Electricity Network Innovation Strategy - March 2018 - Energy Networks Association
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Electricity Network Innovation Strategy March 2018
b Electricity Network Innovation Strategy
01 Electricity Network Innovation Strategy
Contents 02 Foreword 32 D
elivering Benefits
04 Executive Summary from Innovation
06 Introduction
08 Innovation funding timeline 32 Improving the transfer
08 Strategy development process of innovation into BAU
08 Public stakeholder consultations 32 Realising the full value
of previous innovation
09 Electricity Industry Trends 32 Improving methods
of managing risk
10 1. Shifting power-generating 33 Ensuring early identification
sources of useful innovations
10 2. Customer choice and 33 Increasing access for
changing energy demands non-regulated businesses
10 3. Evolving policy drivers
11 4. The Smart, Flexible 34 Collaborative Innovation
Energy System and
the DSO transition 34 Collaboration through ENA
12 5. Uncertainty and challenges 34 Smarter Networks Portal
for the electricity networks 35 Collaboration with the wider
energy industry
13 Innovation Challenges 35 Network Innovation
Collaboration Portal
13 Innovation themes 36 Cross-vector collaboration
14 Challenge categories 36 Open Networks Project
37 Getting involved
16 Current Level of Innovation
38 Conclusions
16 Network innovation under RIIO
17 Previous innovation projects 40 Glossary of terms
19 Evaluating innovation priorities
20 Innovation Strategy
and Roadmap
22 Theme 1 – Network
improvements and system
operability
24 Theme 2 – Transition to
a low carbon future
26 Theme 3 – New technologies
and commercial evolution
28 Theme 4 – Customer and
stakeholder focus
30 Theme 5 – Safety, health
and environment02 Electricity Network Innovation Strategy
Foreword The publication of the gas and electricity Network Innovation
Strategies is the latest chapter in Great Britain’s energy
network innovation success story. Since funding was first
introduced in 2007, Great Britain’s energy networks have
developed a world leading reputation for innovation. A variety
of transformational projects have enabled network companies
to deliver greater efficiency, improved performance and
respond to the challenges and opportunities presented
by the decarbonisation of our energy market.
Innovation projects allow network the lessons learnt from those projects
operators to better understand how with other organisations. This transparency
to integrate new technologies into our is key to ensuring that network companies
energy networks, help them identify new continue to focus on areas for innovation
opportunities for their use and speed up investment which can deliver most benefit
their wider adoption. They also reflect our to the wider energy system in the most
commitment to build an efficient, smarter, effective way possible.
cleaner energy system fit for Britain’s
homes and businesses. Network companies cannot deliver
this innovation alone. We want network
The current RIIO price control mechanism, infrastructure to act as a platform for new
which includes the Network Innovation energy technologies and services that
Allowance and the Network Innovation will put Great Britain at the forefront of the
Competition, has been key to driving global low carbon transformation. Whether
success forward. Continued support for they are end-users, technology developers
innovation has been vital to embedding or service providers, network companies
a culture of innovation within our want to work with these innovators who
energy networks so that innovation have the best and the brightest ideas
is a permanent fixture in the network of how we can harness the potential of
landscape. Smart network solutions energy technology. These opportunities
connected through the Low Carbon extend to communities and businesses
Network Fund alone have already across the country, ensuring that the
enabled close to £1bn of cost savings economic as well as practical benefits
for customers within the electricity sector. are spread far and wide.
This progress is part of a wider, As the pace of network innovation
fundamental change to the way our continues to accelerate, then so will the
network infrastructure operates that importance of this work. The publication
is now taking place which is driven by of the first joint Network Innovation
new technology. Across the country, Strategies is an important milestone
innovation will help network companies and we look forward to working with our
to enable new markets and provide new innovation partners to ensure our network
opportunities for consumers to have infrastructure, our wider energy system
greater control over their energy bills. and our customers benefit from new
Projects have the potential to develop technology and approaches.
a truly world-leading Whole Systems
Approach that brings the way our gas
and electricity networks work more
closely together. This will be crucial as
we find new ways to meet the UK’s
carbon budgets, because if our power, Huw Sullivan
heat, transport and waste sectors are all Cadent
interdependent, then so must the solutions Chair, ENA Gas Innovation
to their decarbonisation. Our role is to & Governance Group
deliver the integrated energy infrastructure
that Britain needs to underpin those
essential pillars of our economy.
