupants with many differing requirements, and proposals based just on general assumptions will find little favour.

Low carbon solutions

There are four broad categories of low carbon heat provision:
•    Networked heating – using heat networks supplied by a low carbon source.
•    Individual electric heating – including heat pumps using a decarbonised electricity supply.
•    Hybrid electric/gas heating – using heat pumps combined with small amounts of gas to meet peak demands.
•    Networked gas – re-purposing the existing gas grid for low carbon gas use (such as hydrogen).

There is, though, no stand-out solution for the mass market. Carbon costs are not added to energy bills, so high carbon options are always cheaper. Low carbon solutions are also relatively complex, with high upfront costs and uncertain benefits for consumers and providers.

Developing local area strategies

There is a need to help build local consensus around spatial strategies that meet the 2050 goals. This should take account of local characteristics including housing stock, geography, energy networks, energy resources and local preferences.

Some local authorities are already working on energy master plans as part of the Energy Technologies Institute’s (ETI’s) Smart Systems and Heat programme (Newcastle City Council, Bridgend County Council and the Greater Manchester Combined Authority). The Energy Systems Catapult has assumed responsibility for the delivery of phase one of the programme to the ETI, which aims to create future-proof and economic local heating solutions for the UK.

The programme is also looking at how best to tackle the question of decarbonising heat. The collaborative activity with local authorities includes the development of a software planning tool and design process, EnergyPath Networks, that produces options for cost-effective, local, low carbon energy transition.

Enabling long-term success

Meeting the low-carbon heat transition objective will mean around 25 years of activity involving almost every household and engaging many thousands of trained personnel. With this in mind, there must be another period of intense activity in the years to the early 2020s. During this time there is a real need to provide a platform for businesses to innovate, and develop, test and demonstrate their ideas at a scale that helps inform the decisions that ultimately affect over 26 million homes and help deliver heat, cooling and comfort for consumers over the coming decades.

Networks innovation

With the development of a smarter energy system comes the adoption of new ideas and technologies, often from new entrants to the utility arena.

Here are some of the technologies and companies that are bringing fresh solutions and driving forward the progress of future-proof, active networks.

UKPN – Smarter Network Storage

UK Power Networks (UKPN) began its Smart Network Storage project in January 2013 and it ran to December 2016.

The £18.7 million pilot saw the DNO install 6MW of lithium-ion storage at its Leighton Buzzard substation. The aim of the grid-scale battery was to prove that the technology has the potential to be technically and commercially viable.

The project concluded that grid-scale energy storage could be commercially viable as battery costs continue to fall and revenue streams become accessible.

SSEN – Esprit

This is part of the wider My Electric Avenue project designed to assess the impact that electric vehicles (EV) will have on the electricity distribution network.

Project Esprit comprises sets of monitoring and control equipment in nine clusters in an area where neighbours drive and charge EVs on the same electricity feeder. When demand comes close to the supply limit in those areas, Esprit switches off car charging points until the peak is passed (see graph).

Tesla – Powerwall

Tesla’s Powerwall, announced in May 2015, is a domestic storage pack made up of lithium-ion batteries.

The idea from founder Elon Musk (who is also one of Utility Week Live’s top ten transformative individuals) is that the Power­wall will collect and store excess energy from roof-mounted solar panels and small-scale wind turbines.

This will then be used to power the home at times of higher demand or low supply, so that we can “wean the world off fossil fuels”.

The Powerwall is available in 10kWh form, aimed at backup applications, or as a 7kWh unit, optimised for daily-use applications. Both can be connected to solar or grid and both can provide backup power.

The impact of EVs

As the take-up of electric vehicles surges, so the distribution networks need to be adapted to cope, says Jane Gray.

The numbers of electric vehicles (EVs) being registered in the UK is surging. In 2016, 88,809 EVs were registered, 22 per cent more than the year before, and no-one is expecting this trend to drop off any time soon.

It is therefore no surprise that the electrification of our transport system has shot up the agenda, and gone from being an outlying issue in conversations about flexible and smart energy, to being the focal point of demonstration projects and innovation investment.

Automotive manufacturers, energy suppliers and energy networks are all expecting a piece of the action. Carmakers, while primarily concerned with shifting units, are waking up to the fact that vehicle-to-grid (V2G) energy storage propositions could provide interesting benefits to customers and be bundled with commercial fleet deals – note Nissan’s launch of a pioneering V2G demonstration scheme last year.

Energy suppliers, meanwhile, have long seen the scope for tailored tariffs for EV owners. With the end of the four-tariff cap under the Retail Market Review, the arrival of half-hourly settlement, and the ever increasing volume of EV owners, actually launching such deals is looking more and more viable.

For energy networks, EVs are more of a worry. Their arrival en masse could deliver benefits, but more pressingly, it will mean severe system strain and will add complexity to demand patterns that are already difficult to predict.

Distribution network operators (DNOs) are therefore investing millions of pounds in schemes seeking to understand in detail exactly what the impact of widespread EV uptake will be.

The biggest project planned to date is being led by Western Power Distribution (WPD) and will engage with between 500 and 700 EV owners. The £5.8 million Electric Nation project will bring together information about all participating vehicles, as well as their owners’ charging behaviour, in order to create a planning tool for DNOs. WPD’s future networks manager, Roger Hey, describes the project as “critical” to the future operation of energy networks.

“The tool will convert information directly into electrical requirements – how many kilowatts are needed at different times,” he explains.

Electric Nation, unlike previous DNO innovation schemes for EVs – such as My Electric Avenue – will not subsidise EV uptake, in the interests of reflecting a more “genuine” EV user demographic. WPD will, however, supply home charging points, which Hey believes will dominate over on-street charging infrastructure in the future.

This is a contentious point – there is little certainty about what the preferred charging locations and timings are likely to be for EV owners as their numbers swell. It’s likely they will vary between urban and rural locations – UKPN is tackling London’s lack of off-street charging capacity by turning lampposts into charging points – and that they will change as car charging technology advances.

These unpredictable and variable factors in the rise of EVs mean all projects exploring their technical and behavioural impact, like the energy system they seek to enable, will need to be flexible, and keep a weather eye to wider market developments.

To download a pdf of full article as if appeared in Utility Week, click here