Project Summary

Indus addresses 'Challenge 4: Accelerating decarbonisation of major energy demands'. The project will demonstrate an innovative approach to facilitating decarbonisation of heat and energy for mid-sized industrial dispersed sites. It will do this by developing a commercial model to integrate multiple, diverse energy-intense manufacturing operations in grid-optimised industrial parks; procuring efficient and flexible energy infrastructure to form a local cluster.

This project requires strong network innovation as it brings multiple parties together to collaborate to embed new technologies, systems, and business models. The deployment of onsite generation and flexibility services impacts the network and its assets and therefore for this project, UK Power Networks will need to challenge their existing processes and work collaboratively with partners to develop new mechanisms that work for decarbonising manufacturing hubs. The process for developing an industrial park will be re-designed to start with energy infrastructure and net zero considerations first. Developing zero-carbon manufacturing hubs at identified locations will stimulate investment at other similar sites.

The Indus project draws on the experience of the current portfolio of national industrial cluster decarbonisation projects to develop an exemplar zero-carbon industrial hub in Peterborough. The developed commercial business model for industrial park development will be operationalised to demonstrate how the consolidation of industrial heat demands with flexibility, demand response, and storage services can minimise investment requirements for network operators and contribute to efficient grid operations.

UK Power Networks will lead the bid, supplying relevant data, engineering expertise, and advising on network regulatory compliance in the design process. The pre-existing industry clusters (Black Country and South Wales) are both engaged in this project to leverage their learnings and operational expertise. They will be joined by a global energy services company to support asset procurement. The consortium will be governed by Camirus who are leaders in managing complex projects at the forefront of innovation and market development. Peterborough Council will assist in site procurement and advise on socio-economic benefits for the community. The Discovery phase will include the identification of a suitable commercial development partner, who would become part of the project for the alpha and beta phases.

The intended users of this project are future operators and developers of industrial hubs and activities. It will offer a more robust approach to industrial development where energy is a critical input to business operations and ensure network companies are seen as facilitators rather than barriers to the net zero transition.

Innovation Justification

Decarbonising industrial heat demand is challenging and expensive. 55% of industrial energy demand is represented by more than 130,000 manufacturing firms outside the heavy industrial clusters of Northern England, Scotland, and South Wales. The UK government has substantive plans in place to deploy infrastructure solutions for the top 200 industrial sites in the UK (e.g., major steelworks, refineries) but no real interventions for the remaining 130,000 energy-dependent manufacturing sites. While hydrogen and CCS may work at scale for the heavy industrial clusters, for smaller distributed sites, these are not economic.

Electrification of industrial heat, coupled with flexibility and demand-side solutions are effective and economic options for many smaller distributed sites but are considered too late in development processes, and there is rarely any effort to consider consolidating industrial heat demands in ways that make decarbonisation easier and offer more resilient energy supplies. Therefore, this project will make decarbonising these industrial hubs affordable and feasible.

This project is innovative as it will develop a comprehensive framework that facilitates strong cross-industry and cross-sector collaboration that is designed specifically for scaling to many small industrial sites and will have not been tested in this way before. The proposed approach builds on the learnings from the Repowering the Black Country project, by incorporating network and development considerations at a much earlier stage to mitigate risks to delivery and ensure the developed solution aligns with local industrial strategy. The appendix summarises the proposed approach; how we envisage that the discovery phase will develop into an alpha and beta stage; and the key findings from the Black Country project.

The key economic and sustainability value of this project comes from reduced network costs in connecting industrial developments to the grid and from flexibility and onsite generation enabling demand to maximise use of cheaper, off-peak, low-carbon power. Without this framework and project, smaller industrial companies will not be able to decarbonise their energy and heat demand while remaining globally competitive.

The project requires the development and testing of an innovative and complex commercial model. Further work is required to understand the feasibility, scope, and outcomes that will be achieved from this project ahead of deployment. As the approach is novel and brings together partners from sectors that don't normally work together, this project would not be considered as part of business-as-usual (BAU) activities and is not suitable for other funding mechanisms within the price control framework.

Project Benefits

Financial - cost savings per annum for operating the network, users of network services​ and consumers

Counterfactual: Decarbonising industrial heat in UK Power Networks' license area in the current scenario will add a significant amount of GWh to annual electricity demand and increase peak power requirements in parts of the network. If UK Power Networks do nothing, this will require significant investment in the network assets and add cost to every consumer bill per year.

Output: The investment costs required by the DNO can be reduced per industrial park through collaborative park design and development, including flexibility mechanisms to reduce network impact and unlock cheaper off-peak pricing. Rolled out across the whole network over the next ten years, the savings of operating the network and of the users of the network services will be passed onto savings for the consumers on their energy bills.

Metrics:

• GWh of electricity consumed per annum
• £ per GWh of electricity
• The network capacity required for the zero carbon industrial park versus the default 'BAU' request for such a development.
• The value of flexibility and demand side services that can be designed into the park infrastructure

These metrics can be estimated at a high level as part of the Discovery phase; calculated for a specific design and development in the alpha phase and demonstrated and measured in practice during the beta phase.

Based on the Black Country experience and UK Power Networks figures, reinforcement and connection requirements for new industrial parks might be 5-50MVA lower (depending on industrial process) than the counterfactual per park. This suggests savings of around -£1 - 10 million per development.

Environmental - carbon reduction -- direct CO2 savings per annum against a business-as-usual counterfactual​

Counterfactual: Decarbonising industrial heat in UK Power Networks' license area in the current scenario will add a significant amount of GWh to annual electricity demand (i.e. by switching around 10% of current gas demand to electricity) and increase peak power requirements in some parts of the network.

Output: Indus will demonstrate how a collaborative industrial development process and designing flexibility into industrial parks can reduce required network capacity, reduce industrial energy consumption and costs, and shift demand to off-peak times. Multiplying the amount of electricity by its associated carbon emission factor (in comparison to gas) will provide direct CO2 savings.

Metrics:

• GWh of electricity consumed per annum

Carbon emissions factor of the electricity consumed per annum