These Strategies set out the areas of
focus where network companies are Phil Swift
looking to provide value to customers Western Power Distribution
from the innovation projects they are Chair, ENA Electricity Networks
undertaking and how they will share and Futures Group03 Electricity Network Innovation Strategy
Future Safety
of gas and health
Low Emergency
carbon and response
environment
Reliability, New
replacement, technologies
maintenance and commercial
and repair evolution
Innovating
to benefit
customers
Network
improvements Security
and system
operability
Key
Common themes
Electricity themes
Gas themes04 Electricity Network Innovation Strategy
Executive Innovation is a key consideration
for electricity network operators
A rapidly changing environment
requires new innovative strategies from
Summary as we transition to a smarter, more
economical, more flexible energy
all participants, including fundamentally
different approaches to business and
system that can support the to serving customers, and embracing
decarbonisation of heat and transport. a range of technical and commercial
It is also a crucial element of the innovations to do so effectively. Key drivers
Great Britain regulatory framework for for the changing energy system in this
electricity networks, which includes context include: shifting power generation
funding and incentives that help us sources, changes for customers in terms
innovate for our customers’ benefit, of choice and demand, policy drivers
as well as deliver value for the network related to decarbonisation of heat and
in the long term. Since 2004, we have transport, a greater focus on sustainability,
delivered more than 1,300 innovation and regulatory trends to ensure a smart,
projects, and we will continue to flexible system with greater local system
deliver innovation that can benefit operation responsibilities for Distribution
our customers. Network Operators (DNOs). These trends
will give rise to the need for further
This Electricity Network Innovation innovation from us, the electricity network
Strategy has been developed to set companies, and will simultaneously pose
out a jointly-agreed approach as to a number of challenges, which we have
how innovation can best accommodate synthesised into five themes as shown
the future requirements of the energy below in Figure 1.
system in its entirety, and can lead to
the effective delivery of benefits in a
collaborative and cost-effective way.
Figure 1:
Innovation themes based on industry trends and challenges
Objectives
1. Identify opportunities for the continuous improvement of our networks and deliver improved value to our customers
2. Find new ways to make our service more reliable, more affordable, more accessible, cleaner and safer
3. Provide us the flexibility to better respond to the changing requirements of our customers, both today and tomorrow
Industry trends Existing innovation strategies
1. Shifting power-generating sources
2. Customer choice and changing energy demands
3. Evolving policy landscape
4. The Smart, Flexible Energy System and the DSO transition
5. Uncertainty and choices for the electricity network companies
Innovation themes
1. Network improvements and system operability
2. Transition to a low carbon future
3. New technologies and commercial evolution
4. Customer and stakeholder focus
5. Safety, health and environment05 Electricity Network Innovation Strategy
Strategic focus a set of priority outcomes and a timeline,
as shown in Figure 2. Given this roadmap
By considering the current level and the analysis undertaken for each
of innovation and future innovation innovation theme, the following represent
opportunity, in consultation with our our key future focus areas:
stakeholders, we have established
Focus on innovation areas with maximum innovation
INNOVATE opportunity which need to be addressed in the short
to mid term.
Maximise transition of proven innovation to Business
IMPLEMENT as Usual (BAU) to realise the full potential benefit
for customers.
Enhance strategic collaboration by increasing project
COLLABORATE partnerships, improving the sharing of knowledge, and
using forums more effectively.
Innovation benefits from effective For more information and to stay
collaboration across the industry, engaged, please contact Energy
so we have valued the feedback Networks Association at
and engagement provided by many innovation@energynetworks.org
stakeholders throughout this innovation or visit our website
strategy process. www.energynetworks.org.
Figure 2:
Innovation strategy outcomes and roadmap
Facilitate change Smarter Networks Whole System
• Ensure resilience of the system • Develop forecasting methodologies • Collaborate with other energy
under emergency conditions for changing behavioural patterns sectors (including gas, transport
• Enable real-time visibility of the and new technologies and heat) to optimise across
LV network • Develop asset inspection multiple sites and vectors
• Develop solutions that interact techniques that reduce manual • Expand planning and operational
with customers workload activities to incorporate heat,
• Develop means to manage tighter transport and gas
• Improve flexibility services to
customers with mutual benefit capacity margins and develop • Manage significant penetration
market signals for new investment of EVs and electrified heat
• Coordinate the deployment of
EV charging points • Effectively utilise all available • Increase use of artificial intelligence
data to counter potential threats to make decisions on a more
• Maximise benefits of network to the system dynamic network
services provided by electric
vehicles and storage • Provide aligned, financial incentives
through innovative or flexible tariffs
• Identify and counter internal and
external cyber threats • Facilitate new customer-focused
products and services from
• Use smart technologies to maximise suppliers
capacity within the power system
• Make network information more
readily available
• Development of safer and more
efficient working practices
Now until 2019 2019 to 2022 2022 onwards06 Electricity Network Innovation Strategy
Introduction This Electricity Network Innovation
Strategy has been produced by
Innovation is a key element of the RIIO1
regulatory framework, which includes
Energy Networks Association (ENA) funding and incentives to enable
and the GB Electricity Licenced innovation in order to deliver customer
Network Operators (LNOs), which benefit and long term network value.
