Energy flexibility - blueprint for a post-carbon UK society

A new study from Ovo Energy and Imperial College demonstrates the use of residential flexibility in reducing electricity system costs.
Published: Thu 20 Sep 2018

Flexibility is by now accepted to play a critical role in the future energy system as distributed energy resources and new technologies such as electric vehicles (EVs) scale in the move towards a carbon-free world in the years ahead.

While the use of such flexibility is yet to be implemented at scale, so far its potential has been widely demonstrated in pilots, and business models are emerging.

As such, in this transition the question arises as to what flexibility options will become available from different potential pathways towards decarbonisation and the values of these different combinations of flexibility resources.

A 2016 investigation for the UK from the Carbon Trust and Imperial College estimated the potential benefits of a smarter, more flexible system with the use of flexibility markets in that country in the range from £17-40bn by 2050. Now a new study from Imperial College and the local energy supplier Ovo Energy focuses in on the UK residential market for flexibility. Three scenarios based on National Grid’s future scenarios are reviewed, reflecting increasing levels of electrification in transport and heat, which are considered the key flexibility resources in that market alongside EVs and home energy storage devices.

These range from a steady state system that sees a grid carbon intensity of 200g/kWh with 3m EVs and 4m electrically heated homes (the ‘Burning platform’ scenario) through a progress made option with grid carbon intensity of 50g/kWh with 17m EVs and 12m electrically heated homes (‘Stepping stone’ scenario) to near complete decarbonisation and a grid carbon intensity of 25g/kWh with 25m EVs and 21m electrically heated homes  (‘Future survival’ scenario). This latter scenario is considered the most ambitious yet modelled in detail for the UK.

Residential flexibility

The study finds that adding residential flexibility to the ‘Future survival’ scenario could save whole system costs of up to £6.9bn, or 21% of total electricity system costs. These savings come from reducing the investment requirements in network infrastructure, and from using cheaper renewables like wind and solar instead of more expensive low carbon generation like nuclear and carbon capture and storage (CCS).

In this scenario, to power the demand for electric vehicles and electric heating, the cost of the electricity sector increases by up to 40%. However, this cost increase is more than offset by displacement of the cost of fuel for transport and heat and their associated carbon emissions, resulting in potential overall savings of £5.6bn per year compared to the ‘Burning Platform’ scenario. This is equivalent to approximately £206 per household whilst undergoing radical decarbonisation.

Considering EVs alone, enabling smart charging could save up to £1.1bn/year compared to dumb, inflexible charging. Incorporating bidirectional, vehicle-to-grid charging could increase the saving by almost four times up to £3.5bn.

Smart electric heat alone could save up to £3.9bn in total system costs and represents one of the lowest cost pathways to heat decarbonisation, according to the report.

Source: Ovo Energy/Imperial College London

Power sector implications

The study report states the analysis to show that the electricity system is capable of growing to meet increased demand from complete electrification of residential heating and road transport, powered by high penetrations of renewable energy. Furthermore, this decarbonised, all-electric scenario results in significant cost savings compared to higher carbon scenarios.

In all the scenarios, the use of residential flexibility is shown to significantly reduce the cost of the electricity system.

In higher carbon energy systems, residential flexibility leads to cost savings by displacing distribution network infrastructure costs and the need for traditional sources of flexibility, i.e. thermal generation.

In lower carbon energy systems, residential flexibility leads to significantly greater savings by enabling the greater utilisation of lower cost low carbon generation sources such as solar and wind rather than the higher cost nuclear and CCS.

However, the report also notes the presence of barriers and states the biggest challenge to the propagation of residential flexibility to be the lack of route to market to grid balancing revenue streams from these devices. It is currently not possible to access the full system value identified by this study via existing flexibility markets.

Once again, and what appears to be a perennial issue in this evolving energy market, regulation is lagging. While areas of the market structure are currently under review, it is clear that these activities need to be accelerated not only in UK but across Europe. In so doing, the report calls for policy makers and regulators to adopt a ‘flexibility first’ approach to prioritising flexibility.