Learnings

Outcomes

The full results for this work is detailed in the “Smart Heat final report” and “MS4 Customer Research Findings” report produced by our partners, Ricardo and Delta-EE and issued alongside this report.

1.1       Future heat landscape scenarios
The results of the load assessment showed that for a low HP uptake just over half of the transformers would not be overloaded even during peak periods, whereas for a high HP uptake only 10% of transformers would never be overloaded and over two thirds will be consistently overloaded. 

1.2       Best practice for the connection and management of electric heating technologies
The recommendations for improved best practice in the connections, planning and operations processes in Electricity North West are: 

·       Connections: Improvements can potentially be made in linking HP connection logs with operation and planning activities. Connection assessments should be updated based on findings from monitoring and innovation projects. After Diversity Maximum Demand (ADMD) assumptions should also be updated as new information becomes available. In order to minimise costs and barriers, it is preferred to use a ‘fit and inform’ approach as often as possible, which will require Electricity North West to react to changing loads quickly and cost-effectively. 

·       Planning: HP load forecasts should be updated based on actual HP uptake rates. Load profiles could be improved using actual ambient temperatures rather than assumed monthly averages. Smart solutions should also be included in load forecasts where appropriate. 

·       Operations: Active network management solutions such as those considered in this project should be implemented to manage additional loads from HPs.

1.3       The impact of low carbon electric heating on network assets, and the potential of leveraging variable thermal ratings
For low HP uptake the capacity released through the application of variable ratings is sufficient to meet the forecasted heat demand for 96% of transformers. For medium HP uptake this figure reduces to 70% but for high HP uptake, the capacity released would be insufficient to meet the heat demand for more than 80% of transformers. 

The results also showed that 99% and 88% of the studied transformers will be overloaded for less than 10% of the time in the low and medium HP uptakes respectively, implying that capacity released by variable rating would be sufficient to meet the heat demand 90% of the time under these scenarios.

As stated previously the thermal pinch points of other network equipment could impact the capacity released and the transformer environment impacts these pinch points. The analysis showed that for indoor substations variable ratings up to 53% above nameplate rating could be achieved whilst for outdoor substations this increased to 96% above nameplate rating.

The analysis indicates that a significant number of transformers may be able to adopt variable ratings without any concern for potential pinch points but a site specific study should be carried out before implementing them. 

1.4       An understanding of customer needs around heating
Key findings from the customer research are:

·       Factors such as price, performance and quality are the key drivers when choosing a heating system. Those with HPs are more likely to take environmental impact and sustainability into account.

·       33% of respondents said it would be acceptable for changes to be made to the level of heating in their home in general, with 24% saying it would be unacceptable.

·       When specifically asked about a reduction in their heating during the peak evening period, only 21% would not be willing to have their heating reduced at all, indicating (as long as this is kept within certain parameters) that many customers would be willing to accept reduced temperatures.

·       Younger customers seemed to find changes most acceptable, along with those that live in a city location.

·       Customers would be more likely to accept a change if it was a small reduction in temperature, rather than a small increase, as turning up heating was seen as a waste.

·       The majority of customers liked the idea of electric batteries, especially if they were used alongside other LCTs, such as solar panels. They also reacted positively to buffer tanks and hot water cylinders but were less convinced of a need for them.

·       Some respondents not having to make the temperature changes themselves and suggested that they may not notice a small change without being told. Others preferred to make the changes themselves as that ensured they had control. Respondents felt it was important to have a manual override and the ability to set limits within which temperature changes would be made. 

·       Respondents would prefer to be communicated with by the supplier as they already have a relationship with them. They were less keen on third party involvement as this would be less cost-effective.

·       The key barrier identified for allowing the DNO to change their heating was that they would be losing control. Some were concerned that they would be too cold in their own home as a result of the changes.