include all of the Distribution Network Since 2004, we have embraced
Operators (DNOs), the Transmission innovation, as evidenced by the more than
Network Operators (TOs) and the 1,300 projects that have been delivered.
System Operator (SO). ENA is our Innovation will remain a central focus in
voice, representing the ‘wires and our plans for the remainder of this price
pipes’ transmission and distribution control period, as well as in the long term.
network operators for gas and
electricity in the UK and Ireland The independent 2016 evaluation of the
(known as Member Companies). Low Carbon Networks Fund (LCNF2),
which was commissioned by Ofgem,
highlighted that the LCNF succeeded in
encouraging us to innovate and served to
move our level of innovation from a ‘low’
base to a ‘moderate’ level3. The potential
future net benefit from LCNF projects is
estimated to be between 4.5 and 6.5
times the funding costs. We want to
further improve this.
Figure 3:
Electricity Network Licence Holders
Electricity distribution Electricity transmission
1 Scottish & Southern 1
1 1 Scottish1 & Southern 1
Electricity Networks Electricity Networks
2 SP Energy Networks 2 SP Energy Networks
2 2 2 2
3 Scottish & Southern 3 National Grid
4 4
Electricity Networks 5 5
4 Electricity North West National Grid are also
6 the
6 System Operator
3 3
5 Northern Powergrid 7
for the 7Transmission
8 8
6 SP Energy Networks Network across GB.
3 3
7 Western Power Distribution
8 UK Power Networks
1
IIO is the current regulatory framework: Revenue =
R
incentives + innovation + outputs.
See Ofgem website for details
2
The LCNF was a £500m fund available to the DNOs
to encourage innovation, and was the precursor to
Ofgem’s present innovation funding mechanisms,
which are available to network companies
3
https://www.ofgem.gov.uk/system/files/
docs/2016/11/evaluation_of_the_lcnf_0.pdf07 Electricity Network Innovation Strategy
Recommendations from independent evaluation of LCNF (2016)
– Ofgem should continue to fund network operator innovation with consideration
given as to how support for network innovation can best accommodate the future
requirements of the whole, low carbon, energy system
– We, the network companies, should be required to jointly develop and publish
an ‘innovation roadmap’
– There should be greater focus on the sharing of project knowledge and learning
(including that from unsuccessful projects) to maximise the benefits and value
of LCNF initiatives and innovation
– Reporting requirements associated with any future innovation funding should
be reviewed to facilitate the future assessment of quantitative benefits
In addition to the success stories, coordinate innovation projects and share
the evaluation also highlighted the learning, which allows us to ‘fast follow’
importance of a more joined-up approach from other networks. This ultimately leads
to network innovation across the entire to bigger cost reductions and benefits
industry. We have improved the way we for customers.
Figure 4:
Ofgem innovation funding timeline
Distribution
Innovation Funding Incentive (IFI)
Low Carbon Networks Fund (LCNF)
Network Innovation Allowance and Competition (NIA & NIC)
RIIO-ED2
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Transmission
Innovation Funding Incentive (IFI)
Network Innovation Allowance and Competition (NIA & NIC)
RIIO-T2/GD208 Electricity Network Innovation Strategy
Innovation funding timeline There are regional variations in innovation
project themes and solutions, which are
Ofgem has incentivised innovation driven by regional requirements and
on our networks since 2004 and difference. We therefore intend to use
currently provides funding under RIIO1 this strategy to help inform the individual
mechanisms. Figure 4 shows a timeline innovation strategies, which we will
of how Ofgem funding mechanisms have maintain over the course of the current
evolved over time. Other available industry price control period. This strategy allows
funding mechanisms are described in us to have a better aligned set of
Current Level of Innovation. innovation projects, so the process of
learning rapidly from another project and
implementing it into BAU will improve.
Strategy development process There will also be ongoing scope for
proactivity in our innovation, seeking views
To develop the Electricity Network from stakeholders on a continuous basis
Innovation Strategy, we have shared to ensure we are leading and learning from
information with each other, and solicited international innovation trends. We will
feedback from a wide range of review and update this strategy every
stakeholders. A key consideration two years4, which will allow us to build
has been to develop an inclusive strategy, in regular horizon scanning and to reflect
which takes into consideration the whole the dynamic developments in the
energy system and its participants. electricity sector.
