Project Summary

The operation of low carbon heat networks is poised to transform the way we heat our homes and buildings as we embrace less reliance on fossil fuels for heating. Today there is a disconnect between DNO planning and heat network design. Left unmanaged, this will affect the planning and operation of the electricity network, and ultimately be costly for consumers.

Heatropolis is a ground-breaking multi-stage framework, set to unlock better outcomes between heat and electricity networks. Intelligent heat network design and operation will deliver significant flexibility and electrical load reduction to lessen the need for costly reinforcement by DNOs.

Innovation Justification

Heatropolis is at the forefront of energy network innovation. We will bring together the latest advances in machine-learning controls, heat-network engineering, infrastructure simulations, power system planning and coordinate a diverse range of stakeholders to enable a whole-system transformation process.

 

Historically, asset management decisions and operational strategies for heat-networks and electricity networks have been delivered largely in isolation from each other. Heatropolis aims to address the problem of coordinating planning decisions between these large and interlinked infrastructures. Our focus is Challenge 4: Accelerating decarbonisation of major energy demands.

 

In Discovery, we explored technical designs to manage peak electrical loads from heat-networks and the value this offers the electricity network. By better understanding how heat-network power demands can be controlled and managed, new sequenced and consumer focused commercial frameworks can be

established that optimise outcomes for all parties. 

 

The project offers a unique, strategic opportunity to explore advanced technical solutions and validate innovative business processes in the context of a live large-scale heat network that is transitioning to Net Zero. We will enable a sandbox environment to evaluate the impact of smart solutions, validate commercial mechanisms, test incentives and risks to all parties to develop viable new propositions linking a DNO and a heat-network operator. 

 

There is a high level of uncertainty in the projected impact of heat-networks on the electricity network. The use of machine learning to manage peak electrical loads on heat-networks over the long-term and required user interactions is largely untested. There are risks in coordinating these interdependent processes and they have significant implications for investors and end users.

 

We will build on Discovery and focus on three core issues:

·       Consumer needs -- understanding the interactions of smarter heat-network designs with end-user expectations and requirements.

·       Technical requirements -- sandbox testing of smarter design engineering needed on low-carbon heat-networks to actively manage electrical loads that is beneficial to planning and operation of electricity networks.

·       Commercial mechanisms -- a framework through which long-term agreements can be developed that enable long-term investments in heat-network infrastructure assets which are directly beneficial to DNOs.

 

Heatropolis will leverage the experience of previous innovation projects, including Passiv UK's SMOOTH research on demand flattening control systems in heat networks and NOTICE's proof-of-concept trial using machine learning to enhance operational efficiencies in a heat network.

 

The project will learn collaboratively from other SIF heat-network projects:

·       Heat Risers: Improving efficiencies for heating in multi-occupancy buildings.

·       Full Circle: Developing innovative solutions to recover heat from transformers.

 

SIF offers an appropriate platform to build and test an innovative and complex framework that would not otherwise be funded within the price control or considered as business-as-usual. Our ambition is that once Heatropolis has been demonstrated and proven in Beta, it will be ready to be adopted and scaled by heat-network developers and DNOs across the UK.

 

Readiness Levels have been summarised as follows:

·       Technology readiness: Alpha will further validate commercial applications of the technology [4-6] and Beta will test and improve the technology for use in integrated investment planning [7-8] 

·       Integration readiness: Aim to validate detail and quality shared energy modelling by the end of Alpha [4] and application of Heatropolis as a technical sandbox in Beta prior to for BAU replication [7].

 

Commercial readiness: Alpha will develop map of business options and economic impact for all stakeholders [5]. Beta will validate financial model [7].

 

A review of processes and baseline assumptions was performed during Discovery for the Kings Cross heat network's phased decarbonisation plan (counterfactual), which includes heat recovery heat pumps, ground source heat pumps, and air source heat pumps with peaking and backup supply by electric boilers and thermal storage.

Impacts and Benefits

Impacts and benefits description

Projecting the impact of the interactions between heat-networks and electricity distribution system is complex. To align our analysis with established BAU practices we used UK Power Networks' (UKPN's) planning datasets including outputs from our SFS software which forecasts load growth under different scenarios and our DFES projecting unused network capacity on their substations to 2050.

The peak loads from heat-networks used in the SFS baseline projections were central to our analysis. Our evaluation identified critical limitations to SFS modelling related to specific assumptions on flat intra-day load profiles, average connection loads and energy fuel-mix. These assumptions will be addressed through Alpha and Beta technical sandboxing and will likely increase measurable benefits.

Financial - future reductions in the cost of operating the network

·       This project will help establish long term commercial agreements that reward heat-networks for managing peak electricity demands thereby avoiding unnecessary costs being passed on to consumers.

·       Discovery suggests baseline costs for reinforcement across UKPN's area will be more than £1,000m by 2050.

·       Overlaying electrical peak load reductions of 44% from smarter heat-networks we estimated over £35 million in avoided network reinforcement is achievable. 

·       Existing DNO connection processes serving a heat-network with unmanaged peak loads will lead to higher reinforcement costs being passed to customers.

Financial -- cost savings per annum for users of network services

·       Peak electrical load flattening on the of the heat network will improve efficiency reduce losses and consumer power demands (heat charges).

·       Smarter management of demands will enable better use of heat network capacity resulting in lower operational costs passed on to consumers (standing charges).

·       This benefit will be modelled during the Alpha Phase. 

Revenues - improved access to revenues for users of network services

·       Long term predictable revenue streams from load flattening, demand shifting, and flexibility will create the market pull for heat network asset owners to invest in the infrastructure necessary to provide this.

·       This benefit will be modelled during the Alpha Phase. 

Environmental - carbon reduction -- indirect CO2 savings per annum

·       This project will help to improve cost efficiencies of deploying heat-networks.

·       This will lead to a more rapid uptake of low carbon heating in domestic and commercial building, resulting in indirect carbon emissions reduction and air quality improvement from the shift away from fossil fuel-based systems.

·       Increasing high volumes of flexibility from large heat-networks through smarter designs and incentives will help manage capacity constraints on the electricity network which can avoid CO2 emissions associated with grid reinforcement. An estimation of 1497 tonnes CO2 eq. can be avoided until 2050 if the option with higher peak demand reduction (option 4 in CBA) is adopted in all UKPN areas.

·       Carbon savings between options from the heat-network will be modelled during the Alpha Phase.

New to market -- processes

·       The creation of new to market commercial framework and operational processes to realise cost efficiencies through improved coordination of long-term energy infrastructure investments that will balance heat-network, DNO and consumer needs.

·       Commercial options under consideration to be developed in Alpha Phase include:

·       Pre-agreed energy performance-based contracting to deliver load reduction using metering and monitoring using data to validate contract delivery. 

·       Long term contractual mechanisms for metering and monitoring ongoing electrical loads with appropriate incentives and or penalties for achieving targeted profiles.

Overall the benefits case calculated for the Alpha Phase submission are conservative as described above, with some benefits to refined or calculated during Alpha Phase delivery.