UK invests £44.6m into smart grids

Ofgem has awarded funding to six projects aimed at developing smarter energy grids in the UK.
Published: Mon 05 Dec 2016

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Six out of the eight projects which entered Ofgem’s annual Network Innovation Competition (NIC) have been successful. These include four power and two gas network projects.  

The UK regulator is calling on electricity distribution companies to deliver more innovation for less so customers get better value for money from smart grid projects. According to senior partner for networks Jonathan Brearley, the UK’s networks are playing a critical role towards developing a smarter energy system. He said that this year’s trials will test a variety of new technologies which, if successful, will provide networks with valuable learning that may be incorporated into daily operations. He added that this learning will provide financial and environmental benefits to consumers.

Smart grid learning

The projects are offering valuable smart grid learning:

- Examining whether distribution-connected generators can provide services to the transmission network such as voltage stability (traditionally provided by larger generators.). The aim is to find out whether distribution network operators can work alongside National Grid to manage the power grids (National Grid Electricity Transmission - £8 million).

- Helping smaller generators to connect to the power network in places like London by using new types of circuit breakers to reduce the number of faults (UK Power Networks - £4.6 million).

- Using cloud-based software to help communities make better use of locally connected renewable generation (Western Power Distribution - £4.9 million).

- Trialling new equipment for regulating frequency and voltage on the grid in response to variable output from wind farms (Scottish Power Transmission - £15.6 million).

- Testing whether hydrogen can help to decarbonise gas networks by mixing natural gas with 10-20% hydrogen on Keele University's gas network (National Grid Gas Distribution - £6.8 million).

- Developing a new billing system which is able to take account of the fact that ‘greener' gas such as biomethane produces different volumes of energy when compared to North Sea gas (National Grid Gas Distribution - £4.8 million).

Smart projects supporting innovation

The first of the above projects will see National Grid and UK Power Networks spend a total of £9.5 million on a "regional power market trial", which will be the "first step" towards a distribution system operator (DSO).

The "pioneering whole system approach" will help networks in the southeast to absorb new storage and the large volumes of distributed renewable generation which are becoming "more of a feature in today's electricity network."

By reducing the need for network reinforcement, it is hoped it will save consumers in the southeast up to £1 million by 2020 and £29 million by 2050. If successful, the regional power market model could be introduced to 59 other sites and potentially save up to £412 million for UK consumers by 2050, according to National Grid.

This will also provide new revenue streams to renewable energy generators, which will be able to offer their services to National Grid's system operator via UK Power Networks' DSO platform.

The Network Innovation Competition (NIC) replaced the Low Carbon Network Fund (LCNF) last year as part of the RIIO price controls, Ofgem's framework for setting price controls for network companies. Over the next decade these companies face an unprecedented challenge of securing significant investment to maintain a reliable and secure network, and dealing with the changes in demand and generation that will occur in a low carbon future.

Smart grid benefits for the UK highlighted

The benefits that smart grids could provide to energy networks could total between £4.8 billion and £8.1 billion, according to Ofgem.

The regulator ran an independent review into its LCNF and has revealed that the estimated net benefits of these projects is around £1 billion and if those companies adopted the new technology into their business it could be worth up to £8.1 billion.

The review also stated the projects trialled through LCNF are expected to save up to 215 million tonnes of CO2 during their lifetime.

Ofgem is proposing that from next year, funding available for power projects is reduced from £90 million to £70 million per year for the electricity NIC.

Brearley said of the review: “…. network companies have improved their innovation, which is significant progress. However there is great potential to go further. Our challenge to the companies is to build on this progress and become high-level innovators, while delivering more for less. Involving third parties in the projects will help network companies take this next step.”

He adds: “It is important that companies take this opportunity. We need a more innovative grid which will allow consumers to get the most out of their smart meters which are being rolled out across the UK.”