The methodology we used to develop
the strategy is shown in Figure 5.
Figure 5:
The process of developing the innovation strategy
1st 2nd
First Second
stakeholder stakeholder
consultation on the consultation and
network challenges, workshops on the
innovation themes draft innovation
and timelines strategy
Evalutate Identify Review Establish Harmonised
industry trends innovation innovation innovation Electricity
themes and challenges and strategy and Network
catergories opportunities roadmap Innovation
Strategy
Public stakeholder in Figure 5, includes a first public
consultations consultation to support the
categorisation of challenges. A second
In developing the Electricity Network consultation, together with stakeholder
Innovation Strategy, we sought workshops in London, Glasgow and at
stakeholder feedback to ensure that we the LCNI conference, then provided more
devised a strategy that is representative in-depth opinion to further improve the
4
s required by the Electricity Act 1989, Section 11A(2)
A of people who use the networks, and draft strategy and roadmap. For the
available at https://www.ofgem.gov.uk/ofgem-
addresses issues faced by the entire results from stakeholder consultations,
publications/116068
5
http://www.energynetworks.org/electricity/futures/ industry. The process, which is shown please refer to the ENA website5.
network-innovation/electricity-networks-innovation-
strategy.html09 Electricity Network Innovation Strategy Electricity Industry Trends
10 Electricity Network Innovation Strategy
Electricity The drivers for innovation in
electricity networks are aligned
2. Customer choice and
changing energy demands
Industry Trends with the energy trilemma which
balances energy security, Through the deployment of a wide variety
affordability6 and sustainability of new technologies, such as smart
Sustainable as we transition to a low carbon thermostats, solar photovoltaic panels,
energy system. Traditional network and electric vehicles, customers are
management solutions, such as increasingly able to control their electricity
network reinforcement, are no usage and spend, as well as the type
longer considered the only viable of power they buy and when they use
or most economical solution to it. Some customers want the ability to
network development. A rapidly self-generate and sell that power back
changing electricity sector requires to the grid. The demand profile for our
new and innovative strategies customers is changing, and is expected
Secure Affordable from all participants, including to change even more drastically with the
fundamentally different approaches forecasted uptake in electric vehicles and
to our business and the way we the decarbonisation of heat in the early
are serving customers, as well parts of the next decade.
as a range of technical and
commercial innovations. As a result of this, we will need to
develop commercial models and
We have identified five trends that are technical solutions that will facilitate
changing the way electricity is produced customer choice in a cost-effective way,
and consumed. These trends are driving while at the same time managing the
the need for us, and other players in the impact on the networks. We believe that
energy value chain, to innovate. at the forefront of our ability to serve our
customers’ evolving needs is increased
1. Shifting power-generating engagement and communication,
sources as well as transparency and efficiency
in our plans and priorities.
For the first time since the 1880s, coal,
once the mainstay of our generation 3. Evolving policy drivers
sector, was absent from GB’s operating
electricity generation mix on the 21st April In addition to the Climate Change Act,
2017. A month later, on the 26th May, whereby the government has committed
solar generation was meeting nearly to reduce greenhouse gas emissions
a quarter of all electricity demand in by at least 80% of 1990 levels by 2050,
GB. In the near term, it is expected the Paris Climate Agreement will have
that the majority of new capacity in a significant long term impact on energy
the GB energy system will come from networks. The agreement, which has
renewables, primarily wind and solar. been ratified by the UK government,
focuses on limiting global warming
In response to this, network operators to below 2°C by the year 2100.
will need new tools and resources to Decarbonisation of electricity
deploy and optimise flexible response generation, heat and transport are
to the intermittent output of renewable all crucial components.
energy sources. Although storage is
becoming increasingly available, greater Other recent policy decisions include
capacities will be needed to help manage plans announced by the government
the inherent intermittency in renewable to ban the sale of new petrol and diesel
generation. As the role of storage cars in Britain by 2040. This will clearly
continues to develop, we expect more impact the growth of electric vehicle
reliance in the short term on grid sales. Heat is also a critical element of
interconnection and active network Britain’s Clean Growth Strategy and is
management, to manage both a high priority for future decarbonisation
generation and demand as we move activity, including greater use of green
towards DSO. Cross-sector energy gas, potential for increased use of hybrid
management and planning will be heating systems or electric heat pumps.
