Project Summary
In some areas of Great Britain, high penetration of distribution connected generation is causing network constraints that are blocking the connection of more renewable power. Traditional network reinforcement typically has a long lead time and these delays are slowing the decarbonisation of the country's energy system.
Project UN:LOCK will explore novel market-based solutions to create capacity in constrained areas of network and allow the connection of additional generation, whilst the long-term network reinforcements are being delivered. This will create additional local economic benefit for both generators and consumers as well as accelerating progress to a net zero society.
Innovation Justification
Generation constraints are becoming a barrier to deploying the volume of renewable generation needed to achieve Net Zero. Traditional reinforcement comes with long lead times, so innovative market solutions need to be found working within existing network capacity to complement and improve the economics of network solutions, such as ANM, or to create capacity for additional generation connections.
There have been previous trials exploring solutions to generation constraints -- for example, time of use tariffs, demand turn-up payments, flexibility markets, and capacity trading,-- however few have become BAU despite being cutting-edge and relevant.
No previous project has researched a full range of options to compare their potential impact and identify the optimal solution. Nor have they explored interactions with other options -- in particular, with an existing ANM system. The scale of the study is targeted at the Isle of Wight due to its position behind a well-defined constraint and its well-defined boundaries, making it an optimal test environment. The core innovative aspect of this project is to develop a replicable tool that identifies the best local non-network options for overcoming a generation constraint, which can be deployed in other areas of GB facing similar constraints.
By the end of the Discovery phase, we do not expect a change in TRL or CRL of the different non-network options, which currently range from 3-9. We expect the IRL to increase from 1 to 3, as we better understand how the different options interact and what the optimal solution is.
Project UN:LOCK is suitable for SIF funding because:
*it is a significant problem with no obvious solution, despite previous attempts to address it.
*it is potentially disruptive, if regulatory change is required.
*it cannot be funded through BAU activities, as it requires collaboration between a number of parties, including the network operator and local actors, in a way that has not yet been defined.
By the end of the Alpha phase we will identify the full design (market, regulatory and economic) of a working solution, replicable across multiple communities.
The counterfactual is to either wait for traditional investment in a new subsea cable or wait for decarbonisation of heat and transport etc. to create the additional demand required to mitigate the constraint. The timelines of these are uncertain and any solutions delivered by UN:LOCK will complement the delivery of both objectives, while helping to accelerate progress towards Net Zero on the island.
Impacts and Benefits
Impacts and benefits description
These benefits relate to the whole project, not just Discovery which will not deliver tangible benefits, but will lay the groundwork for future phases.
Renewable energy development and carbon reduction
Project UN:LOCK's aim is to unlock capacity to develop renewables. Primary benefit will be increased renewable capacity and annual generation. This will reduce carbon through direct on-island use and through wider grid emissions factor reductions.
There are many prospective projects that could be brought forward if network capacity is created:
*178 MW of new generation/storage projects, some under the ANM scheme
*146 MW that were abandoned due to high connection costs
*20 MW of planning applications that were refuse/expired could be revisited.
For every MW created, assuming it is utilised by large-scale solar, would generate c.1.1 GWh annually (assuming 12% capacity factor). The GB grid electricity emissions factor is c.0.2kgCO2e/kWh. If consumed directly, this equates to 218 tCO2e per year per MW. In reality, new generation contributes to the wider GB grid emissions factor, so carbon savings are indirect.
Cost savings
Consumers will benefit from engaging in local flexibility, either earning revenue or creating bill savings from shifting demand. Previous studies have measured this:
*SPEN's Domestic Demand Shift Trial paid consumers to turn up demand, finding that customers were rewarded with £5 of free energy on average over a 6-week period, some saved up to £73.
*Project TraDER demonstrated that customers earned on average £31/MWh through a capacity trading platform, reducing generation curtailment on Orkney.
We will review relevant studies during Discovery, estimate potential cost savings against a baseline estimate of the island's 2020 electricity bills, when total consumption was around 520 GWh.
New to market
Project UN:LOCK will create a new process for DNOs and local authorities to use to identify optimal solutions to generation constraints. We will estimate a baseline of GSPs in GB that are generation constrained, before estimating how many could be unlocked by the new process.
New products/services may come to market later in the project through the options assessment. These could include new retail tariffs, a capacity trading platform, or demand turn-up flexibility marketplace. There are currently no products in operation other than the ANM.
We will estimate and measure the impact of new services for how much headroom is created, and how much value is created for service providers.
Impacts and benefits
At Discovery, UN:LOCK shortlisted three of the six options assessed, these were identified as the most appropriate for implementation in the pathfinder area.
Financial benefits were measured as either flexibility payments to participants in demand turn up services, reduction in unit cost for time of use tariff participants, and increased income for renewable generators in all scenarios.
Financial - cost savings per annum on energy bills for consumers
Customers who are signed up to a time of use tariff developed as part of this Project will be able to benefit from lower prices at times when renewable generation export peaks. The benefit they will receive will be dependent on the degree to which they are able to change their usage patterns to capitalise on times of cheaper power, and the differential between the value of the new tariff and the baseline standard variable tariff.
Environmental - carbon reduction -- indirect CO2 savings per annum
The value of this will be measured in terms of the reduction of electricity imported from the mainland and instead met by increased renewable generation exporting to the Island network, due to the alleviation of network constraints, and being consumed locally.
Revenues - creation of new revenue streams
The value is measured against capacity, frequency and duration of the DTU required to alleviate the constraint and allow the connection of new generation.
New to market
During Discovery we developed an assessment tool to identify the most impactful options available to resolve generation constraints. As such, UN:LOCK has created a new process that supports DNOs and local authorities to identify and assess the impact of optimal solutions to alleviating generation constraints. During Alpha we intend to undertake further work to refine and develop this tool so that it can be validated and commercialised during Beta and be released for use by local stakeholders.
Further development of the shortlisted options at Alpha phase may lead to the creation of new products/services, as existing processes or products are repurposed to address the specific challenge of maximising existing network capacity.
We will estimate and measure the impact of new services for how much headroom is created, and how much value is created for service providers.
