Project Summary
Project LEO-N addresses the accelerating decarbonisation of major energy demands challenge by developing an innovative approach to creating an enabling environment for homes, small businesses and communities to transition to Net Zero, at pace and scale. At present, there is no clear route to guide consumers, nor is there the supporting infrastructure to support the transition at a local level. Working with all the key actors, LEO-N will build on our earlier local energy projects by adopting a systems innovation approach, to develop the tools, commercial arrangements and supporting local governance structures to drive the Net Zero transition at pace.
Innovation Justification
Project LEO-N addresses the 'accelerating decarbonisation of major energy demands' challenge by developing an innovative approach to creating an enabling environment for homes, small businesses and communities to transition to net zero, at pace and at scale to help deliver UK's Net Zero targets.
At present there is no clear route to guide consumers nor is there the supporting infrastructure to support the transition at a local level. LEO-N will develop the Smart and Fair Neighbourhoods (SFN) from Project LEO by adopting a systems innovation approach to develop the tools, commercial arrangements and supporting local governance structures to drive the Net Zero transition at pace in Oxfordshire. The three key elements of the LEO-N approach, as described in Q2, FutureFit, Smart Community Energy System (SCES) and Local Net Zero Coordination (LNZC) need to come together in a coordinated manner to optimise use of the network and deliver Net Zero fairly and efficiently.
Bringing the LEO-N components together presents a complex systems innovation challenge which must be addressed if we are going to deliver an efficient and fair transition, making optimal use of existing network capacity and further leveraging future investment plans. The components of the LEO-N system are shown in the diagram on slide 2 of the Appendix, only by bringing them together as part of an overall system will we be able to fully realise the benefits.
Project LEON takes a 'systems innovation' approach to this challenging problem:
- Developing the FutureFit approach to ensure it develops services that are suitable for a diverse set of customers;
- Enabling local energy trading and flexibility services to manage demand through in introduction of SCES
- Creating new integrated building and network models to give a more complete understanding for the networks, planners and communities;
- Using customer data and retrofit options along with recently developed spatial tools to identify new options to scale from street level solutions to county-wide strategies;
- Developing new institutional arrangements to support coordination and drive local delivery.
The system includes:
- Using the FutureFit approach to help households and small businesses to decarbonise: with support on the best route for that premises including new financing mechanisms to allow them to transition to Net Zero.
- Local coordination and trading lowers peak demand reducing constraints on the wider network through a SCES.
- Networks need new integrated building and network modelling to assess the impact of FutureFit measures on the LV network improving operational efficiency and reducing overall system costs.
- Enabling existing capacity to be used more effectively, potentially, avoiding the need for expensive reinforcement.
- New arrangements to allow local actors to work together with networks to deliver a whole system solution at scale. These new arrangements include new institutional arrangements where the local energy system can be managed through a Local Net Zero Coordination architecture at the Regional, District and local scale. In addition to this we propose a new Grid Edge Coordinator role that can work at the Low Voltage level to spot opportunities for consumers whilst supporting delivery at pace and scale in their neighbourhoods.
In the Alpha stage we will:
- Continue to develop the LEO-N model as described above.
- Refine our approach to quantifying the costs and benefits, with the help of our additional partner, RetrofitWorks.
- Use a Minimum Viable System (MVS) approach to develop a model of how electricity networks plan their investment cycles to allow local authorities and communities to align their investments and/or inform the network investment, thus enabling the benefits for network customers and the wider system.
Prepare trials for the Beta stage in two areas of the UK to test application of the LEO-N models across different geographic, demographic and economic areas.
Impacts and Benefits
To quantify the benefits from innovation developed in LEO-N, we have based the counterfactual around five assumptions:
1. Network Reinforcement is carried out as set out in RIIO-ED2 Business Plan but is not well enough coordinated with the needs of customers who are striving to decarbonise, especially at the low voltage and secondary substation level. This could hinder uptake of Low Carbon Technologies (LCTs) due to thermal and voltage constraints.
Metrics:
- Actual spend on network re-enforcement in Oxfordshire compared to RIIO-ED2 Business plan
- LCT volume update in Oxfordshire compared to Distributed Energy Future Scenarios (DFES).
2. Sub-optimal use of existing network capacity results in greater losses and power quality issues (e.g. higher daily variation in voltage) caused by uncoordinated operation of community owned and behind-the-meter generation, flexibility and demand that exacerbates peak generation and demand conditions. This results in a limited hosting capacity for further decarbonisation of heat, transport and generation before triggering network reinforcement.