required to efficiently manage interactions
between electricity, gas and heat We will facilitate these ambitions, and
networks. Furthermore, from a system manage the potential impacts on our
operation perspective, we will need to customers through innovation and whole
adapt ancillary services provisions to energy system-thinking. We recognise
match the evolving system requirements. that energy, environment and transport
policy are very closely linked, and we
will ensure that we have a productive
contribution to aid the implementation
6
nergy affordability has been growing in importance
E of these policy objectives.
for a number of years and this trend will continue as
the industry needs to protect vulnerable customers
and ensure value for money.11 Electricity Network Innovation Strategy
4. The Smart, Flexible Energy To achieve this, there needs to be
System and the DSO transition far greater coordination between
transmission and distribution, and as
The requirement for a cleaner, DNOs, we must transition to become
distributed, and smart energy system DSOs. This role includes active
is becoming very evident. Fuelled by management of the network, and
significant increases in Distributed increased communication and
Energy Resources (DER) and storage, collaboration with 3rd parties, such
these changes will affect policy and as the TOs, other DSOs and the SO.
regulation, business models, and the
way the grid is operated in the UK. We are preparing for this shift to a
Figure 6 visualises the evolution to smarter electricity grid. The Open
a Smart, Flexible Energy System. Networks Project has been established
by ENA to enable industry-wide
A central pillar of Ofgem’s and BEIS’ coordination in this transition. We see
consultation and call for evidence on multiple opportunities to leverage
the Smart, Flexible Energy System7 is innovation in this transition, as evidenced
the suggestion that we need to focus by recent Network Innovation Allowance
more on coordinated whole system (NIA) and Network Innovation
planning and operations. We will Competition (NIC)-funded projects that
therefore have an increased role in the focus on the future DSO arrangements.
delivery of an “efficient, economical and
coordinated wider system”.
Figure 6:
Example of evolution to a Smart, Flexible Energy System
Traditional one-way Smart, Flexible
Wind farm with
power system Energy System energy storage
Power plants
Power generation
Utility/Community
solar
Transmission Commercial
& distribution offices with
rooftop solar
Wind farm with
cogeneration
Electric Homes with solar
Residential Commercial vehicles PV and storage
Factory with natural Hospital campus
gas combined heat with microgrid
and power
Industrial
ttps://www.ofgem.gov.uk/publications-and-updates/
h
7
smart-flexible-energy-system-call-evidence12 Electricity Network Innovation Strategy
5. Uncertainty and challenges for The transition to a smarter grid has
the electricity networks the potential to bring many benefits for
customers, but this is not a given. It is
As highlighted in Ofgem’s call for evidence therefore important that we have a clear
on the Smart, Flexible Energy System, plan and a roadmap for the future. This
we will need to change in order to make roadmap includes innovation that supports
sure we meet the demands of all of our the need to act differently and seeks
stakeholders in future. There is a wide new customer solutions, embracing the
spectrum of possible scenarios for us, changing circumstances to set a positive
which will largely be driven by external course for the energy sector in GB. It must
factors over which we have limited control. be highlighted that innovation is a process
that involves incremental learning by doing
As DNOs and TOs, we need to make and the optimal way to transition is often
significant investment decisions in the face to trial potential solutions and roll-out the
of an ageing network and a historically successful ones as BAU, which allows
non-flat investment profile. Our networks us to derive most benefits for customers.
could evolve in different directions, such
as a gradual evolution towards using
smart solutions for system development,
or fundamental change towards a role
of a platform facilitator, able to manage
and provide value-adding services for
generators, electric vehicle (EV) owners,
storage owners, microgrid operators,
peer-to-peer traders and demand
response providers.13 Electricity Network Innovation Strategy
Innovation Innovation themes identifies those challenges and presents
a vision for addressing those that have
Challenges The macro trends identified in the previous
section will give rise to the need for further
not been completely met by innovation
projects to date. Figure 7 shows the
innovation, and will simultaneously pose process behind identifying the overarching
several challenges. The development of innovation themes.
this Electricity Network Innovation Strategy
Figure 7:
Development of innovation themes
Industry trends Existing innovation strategies
1. Shifting power-generating sources
2. Customer choice and changing energy demands
3. Evolving policy landscape
4. The Smart, Flexible Energy System and the DSO transition
5. Uncertainty and choices for the electricity network companies
Innovation themes
1. Network improvements and system operability
2. Transition to a low carbon future
3. New technologies and commercial evolution
4. Customer and stakeholder focus
5. Safety, health and environment
Challenge categories – All projects have a customer benefit
– the projects currently listed under
This section gives an overview of the customer focus are solely customer
categories of challenges identified. focused projects
The five innovation themes have – Customer and commercial themes
been synthesised from our individual were a priority area in the stakeholder
Innovation Strategy documents. consultation and may benefit from
These challenges have been compiled increased innovation activity
from our individual strategies and the – New technologies and commercial
wider trends affecting the GB energy evolution has had a relatively low
industry. We have grouped and representation in innovation projects,
categorised the individual challenges so may also benefit from increased
in Figure 8 below, and grouped them innovation focus
by the innovation themes.
