Project Summary
This project aims to address SIF Innovation Challenge 2 "preparing for a Net Zero power system" and the project scope "accessing grid/system support from novel supply and demand side sources".
Commercial buildings have high energy demands that will increase through further electrification. This project aims to develop new flexibility products tailored for commercial buildings that will provide DSOs with access to this untapped source of flexibility and enabling them to decarbonise without the need for significant reinforcement. In line with UK Power Networks' RIIO-ED2 ambition to keep costs down by taking a flexibility and energy efficiency first approach and will market test all network needs before considering reinforcement. This will be achieved by:
- Obtaining granular behind the meter data including asset specific data;
- Developing predictive AI models that can be assess how to optimise buildings in line with building manager and occupants needs;
- Defining the level of flexibility available for the DSO; and
- Enabling loads to be dynamically managed with novel flexibility products and services created.
The project team consists of the following partners, including two DNOs with significant number of commercial buildings in their region:
- UK Power Networks has experience running bi-annual flexibility market tenders since 2017, as described in their Flexibility Services Procurement Statement. they have run several innovative flexibility projects including Optimise Prime, where the potential flexibility available from EV fleets was investigated.
- Grid Edge have undertaken V2G projects (VIGIL, GreenSCIES) which focused on dynamic curtailment using cloud-based optimisation and control to response to a grid price signal. The same concept will be applied to building assets.
- Northern PowerGrid is evaluating the value of flexible heat demand as a service to distribution networks and the current and future impact on electricity demand. They have also invited generators of electricity, businesses with high energy demands and electricity supply aggregators to express interest in providing flexibility services to the electricity network operator across its operating area which is a steppingstone in procuring flexibility services.
The main users are:
- Building operators: enabled to use to AI appropriately manage their building's energy demand, participate in flexibility services while maintain occupant comfort;
- DSOs: enabled to forecast where flexibility could be used from these predictions and enable access to a novel flexibility from commercial buildings;
- Building owners and tenants: provided by additional revenue through access to flexibility markets and reduce bills for all consumers.
Innovation Justification
To meet Net Zero by 2050 all buildings will need to be decarbonised. For commercial buildings, electrification without any smart technology-based interventions will impact grid capacity and require reinforcement before the additional capacity can be unlocked.
line with our DSO strategy to, keep our costs down by taking a flexibility and energy efficiency first approach over RIIO-ED2 and market test all network needs before considering reinforcement, this project will look at how this approach can be applied to commercial buildings, by:
Developing a solution to gather, analyse and utilise asset level consumption data for commercial buildings;
- Providing building managers and tenants with energy efficiency guidance to reduce their overall energy consumption;
- Enabling management of local microgeneration and battery storage solutions to reduce demand on the grid; and
- Creating new flexibility products for commercial buildings through smart asset management solutions.
Knowledge from other projects:
- UK Power Networks have run several flexibility services projects for different areas of the market including Optimise Prime, which focused on electrified fleets. Learnings from these will support development of a new flexibility product for commercial building.
- Previous projects by Grid Edge have focused on optimising energy management at a site level to reduce overall energy costs and the net demand on the grid. This project will expand this concept to address whether these assets could be source of flexibility for DSOs.
This project provides the following economic value:
- Enables electrification and decarbonisation of commercial buildings in a way that reduces the need for reinforcement and significant additional spend by DNOs;
- Reduces consumer energy bills by helping to keep DUoS charges low through avoiding infrastructure upgrade spend;
- Creates new revenues for building managers and owners through the development of a novel flexibility product or offering; and
- Develops a framework for commercial building to decarbonise in a way that reduces the overall costs incurred and OPEX spend through reduced energy bills.
From sustainability standpoint this project enables the commercial buildings to better utilise renewable energy source and reduces the net CO2 produced by commercial buildings.
The potential scale/value for commercial buildings is unknown so carries risk to complete activities with BAU funding. The phased nature of SIF lends itself to do feasibility, then decide if there is enough value and should this progress to trials, the SIF Beta fund sizing is better sized to support this than other innovation funding sources.
Project Benefits
Financial --future reductions in the cost of operating the network
- Target outcome: A reduction in the average cost of a kWh of energy consumed.
- Calculation: average price per kilowatt hour of turn down is calculated per day compared to the average wholesale cost of electricity is calculated per day.
- Justification for target outcome: The opportunity on variable energy pricing means the cost of demand side flexibility is linked to within day or day ahead price spread.
- Achieved by: End of Beta Phase.
Financial -- consumers bills cost reduction per annum
- Target outcome: reduction in electricity bills.
- Calculation: a comparison of a yearly bill based on the current energy use of the energy use with the interoperability offering.
- Justification for target outcome: Similar projects, when energy efficiency guidance and smart technologies are used, has shown a net reduction in energy bills
- Achieved by: End of Beta Phase.
Financial -- cost savings per annum for users of network services .
- Target outcome: delay or prevention of the requirement for network reinforcement.
- Calculation: Model to define reinforcement spend if no flexibility solutions were in place.
- Justification for target outcome: Flexibility solutions prevent or delay the need for network reinforcement.
- Achieved by: End of Beta Phase.
Environmental -- Direct CO2 savings per annum
- Target outcome: Reduction in scope 2 emissions due to the reduction in energy use.
- Calculation: The product of energy consumption reduced and the kgCO2/kWh over the period the reduction took place.
- Justification for target outcome: conservative estimate based on case studies and similar projects.
- Achieved by: End of Beta Phase
Learnings
Impacts And Benefits
The partners agreed that the project could be pursued outside of SIF, however, there are no immediate plans to do so. Further details are presented in Question 4.
The Discovery Phase focused on understanding the reasons behind the low levels of flexibility provision by commercial buildings, and it was not intended to assess the benefits for the Power Block solution. As such expected net benefits remain consistent with the application for Alpha Phase. Learnings from stakeholder engagement with the solution end users confirmed that these potential benefits are well founded. There have not been any changes made to the proposed benefit categories since the application.
There were no changes made to the project and the scope remained as planned during the Discovery Phase. The anticipated net benefits to consumers are:
Financial – Cost savings per annum for users of network services
By adding additional flexibility capacity to the network, reinforcement could be deferred, and existing assets used to their maximum capacity. This benefit is in line with UK Power Networks’ RIIO-ED2 ambition to keep costs down by taking a flexibility and energy efficiency first approach and will market test all network needs before considering reinforcement.
• This benefit would result in reduced socialised costs by Distribution Network Operators (DNOs).
• This benefit will be more relevant following Ofgem’s Significant Code Reform which came into effect at the beginning of RIIO-ED2 and will see the costs of demand reinforcement works below a high-cost cap socialised through DUoS charges.
Financial – Future reductions in the cost of operating the network
• Increased levels of flexible capacity should reduce the price per MWhr of flexibility services due to increased competition.
• Higher levels of automation should reduce the time spent interacting with flexibility providers and DSO teams when responding to flexibility requests.
Financial – Consumers bills cost reduction per annum
With implementation of the Power Block solution consumers bills would be expected to reduce due to the following reasons:
• Energy usage optimisation.
• Optimised usage of electricity based on supplier pricing signals.
• Financial incentive from participating in flexibility services.
Environmental – Direct CO2 savings per annum
Using the Power Block solution to actively optimise electricity consumption, usage of onsite generation, and energy storage around times when grid carbon intensity is low, e.g. increasing electrical import when grid renewable generation levels are high, or by shifting demand to better suit on-site renewable generation there will be a reduction in a buildings CO2 consumption.