·       The most appealing incentives were financial rewards, either in the form of a reduction in bill, or an annual payment. Respondents also liked the idea of personalised advice, which would mean they could reduce their bill themselves, through reduced usage. 

·       Other incentives that respondents suggested included knowing they were doing the right thing for the environment and helping those that need heating more than they do.

·       Customers in vulnerable circumstances have similar needs to other customers, though they typically placed a slightly higher importance on their heating level.

·       Overall, similarly to all other customers, customers in vulnerable circumstances would like to retain a level of control themselves and would also be happy with a financial reward as an incentive.

A heat flexibility mechanism should then include the following:

·       Choice: the ability for customers to choose an approach that suits them best.

·       Personalisation: the ability to tailor the approach according to customers’ own needs.

·       Flexibility: allowing customers to ‘opt out’ if their circumstances change.

·       Incentives: a financial reward will be the most effective, but advice is also valued.

·       Information: ensuring customers are informed of the benefits of their actions.

1.5       The likely availability of flexibility from heat
Looking at the half hourly load profile for one distribution transformer with a moderate level of HP uptake the baseline load (with no flexibility measures) peaks in the evening at just over 800kW – more than 60% above its 500kW nameplate rating.

Shifting hot water generation to off-peak times reduces peak demand by about 3%. Allowing some over or under-heating in homes reduces the peak by an additional ~1% for every 1°C change. Changing indoor temperatures by a few degrees might have an appreciable impact on demand on an average winter day, but it has little impact during 1 in 20 weather conditions.

The most effective flexibility measure for reducing peak demand is storage, either electrical or thermal, which can be charged during off-peak times and discharged during peak times. Together with flexible hot water generation this reduces the peak demand by about 11%.

The exact impact of the different heat flexibility measures varies based on weather conditions, house mix and level of HP uptake on a substation. Overall, these measures could be expected reduce the peak demand by 1-15% during 1 in 20 winter conditions. High levels of uptake of flexibility measures, could delay transformer upgrades by a few years. 

Combining variable rating with heat flexibility

For high HP uptake more than 90% of transformers would be overloaded and require reinforcement if no additional measures are taken. Adopting variable ratings reduced the percentage of overloaded transformers to 65%. Combining this with heat flexibility measures reduces this further to 58%. 

For low HP uptake adding heating flexibility to variable ratings has no additional effect as there is less flexibility available.

1.6       An assessment of the costs and benefits of approaches to mitigate the impact of electric heating load on networks
A CBA indicates that the Smart Heat solutions could deliver significant financial, carbon and capacity release benefits over alternative approaches, including traditional reinforcement and other smart solutions. 

For the high HP uptake, the 2050 benefit is £1,554m when compared to traditional reinforcement and £395m when compared to the Smart Base Case for a GB-scale rollout. 

The solutions could also provide 2050 carbon benefits of up to 114ktCO2e at GB scale.

Lessons Learnt

There is likely sufficient existing network capacity to accommodate a low uptake of HPs, but with high levels the majority of substations would be heavily overloaded and require intervention. 

DNOs should consider integrating HP connection data into other business processes, reviewing ADMD assumptions as new information becomes available, making more use of existing monitoring to inform connection assessments and including smart solutions in intervention assessment as they become available.

The use of variable ratings could enable the uptake of HPs whilst causing minimal disruption to customers, but additional research and demonstration is required to build up confidence in the method. If variable ratings are being considered an assessment of network pinch points should be carried out and any mitigation required taken into account in the intervention decision.

Heat flexibility measures such as shifting hot water generation, use of storage, pre-heating homes ahead of peak times or reducing indoor temperatures during peak periods enable relatively small reductions in peak demand. Many customers would be willing to provide heat flexibility provided they have override control and are suitably compensated. To enable this solution an appropriate flexibility mechanism will need to be developed.

There is a clear business case for the deployment of variable ratings as a solution to release capacity for the adoption of HPs across distribution networks, whereas the benefits from heat flexibility are marginal.