– Projects categorised under the
Based on the analysis of our past Network Improvements and
innovation projects, and the feedback Transitioning to a Low Carbon Future
from the online stakeholder consultation, themes will still play an important role,
we have made the following despite the increasing emphasis on
observations: customer and commercial themes
– Projects often do not align to only one
theme. While the main focus may be
one theme, many projects impact
some or all of the others, so there may
be multiple themes per project and
multiple projects per theme in practice14 Electricity Network Innovation Strategy
Figure 8:
Key innovation themes
Innovation theme Challenge categories
1.1 Improve network resilience to avoid unplanned power outages
(particularly when moving towards the low carbon world)
1.2 Improve demand and generation forecasting, and network
Theme 1 planning processes
Network improvements 1.3 Improve network visibility and controllability
and system operability 1.4 Improve asset management processes
1.5 Maximise the value and capacity of existing assets
1.6 Optimise cross-sector coordination between DNOs, TOs, and SO,
as well as licensees from other sectors (e.g. gas) and other countries
2.1 Efficiently facilitate the adoption of low carbon technologies supporting
the electrification of heat and transport
2.2 Enable flexibility in the GB low carbon transition (e.g. increasing role of
demand side response)
Theme 2 2.3 Facilitate the transition from DNO to DSO, enabling the provision of new
Transition to a platforms, market participants and value streams
low carbon future 2.4 Create value from the introduction of smart meters and work collectively
to deliver the wider public policy and public interest benefits from data
2.5 Develop advanced whole energy system planning and
forecasting methodologies15 Electricity Network Innovation Strategy
Innovation theme Challenge categories
3.1 Maximise cyber security and data protection in respect of privacy and
commercial sensitivity
3.2 Maximise benefits provided by new technologies, with particular focus
Theme 3 on network services provided by electric vehicles and energy storage
New technologies and 3.3 Facilitate the adoption of commercial business models that leverage low
carbon technologies
commercial evolution
3.4 Extract value from continued growth in digital-enabled services, new and
improved sources of data, and artificial intelligence
3.5 Shape and comply with evolving regulations and standards
3.6 Inform the development of, and ensure compliance with, new markets
and structures that allow greater competition in the energy markets
3.7 Facilitate sharing of services and business functions between DNOs,
TOs, and SO
3.8 Leverage cross-sector "smart technology" benefits and lessons
4.1 Improve involvement of customers in the delivery of the innovation work
4.2 Continuously improve customer experience and affordability, and support
the fuel-poor
Theme 4 4.3 Improve the understanding of future employee skill and resource requirements
Customer and 4.4 Improve the understanding of changing customer needs, particularly in regard
to the electrification of heat and transport
stakeholder focus
4.5 Enable customer choice
4.6 Actively seek collaboration with stakeholders and partners
4.7 Maximise the transparency of information and the quality of accessible data
4.8 Facilitate community energy
4.9 Facilitate behavioural change initiatives to promote energy conservation
and sustainability
5.1 Improve the safety and health of the public and workers
5.2 Further improve safety and health and reduce impact on the environment
Theme 5 5.3 Reduce the visual and noise impacts of assets
Safety, health
and environment16 Electricity Network Innovation Strategy
Current Level Network innovation under RIIO – A specific novel operational practice
directly related to the operation of
of Innovation The NIA and NIC funding incentives were
set up by Ofgem to fund new technical,
the GB Transmission System and/or
the GB Distribution System
commercial, or operational projects that – A specific novel commercial
have the potential to deliver a range of arrangement
benefits to us and to our customers.
Innovation projects must have the potential Within the GB energy industry, there
to have a direct impact on our networks are a range of other bodies and funding
or the operations of the SO. They involve platforms that are heavily involved in
research, development, or demonstration energy industry innovation. These bodies
of at least one of the following: are funding, planning, developing and
– A specific piece of new (i.e. unproven rolling out innovation projects, and it
in GB) equipment (including control and is critical that the Electricity Network
communications systems and software) Innovation Strategy consider these and
align strategies as much as possible.
