Significant electrification of heating is a fundamental requirement for decarbonisation. Electrification of home heating is expected to increase residential electricity demand by 50% in 2035, and to double peak demand by 2050, creating a significant additional cost for the GB electricity system. This project will look to understand how flexibility market signals can encourage electrification of heating, and the adoption of flexible heating practices from domestic consumers and their homes. This project aims to understand what market signals the ESO should develop to encourage electrified heating, flexibility practices and understand where these sit in the wider context of market signals for domestic consumers.
Benefits
This project brings significant benefits to the ESO and potentially to DNOs. These benefits include improved visibility and understanding of market signals for consumers. It will help in the identification of appropriate market signals, enablement of flexibility markets and in the overall conception of a stronger business case for electrification of heat, with significant impact on emissions reductions. The project also enables a reduction of network reinforcement requirements, the optimisation of generation capacity and costs as well as contributing to an improvement in network resilience. Due to the positive impact of all those benefits, this project ultimately enables the reduction of consumer bills.
Learnings
Outcomes
This innovation project explored the impact of electrified residential heat on the electricity networks and the market signals which NESO can use to enable and utilise the development of flexible heat to support network balancing operations whilst delivering whole system cost savings to ultimately benefit end-consumers.
The project covered a range of topic areas including building performance, FES projections, market mechanisms, technical requirements, network reinforcement, and policy. The findings have been brought together to establish key recommendations for future NESO trials and potential areas of focus for Policy and Market development.
Stakeholder input was critical to shaping the case for change and informing decisions on key market design choices. We co-created with industry through industry webinars (available here) and a survey that allowed stakeholders to provide detailed views and feedback to design an effective market.
This project has informed activities and changes NESO can investigate or implement in the short term to enable its markets to be open and accessible to electric home heating, with a view to contributing to the CP30 consumer lead flexible goal of 10 – 12GW across the system by 2030.
The project has also informed further activities NESO needs to undertake to better understand the implications of heat electrification pathways and associated requirements for NESO markets and system operation.
Initial scoping has also been undertaken with the REVEAL team to identify trialing opportunities as part of the REVEAL roadmap, as well as with the Crowdflex team to understand if there are opportunities to collaborate and implement recommendations on any future consumer trials of this nature.
Lessons Learnt
The impact of electrified heat, if aligned to net zero targets and government policy, will impose a substantial demand on the electricity networks and on standby generation necessary for rare, e.g. a severe prolonged winter cold snap, peak demand scenarios. This additional demand will likely have substantially reduced ability to operate in a flexible
manner under an extreme winter cold snap event, without the support of high thermal- performance building stock, and thermal storage. Consideration of different approaches to manage severe winter peaks, for highly electrified heat scenarios will be required. For example, these may include hybrid heating (e.g. Heat Pump and Fueled Boiler) and
thermal networks coupled with long duration thermal storage for ‘hard to thermally improve’ existing building stock.
Stakeholder feedback supported the promotion of other forms of advanced electric heating, including heat batteries and heat boilers with storage, to provide solutions for buildings which are less suited to heat pumps. Some of the non-heat pump solutions, although being less efficient, do provide increased opportunities for flexible operation including higher speed response rates which may enable extended service offerings for NESO’s balancing requirements. Control and metering of flexible assets is being improved through the development of a range of new standards including PAS 1878 and 1879, however there are currently a range of further improvements required to enable flexible heat to participate in new BM service lines which are currently being expanded for access by flexible domestic consumer assets.
When undertaking network reinforcement cost analysis for projects of this nature, detailed and specific data will be helpful to get an accurate forecast of costs, as opposed to using generalised cost assumptions. This includes for substation and conductor reinforcements, and regarding boundary flow estimations and the assumptions on generation and demand under peak conditions related to this data.
