As part of UK Power Networks’ role in understanding the transition to the future smart flexible energy system we have identified potential categories of exclusion from the transition consisting of financial exclusion, fuel poverty, lack of engagement in the energy market and lack of flexibility in energy use. DNOs need to explore inclusive approaches that will ensure everyone is able to access the benefits of a flexible system if they wish to do so.
In urban areas, multiple occupancy properties such as blocks of flats are a common living arrangement. Many local authorities plan to further develop affordable housing: this will also contribute to an increase in this type of living arrangement. Often blocks of flats are a type of social housing and are common in areas where financially underprivileged customers live in higher concentrations.
Living in these premises can often limit customers’ energy options and the uptake of low carbon technologies (LCTs) such as rooftop solar panels and batteries due to the nature of shared properties and limited space on individual sites. This can be a barrier for certain customers who would be unable to actively participate in the energy market, own distributed energy resources and offer flexibility services.
Shared ownership and virtual allocation of the assets can open energy saving opportunities, choices and new revenue streams for customers who would otherwise not be able to participate in the flexibility market.
Objectives
The main objectives of this project are:
• To test whether customers living inblocks of flats can access financial benefits through flexibility;
• To explore how DNOs can be more inclusive by way of flexibility based on virtual allocation of shared assets;
• To create better value around low carbon and other future technology for groups that are part of some of the potential exclusion categories from a future flexible energy system (fuel poverty, lack of engagement in the energy market);
• To facilitate non-prosumers and fuel poor households’ ability to benefit from future energy technologies and from flexibility opportunties.
Learnings
Outcomes
The project has:
· designed and created a system that allows for flexibility provision within a virtually allocated energy storage asset; this has increased the TRL level for this type of system and this technology can be considered more reliable in terms of ability to provide services
· delivered demand turn down services at specific times
· collected data on consumption and generation
· achieved bill savings through the ability to collectively self-consume cheaper power
· demonstrated how the technical requirements for procuring LV flexibility from a community-owned battery could be met and
· helped to facilitate improvements required towards a commercial case for a communal battery application offering flexibility services
Lessons Learnt
1. Key limitation to recruitment:
Ensure technical and financial barriers to participation such as the need for smart meters or OPEX and CAPEX restrictions are identified and addressed.
Consider the ethics of automatically enrolling (with opt out option available) disengaged customers on to non-punitive trials and/or tariffs offered by their existing supplier
Consider the geographic boundaries of the community alongside the social ties that exist within the area
Allowing multiple suppliers rather than one facilitating supplier to participate in such flexibility services is likely to address the switching barrier to uptake.
2. LV flexibility procurement:
New processes around flexibility procurement that actively and cost effectively support the delivery of SEV (Social and Environmental) benefits should be designed, piloted and evaluated
Flexibility proposals should be evaluated against the following criteria:
o mitigation of vulnerability to (or impacts of) loss of supply;
o impact on fuel poverty;
o local community involvement; and
o contribution to net-zero carbon and other environmental impact reduction
Two approaches could be used to administer flexibility procurement of SEV projects: either by introducing a weighted SEV component to all flexibility tender processes, or having a separate stream of tenders which intentionally set out to deliver SEV to ensure a certain proportion of SEV projects are procured
Minimum capacity thresholds for flexibility should be kept as low as possible to minimise the barrier to entry for smaller projects which may still have significant social value
Due to the limited number of participants the financial benefits accrued to a very small number of participants. More optimal distribution of benefits could perhaps have been achieved via a community fund
3. The magnitude of the bill savings is dependent on:
The type of network that connects the household to the asset and the associated charges or taxes. Wired and non-wired solutions have been used to deliver bill savings, however non-wired solutions using public networks are more highly affected by regulations and likely to incur higher costs and limited savings outside of a trial context. If network charges are changed there will be potential for bill savings to be achieved through non-energy cost reductions as well
The ownership of the asset and business model. Shared batteries can earn revenue from export of low-price electricity at higher export prices, or provision of other flexibility services. These services impact the availability of storage for collective self-consumption and affect the share of flex income versus bill savings participants will receive. Community-owned schemes may choose to distribute any flex income through non-bill mechanisms such as community funds, or via bills by working with a licensed supplier. Changes in regulations may allow for local energy and flexibility services to be retailed along with a customer’s main supply contract. Changes in network charging structures may mean the use of local renewable energy delivers bill savings via non-energy cost reductions
4. Currently there are no incentive mechanism to support or prioritise low carbon flex. This negatively affects the ability for community energy groups/mission driven organisations to develop flex assets.
5. Communication of successful and widely replicable examples will need to be effective through the use of illustrative case studies which become available to all interested parties and not only the partners involved
6. With regards to societal benefits more research is required on:
Use-cases and models of actual revenue stacks for community-owned, shared batteries to build capacity, increase engagement with LV flexibility and support the uptake of renewables
Trade-offs between distributing economic benefits via individual bill savings and community funds
Effect of changing network charging on the economic benefits of communal batteries and the uptake of renewables by households and communities