– A specific novel arrangement or
These bodies include Innovate UK8,
application of existing electricity
Energy Systems Catapult9, the Industrial
transmission and/or electricity
Strategy Challenge Fund10, and the
distribution equipment (including
Engineering and Physical Sciences
control and/or communications
Research Council (EPSRC)11.
systems and/or software)
Figure 9:
Number of innovation projects
Innovation theme 0 20 40 60 80 100 120 140
1. Network improvements
2. Transition into a low carbon future
3. New technologies and commercial evolution
4. Customer and stakeholder focus
5. Safety, health and environment
NIA NIC LCNF
Figure 10:
Value of innovation projects
Innovation theme £0M £100M £200M £300M £400M £500M
1. Network improvements
2. Transition into a low carbon future
3. New technologies and commercial evolution
4. Customer and stakeholder focus
5. Safety, health and environment
NIA NIC LCNF
8
ttps://www.gov.uk/government/organisations/
h
innovate-uk
9
https://es.catapult.org.uk/
10
https://www.gov.uk/government/collections/
industrial-strategy-challenge-fund-joint-research-and-
innovation
11
https://www.epsrc.ac.uk/funding/17 Electricity Network Innovation Strategy
Previous innovation projects Looking forward, we expect that
innovation in the Network Improvements
Innovation projects Our analysis focused on innovation theme will continue. Furthermore, there
projects delivered via NIA, NIC and LCNF is still an opportunity to build on the
190 mechanisms because they are the main
source of funding for our innovation
benefits achieved from previous innovation
projects under all of the innovation themes;
Network Innovation projects12. Other funding sources for new innovation opportunities will arise as
Allowance projects innovation exist and we fund some technology evolves and tipping points are
innovation activities from our own budgets. reached that affect our industry.
14 For this strategy, projects have been
grouped per innovation theme based A review funded by HubNet and UKERC13,
Network Innovation on their total number and total value. and written by the University of
Competition projects Strathclyde, shows that the lessons from
Figure 9 shows that the majority of innovation projects are impacting our
67 projects were conducted in the Network
Improvements domain. This reflects the
BAU activities in a positive way, which
is helping to facilitate the Low Carbon
Low Carbon Networks fact that traditionally we have been transition. The rollout of successful
Fund projects essentially asset management businesses. innovation to BAU is key to the success
There is a robust and well-established of the innovation programme, and this
supply chain for this area, which has process is supported by ENA, the activities
been able to bring best practice from of which also includes the creation of
other geographies to the UK. When the new standards. The report shows we
innovation funding started, the focus are making progress, but that there is
was put on developing the technology still some scope for improvement.
to enable innovation in other categories.
This has changed over time as the Figure 10 shows the value of all conducted
understanding of our requirements has innovation projects under NIA, NIC and
improved. Furthermore, the bulk of our LCNF. It must be noted that a positive
income is based on the management cost-benefit analysis (CBA), indicating
of our network, and this area still has the benefits to customers where projects are
potential to yield benefits to our customers. successful and deployed, is a requirement
It will therefore continue to be a focus. for funding to be awarded.
The transition to a low carbon future has
also received significant attention. This
reflects the emphasis that we have placed
on innovation that has helped us adapt to
changing customer needs. Out of all the
categories, the least number of projects
were conducted around the Customer
and Stakeholder focus. Although we have
delivered some interesting projects under
this innovation theme, we see this as an
area that may benefit from a greater focus
in the future.
12
he Innovation Funding Incentive (IFI) was the
T
precursor to NIA, NIC and LCNF initiatives, however
it was discontinued prior to 2010 and therefore was
not included in our analysis.
13
“A Review and Synthesis of the Outcomes from Low
Carbon Networks Fund Projects” Damien Frame,
Keith Bell and Stephen McArthur, 17/08/201618 Electricity Network Innovation Strategy
Figure 11:
Breakdown of NIC, NIA and LCNF projects by theme14
(£M) 0 20 40 60 80 100 120 140
Network improvements No. of
and system operability projects
Network resilience 36
Forecasting & planning 22
Network visibility and control 38
Asset management processes 46
Value and capacity of existing assets 21
Transition into a low carbon future
Low carbon technologies 20
Electric vehicles 23
Electrification of heat 01
Network flexibility 09
Transition to DSO 08
Value from smart meters 02
Whole system planning and forecasting 08
New technologies and
commercial evolution
Cyber security & data protection 03
New technologies 21
Commercial business models 08
Digital services & big data 07
Regulations and standards 03
Customer and stakeholder focus
Customer involvement in innovation 03
Customer experience 07
Customer affordability 03
Skills and resources requirements 05
Understanding customer needs 01
Enable customer choice 03
Collaboration with stakeholders 03
Safety, health and environment
Protecting public and workers 07
Safety & environment 28
Construction and design standards 10
Visual and noise impacts 04
14
ote that many projects fall across several themes.
