Project Summary
As Britain warms due to climate change, electrification of heat will mean increasing customer access to Space Cooling (SC) leading to increased summer peak demands. In current distribution network planning cooling demand is currently poorly accounted for and based on limited, high-level modelling. Additionally, cooling's potential to provide flexibility during periods of network stress has not been considered.
CoolDown will explore the impact of cooling on network capacity by producing improved uptake and demand projections as well as developing novel commercial arrangements to incentivise and unlock SC flexibility, reducing network reinforcement requirements and optimising value for customers
Innovation Justification
Prior to CoolDown, the impact of SC on electricity demand has only been modelled on a transmission scale, and even then, only at a high level. No GB DNO-led or supported project had explored the distribution network impacts of SC or how flexible SC demand can be unlocked to alleviate these emerging constraints.
The CoolDown Discovery phase was the first project to consider these elements in-depth, particularly using network impact insights to appraise the value of DR and how to incentivise and commercialise SC flexibility from end users.
The lack of prior detailed consideration given to SC network impact means that bolstering understanding of future SC scale and exploring novel commercial arrangements to improve the value and capture of system benefits from flexible building temperature control are innovative activities which cannot be considered part of business as usual BaU) activities.
The innovative modelling methodology developed in the Discovery phase of the project highlighted the benefit of modelling at a distribution substation level. The Alpha phase looks to develop this further by using the expanded modelling, customer engagement and FSP expertise to design suitable DR programmes in preparation for real world trials at Beta phase.
To ensure that SC's network impact can be properly forecasted and planned for, Alpha phase will refine the high-resolution dynamic thermal simulation modelling, carried out in Discovery, to explore the SC response of building stock under a range of scenarios. We will expand the work carried out in Discovery to further assess which distribution substations may be at risk of overload due to SC demand, and how these substations are characterised in terms of building types, numbers, and Photovoltaic (PV) penetration.
CoolDown will use these insights to assess the need for, and feasibility of, specifically designed new and innovative commercial arrangements to incentivise SC flexibility and minimise the need for network reinforcement. The Discovery phase produced a comprehensive long-list of potential models informed by learnings from international markets and UK network innovation, such as NGEDs NIC project EQUINOX.
The work outlined in Alpha is expected to take both the Technology Readiness Level (TRL) and Commercial Readiness Level (CRL) from 3 at the end of Discovery to 5/6. This will enable demonstration of the selected DR trials in Beta phase. We expect the Integration Readiness Level (IRL) to be level 2 at the end of Alpha.
In addition to all the enabling work done in Discovery phase, additional partners have been brought on board to further expand and accelerate the development of the project:
a customer engagement partner to understand the customers' knowledge, technology bias and DR participation willingness
an FSP to inform DR trial design and provide commercial customer insight. Note that we saw high interest from FSPs in the opportunity to partner on cooling DR, and will disseminate project findings to at least four additional FSPs
an additional DNO to ensure scalability across GB networks.
The Beta phase will then physically trial these developed solutions and progress them into a BaU solution which could be rolled out across GB markets and beyond.
Due to the high level of uncertainty around cooling uptake and potential DR participation, approaching this project in a phased manner reduces the risk of committing to a significant innovation project prior to fully defining the problem. For these reasons, CoolDown is extremely well-suited to the Strategic Innovation Fund (SIF) process, guiding the concept of GB SC distribution network flexibility through the different readiness levels to deliver a BaU network flexibility product.
Impacts and Benefits
Impacts and benefits description
The impacts and benefits of network flexibility from domestic, office and retail SC have not yet been appraised and quantified across GB. The CBA counterfactual is the gradual rollout of SC up to 2050 on a sample of 36 distribution substations on the ENWL network. The counterfactual for the CBA considers network reinforcement only, with no flexible alternative.
CoolDown is expected to deliver the following:
Financial -- future reductions in the cost of operating the network -- Network flexibility derived from SC load could defer or avoid the need for summer-peaking substations to be reinforced, reducing expenditure. Considering a nominal cost of £32,200 per new transformer, the high-level CBA results up to 2050 show that the cost saving due to SC DR on the 36 substations has lowered the overall network expenditure. Taking a conservative assumption of 100% of overheated buildings and subsequent installation of AC, the reduction in expenditure, associated with reinforcement is £610,000. Taking a more optimistic assumption of 50% of overheated buildings and half of the subsequent installation of AC, the equivalent reduction in expenditure is £480,000. If results were scaled across ENWL's 17,000 ground mounted distribution substations, the cumulative benefits could be up to £35m by 2035.
Financial -- cost savings per annum on energy bills for customers -- New commercial arrangements designed to incentivise customers to reduce their SC electricity usage during peak demand times could provide benefits to customers by:
1.Receiving compensation for reducing their electricity demand through mechanisms such as DR payments or a new time-of-use tariff.
2.Saving money that would have been spent on electricity during periods where they reduce usage, or through wider behaviour change instigated by being on that commercial arrangement.
3.Reduced network charges on their energy bill due to more efficient network management and reduced reinforcement costs.
Environmental -- carbon reduction (direct) -- Reduced SC demand will reduce the amount of greenhouse gas emissions associated with the reduction in peak energy consumption. The high-level CBA results up to 2050 shows that the reduction in losses associated with the total reduction in peak energy consumption for the conservative 100% assumption is 10,031.14MWh which translates to an overall reduction in CO2e of 649.15t. The total for the more optimistic 50% assumption is 4482.04 MWh which translates to an overall reduction in CO2e of 308.52t. The conversion from MWh to tCO2e is based on the 2023 government greenhouse gas conversion factors.
Environmental - carbon reduction (indirect) -- Reduced network reinforcement requirements will save the emissions associated with the manufacture, construction and installation of additional assets.
Revenues - creation of new revenue streams -- As detailed above, novel commercial arrangements for SC flexibility will offer revenue opportunities to businesses and homes with relevant technologies installed, increasing the potential market liquidity for local flexibility requirements. In the Discovery phase, we defined a comprehensive list of commercial arrangements and shortlisted the five most promising for further investigation in the Alpha phase.
New to market -- products, processes, and services -- SC DR commercial arrangements will be a new addition to the growing and maturing GB flexibility market. We will consider how such models complement other low-carbon heating flexibility products such as those being developed in NGED's NIC project EQUINOX. There is also an opportunity for FSPs to further develop their business models, earning fees for coordinating DR programmes amongst customers.
During Alpha we will be exploring commercial arrangements and drawing on the experience with proven flexibility markets to assess the costs and benefits of adding SC into existing flexibility services.