Metrics:
- Peak-to-average ratio of daily power flows profiles in the test areas before and after deployment of FutureFit and SCES.
- Daily distribution of voltage range at Low Voltage (LV) busbar before and after deployment of FutureFit and SCES.
3.Roll-out of LCTs is done without consideration of future requirements and consequent enablement of flexibility. Flexibility for in-front-of-meter services is only accessible via an aggregator and not visible to the network or the system operator 1.until the bids are made in response to procurement of flexibility services.
Metrics:
- LCT volume update in Oxfordshire compared to DFES scenarios.
- Average volume of flexibility per customer participating in delivery of flexibility services before and after deployment of FutureFit and SCES.
4. Revenue or reduced network related costs shared between the aggregator providing route to markets and the customer with flexibility -- those who can afford flexibility benefit the most.
Metrics:
- Average annual revenue /recued cost per customer from delivery of flexibility services before and after deployment of FutureFit and SCES.
5. Customers' energy bills are mainly driven by wholesale electricity prices and local generation receives power purchase agreements from external off-takers, priced at the current wholesale market prices, or requires big enough demand nearby for private wire. Metrics:
- Proportion of energy consumed on customer premises supplied from behind-the-meter generation or allocated energy from local SCES
- Modelled reduction in energy bills based on cost of energy imported to customer premises/community.
To quantify the benefits from innovation developed in LEO-N, we have based the counterfactual around five assumptions:
1. Network Reinforcement is carried out as set out in RIIO-ED2 Business Plan but is not well enough coordinated with the needs of customers who are striving to decarbonise, especially at the low voltage and secondary substation level. This could hinder uptake of Low Carbon Technologies (LCTs) due to thermal and voltage constraints.
Metrics:
- Actual spend on network re-enforcement in Oxfordshire compared to RIIO-ED2 Business plan
- LCT volume update in Oxfordshire compared to Distributed Energy Future Scenarios (DFES).
2. Sub-optimal use of existing network capacity results in greater losses and power quality issues (e.g. higher daily variation in voltage) caused by uncoordinated operation of community owned and behind-the-meter generation, flexibility and demand that exacerbates peak generation and demand conditions. This results in a limited hosting capacity for further decarbonisation of heat, transport and generation before triggering network reinforcement.
Metrics:
- Peak-to-average ratio of daily power flows profiles in the test areas before and after deployment of FutureFit and SCES.
- Daily distribution of voltage range at Low Voltage (LV) busbar before and after deployment of FutureFit and SCES.
3.Roll-out of LCTs is done without consideration of future requirements and consequent enablement of flexibility. Flexibility for in-front-of-meter services is only accessible via an aggregator and not visible to the network or the system operator 1.until the bids are made in response to procurement of flexibility services.
Metrics:
- LCT volume update in Oxfordshire compared to DFES scenarios.
- Average volume of flexibility per customer participating in delivery of flexibility services before and after deployment of FutureFit and SCES.
4. Revenue or reduced network related costs shared between the aggregator providing route to markets and the customer with flexibility -- those who can afford flexibility benefit the most.
Metrics:
- Average annual revenue /recued cost per customer from delivery of flexibility services before and after deployment of FutureFit and SCES.
5. Customers' energy bills are mainly driven by wholesale electricity prices and local generation receives power purchase agreements from external off-takers, priced at the current wholesale market prices, or requires big enough demand nearby for private wire. Metrics:
- Proportion of energy consumed on customer premises supplied from behind-the-meter generation or allocated energy from local SCES
- Modelled reduction in energy bills based on cost of energy imported to customer premises/community.
Innovation proposed for development and demonstration in LEO-N is anticipated to deliver net benefit of up to £68.7bn and avoid 4.7GtCO2e between 2025-2050 if scaled up to the GB level. In the Discovery stage, the estimate of cumulative net benefit from LEO-N is based on:
- Savings from deferral in planned network investment achieved through increase in volume and coordination of new generation and new flexibility at the LV level
- Coordination of electricity flexibility, consumption and generation is expected to reduce peak loading on the network, consequently reducing losses, reducing the need for additional capacity and improving voltage profile of supply which also delivers demand reduction.
- Savings achieved from avoided import of electricity by retail suppliers to the customers' premises due to increased self-consumption.
In Alpha, we plan to refine the qualitative and quantitative costs and benefits, as listed in Q4 expected from the complete LEO-N model as the individual elements will be further developed and their operational models defined as well as the additive benefits from considering the LEO-N model as a whole.
Importantly, in Alpha we will further investigate, where the various costs and benefits will materialise as to be successful, LEO-N will involve actors from across the entire energy supply chain.
