Project Summary

Heatropolis addresses Challenge 4: Accelerating decarbonisation of major energy demands; developing a new evidence-based framework for delivering net-zero district heating that will support a smarter, more flexible, and integrated energy system.

Decarbonising large-scale district heating systems will have profound implications for investment planning in the electricity networks. The challenge of distributing power to low-carbon heat networks is growing and BEIS estimates that by 2050 they will serve over 18% of the heat demand for buildings.

The Heatropolis project is at the forefront of energy network innovation as it requires the collaboration and coordination of a complex array of stakeholders to deliver a whole system approach and thinking with flexibility as the core theme. The project will deliver a highly scalable demonstration of accelerated decarbonisation for existing heat networks, as the methodology will have transferable properties for new infrastructure developments.

The project will deliver:

• A replicable solution -- a data-led framework for improving operational planning in power network investment and heat network infrastructure
• An integrated approach -- reduced risk for a cost-effective transition, in partnership with institutional investors, heat network operators and DNOs
• Flexibility services -- validated demand response mechanisms that can function within an agreed-profiled connection to manage capacity constraints, support increased use of variable renewable technologies, and reduce costs that are passed on to customers.

Project success will be achieved through involvement and support from the following partners:

• Distribution Network Operator -- UK Power Networks is the UK's largest electricity distributor delivering power to 8.4 million homes and businesses
• Heat Network Operator -- Metropolitan manages over 75 ESCO's contracts for district heating networks, and is responsible for provisioning the design-engineering sub-contractor for the heat-load modeling and data validation
• Smart controls -- Passiv UK are market-leader in delivering net-zero innovation projects with deep domain expertise in monitoring, controlling and optimising low-carbon technologies
• Local Authority -- Camden London Borough Council, a progressive local authority with ambitious net zero targets by 2030 and a track record in district heat innovation, in which the energy centre for the Kings Cross heat network is located

Our hypothesis is that we can help heat network operators transition to net zero. The commercial, reputational, environmental, safety and delivery needs of heat network operators and all other impacted stakeholders will be investigated through the discovery phase and inform the rest of the project.

Innovation Justification

The decarbonisation of existing heat networks faces key barriers like cost of managing increased electricity demand on the network. Heatropolis aims to leverage the use of flexibility to develop a data-driven framework to overcome these challenges and provide a viable decarbonisation pathway.

Historically, asset-management decisions and operational strategies for heat-networks and electricity networks have been developed largely in isolation from each other. Heatropolis aims to address the problem of coordinating investment planning decisions. Developing new evidence-based investment mechanisms to enable Kings Cross Development and others to transition to net-zero using novel low-carbon technologies, e.g., heat-pump, thermal-storage, fuel-cells, hydrogen, demand-side-response mechanisms. Active demand management and flexible connections have been trialled in previous heat-network innovation projects, but commercial integration within an ongoing energy transformation project is highly innovative, complex and carries risk that could not be overcome without SIF support.

The project is risky as understanding how to coordinate long term investment decisions with interdependent processes such as active demand management is complex. The financial mechanisms for delivering flexible connections for heat-networks are untested and there is high-degree of uncertainty around using conventional energy modelling for future operational scenarios. The Heatropolis project is at the forefront of energy network innovation as it requires the interaction of an array of stakeholders to deliver a whole-system approach and thinking.

Heatropolis will incorporate the latest innovations in dynamic heat-network control, AI based energy simulations and incorporate near real-time data exchanges. The project will draw on learnings from previous innovation projects led by Passiv UK: ​

• SMOOTH -- this project explored the use of demand control throughout a heat network and into the home​
• NOTICE -- this project explored to use of end-point demand control to improve the operational efficiencies of a heat-network​

The Kings Cross Development has already considered demand reduction measures to maximise the contribution from the low-carbon technologies. However, the benefits of active management to take advantage of low-cost renewable energy and a flexible connection have not been investigated. The existing plans for decarbonisation will provide a counterfactual against which the economic and sustainable value of Heatropolis will be evaluated. ​

Heatropolis could not have been funded elsewhere within the pricing control or as part of business-as-usual (BaU) activities. As the multi-asset and -party approach is unproven, the agile approach provided by SIF is ideal to ensure sufficient level of investigations is undertaken before the complete solution is developed in collaboration with stakeholders.

Project Benefits

Consumer benefits are developed based on the assumption that load-shifting on a low-carbon heat-network using smart controls, storage can help to reduce seasonal, (short-term) misalignment of heat demand and electricity generation.

All benefits are expected to be achieved by the end of Beta.

Financial - network operations​:

• Consumer benefit: Indirectly in the long-term by reduced distribution use of system (DUoS) costs.
• Target output: 5-50% cost reduction associated with secondary-substation where the heat-network connects (initial connection, operating, maintenance cost and reinforcement expenditure) due to retrofit of heat-network with low-carbon heating technologies.
• Tracking metric assumptions and calculations: Cost/Quote for reinforcing electricity distribution network, cost of new connection for heat-network and connections to electricity distribution network. This will be based on the local electricity connection capacity and flexibility assumptions.
• Justification for assumptions: Increased network flexibility from heat technologies can reduce ESO balancing costs and DSO flexibility costs. This will be against a benchmark of the cost to UK Power Networks to operate its network and upgrade substations where the retrofitted heat-network is connected, without taking into account flexibility.

Financial - network service users​:

• Consumer benefit: Reduced socialised costs for network connection upgrades using DNO funding to incentivise heat-network owners to invest in asset-based solutions.
• Target output: 5-50% reduction in cost per annum for users of network services.
• Tracking metric assumptions and calculations: Number of kW of electricity required per annum for heating and the average pence per kW.
• Justification for assumptions: ​ Cost of connecting an energy centre will impact the final cost of operating the heat-network and operating costs passed to customers. Benefits to be estimated during the discovery phase, validated and tested during trials.

Environmental -- direct carbon reduction:

• Consumer benefit: Enables consumers, including in vulnerable circumstances, to benefit from the energy transition.
• Target output: 5-50% reduction in CO2 produced from operating heat network.
• Tracking metric assumptions and calculations: CO2 profile of the electricity required for heating in the flexible heat-network compared with CO2 profile of electricity required for non-flexible heat-network.
• Justification for assumptions: Carbon savings will be achieved by taking advantage of cheap renewable power generation using active load shaping across the whole heat-network.

Non-financial:

This project aims to build a new commercial framework that considers particularly consumers in vulnerable circumstances and will support them in reducing their fuel poverty and/or improve their health and social inclusion with healthier, more comfortable new and refurbished homes that are cheaper to run.