Project Summary
The project sits under Innovation Challenge 1, Project Scope 2, and will focus on supporting the decarbonisation of heat for those consumer groups with reduced access to opportunities for decarbonisation by demonstrating the benefits of an integrated SLES. SIF is the most appropriate funding mechanism because there is a strong but indirect interest from networks in solving this problem; however, there are greater benefits to the consumer than the networks.
The community-led ‘Net Zero Terrace’ project will be the first to explore utilising a DNO network to decarbonise terraced communities through an integrated, optimised community virtual power plant, taking a smart integrated systems approach to low carbon heat. The benefits of this include enabling communities to decarbonise whilst reducing costs by avoiding the expensive counterfactual of direct electric heating and deferring network reinforcement. The shared heating system will comprise shared ambient loops, home thermal storage, home energy management and community storage, with the potential to provide flexible services to the DNO. The SLES will require a local energy market to operate in the form of a ledger platform (digital platform, aggregates generation and allows Power Purchase Agreement (PPA) transactions) to manage PPA contracts between the shared assets and individual homeowners.
Our project partners in the Discovery phase:
· Electricity North West (ENWL) – responsible for providing network data, financial information and understanding DNO network integration.
· Northern Powergrid (NPg) – another DNO, responsible for ensuring the model is replicable across GB.
· Buro Happold – responsible for providing expertise in decarbonisation of the built environment, including specialised knowledge on smart energy and low carbon heat systems. · RV Energy – local non-profit organisation working on Net Zero community services, responsible for engagement with households and wider community.
· Rossendale Borough Council – responsible for support and coordinating community engagement.
The project will also be supported by the BEIS-funded North West Net Zero Hub, which will assist in networking across the region and enabling dissemination and sharing of learning, including with other regional hubs.
Potential users of this innovation include:
· Consumers in terraced streets.
· Supply chain, including suppliers of LCTs and fabric retrofit – can adopt to develop new market opportunities at scale.
· Local authorities – can incorporate into their Local Area Energy Action Plans.
· Housing associations – can use to decarbonise their housing stock.
· DNOs – can benefit from improved understanding of how to integrate into the network, the network benefits and how it can help to deliver flexible services.
Innovation Justification
There are nearly 10 million terraced homes in GB. Many cannot easily transition to low carbon heating due to space and noise constraints, which risks leaving these communities behind, locked into higher energy bills and at increased risk of moving into fuel poverty.
Net Zero Terrace is innovative in its use of an optimised SLES, which integrates community heat, community generation and fair distribution of generation via the DNO network for a street of terraced houses. Previous uses of integrated technology have been limited to landlord-owned apartment blocks and private networks. This project is innovative because it is working across mixed ownership buildings for the first time and making use of the DNO network. This project is commercially risky because the finance model and consumer value proposition are novel and require demonstration.
This project will build on a previous high-level feasibility study, funded by the Community Renewal Fund project and led by RV Energy, supported by Rossendale Borough Council and delivered by Buro Happold. The feasibility explored all potential options to decarbonise a trial area in Bacup, Rossendale, and determined the best approach would be the SLES approach described here. However, it did not determine the technical or commercial requirements for deployment or prove the solution in the field.
The risks we are seeking to address centre around the level of integration needed between different stakeholders to develop and implement a system which relies on community investment, DNO integration and delivering consumer value.
The counterfactual solution to this problem, due to the constraints on space and noise pollution prohibiting installation of alternatives, is that consumers have no option but to default to direct electric heating (e.g. electric boilers), which could increase their consumption, and the corresponding DNO network capacity requirements, by more than four times.
Net Zero Terrace is replicable and scalable, and presents an economic and sustainable solution against this counterfactual. The technology used in this solution is retrofittable, providing opportunity to create demand and supply.
Please see the appendix for a project overview including a diagram for how the SLES might operate.
SIF is the most appropriate funding mechanism for Net Zero Terrace. There is an existing strong but indirect interest from networks in solving this problem; however, there are greater benefits to the consumer than the networks. Therefore, NIA is not a suitable funding mechanism and there are no other government subsidies to support this innovation.
Project Benefits
Net Zero Terrace will deliver the following net benefits to consumers:
1. A significant reduction in bills compared to the counterfactual of direct electric heating, as direct electric heating is more costly to operate. The reduction in energy consumption predicted could save consumers up to 70% on their bills. Additionally, if forced to use electric boilers residents are likely to respond by turning their heating down to reduce bills, which can significantly impact comfort, health and building fabric condition.
2. In addition to reduced consumption, consumers may also receive payments for providing flexibility, and utilising community-funded generation will result in lower tariffs, leading to a further estimated bill reduction of 10%.
3. Reduced socialised costs of infrastructure expenditure will be realised through a reduction in peak energy consumption. These benefits will be quantified against the counterfactual for each locality where the solution is deployed and will include ENWL’s costs for any network upgrades required.
4. Accelerating the decarbonisation of homes as low carbon heating becomes affordable and available to them. For every year decarbonisation is accelerated, the average household will save around 2.5tCO2e in carbon emissions, a figure that would continue to drop to almost a full reduction by 2040.
These benefits will be delivered through enabling an accelerated transition to low carbon heating, using more efficient heating sources than can otherwise be obtained by individual households. Shared community heating provides flexibility and reduced peak energy consumption, deferring network reinforcement requirements, which can otherwise be a barrier. Integration with community energy as an SLES further stabilises prices and reduces bills.
To enable the tracking of these benefits the following metrics will be used:
1. Peak and aggregated heat demand profiling from the SLES.
2. Metered energy costs against calculated bill costs derived from current actual bills and usage.
3. Local energy demand profiled against local energy generation to compare actual generation and actual consumption on a house-by-house basis.
4. Cost of implementation (capital and operational) compared to techno-economic assumptions to determine whether the actual business model performance aligns with the forecasted model.
5. Regular surveys of customer satisfaction via the Fairer Warmth App, conducted by RV Energy.
We will also be measuring to ensure the risk of negative impacts is fully evaluated and managed. For example, related to the project risk register, the potential for higher bills than anticipated or lack of consumer response and buy-in to the operating model.