N
Our analysis considers the main themes only.19 Electricity Network Innovation Strategy
Evaluating innovation priorities to overall safety of the public and staff,
design standards and environmental
Historically, innovation project spending protection show a relatively low
has prioritised Network improvements proportion in the overall volume of
and Transition into a low carbon future projects. Customer and stakeholder
(as shown in Figure 10). Challenges consultation and New technologies and
relating to asset management, improving commercial evolution have been the sole
network resilience, improving forecasting focus of relatively few innovation projects.
and maximising the value of existing
assets have been the subject of several On this basis, and based on the five
NIA and NIC projects. This is because electricity industry trends, we have
we have been able to demonstrate that made the following observations on the
projects that address these challenges innovation project coverage with respect
deliver significant direct benefits to us to the innovation challenge themes.
and to our customers. Projects related
The utilisation of large volumes of data There is an opportunity for more activity
from smart meters has become a in understanding changing customer
prevalent innovation subject; however, needs and improving affordability
this depends on individual approaches for customers.
to LV monitoring and the availability of
smart meter data15.
Enabling customer choice There is an opportunity to increase
has been the sole focus of activity in using new technology to
few innovation projects. develop and optimise commercial
business models.
Cyber security is becoming an The electrification of heat is an
increasingly important issue and under-represented topic in terms of
more focus may be required in future practical activities, however uptake
innovation projects. However, in some in this area is lower than predicted.
cases, Ofgem funding mechanisms are
not suitable for cyber security innovation
projects due to the restricted nature
of the information and learning.
Given global trends, predictions, and the
rapid emergence of electric vehicles,
we expect to see more projects in this area.
he smart meter data available to us is dependent
T
15
upon the deployment roadmap and the granularity
data that can be shared.20 Electricity Network Innovation Strategy Innovation Strategy and Roadmap
21 Electricity Network Innovation Strategy
Innovation For each innovation theme, we have
included a description of the key
We also provided a roadmap to
show when innovation will be required
Strategy and issues, highlighted current innovation
activity, and shown the relative
as a priority for each of the challenge
categories. This section explains
Roadmap potential for innovation projects
in each of the challenge categories.
the methodology behind the
scoring and assessment of the
aforementioned criteria.
Assessment methodology
The current level of innovation was against the challenges in each of the
determined by mapping the innovation themes and subcategories identified.
activity from NIA, NIC and LCNF projects
Current level of innovation
Low Medium High
Emerging innovation Developing innovation Significant innovation
area area to date
Future innovation opportunity is an customers and the stakeholder consultation,
assessment based on industry trends as well as the analysis of innovation
identified, potential benefits for UK priorities in the previous section.
Future innovation opportunity16
• Relevant element • Significant element • Crucial element
to enable industry to enable industry to enable industry
progress progress progress
• Moderate potential • High potential benefits • Major potential benefits
benefits17 from future from future innovation from future innovation
innovation • Highlighted by • Significant focus from
• Supported by stakeholders the stakeholders
stakeholders
The below high-level timeline was includes projects that should be planned
structured such that short term projects for completion by the end of RIIO1 and
are the ones that should be conducted long term means plans for the RIIO2 price
immediately and adequate resources period and beyond.
exist to launch them. Medium term
Timeline
Short Medium Long
Now until 2019 2019-2022 2022 onwards
16
ll categories included in this strategy have
A
a notable future innovation opportunity. This rating
is used to identify the relative importance of each
innovation category.
17
Benefits refer to improvements for the customer
such as customer service, reliability, cost and
environmental impact.22 Electricity Network Innovation Strategy
This theme focuses on how to achieve a reliable, dynamic and
adaptable network to support future electricity demand and
generation requirements, and the resulting volatility in energy flows.
The theme encompasses maximisation of existing capacity by
increased utilisation of the network, network visibility and control.
Theme 1 The goal of innovation in this area is to further develop asset management
strategies to minimise the costs of managing ageing assets and network
Network risk. Significant challenges lie in the activities of the SO and emerging
DSOs. As networks become more highly-utilised and capacity headroom
improvements decreases, it will become increasingly important to share network information
and system between our companies for maintenance and construction purposes.
operability Furthermore, to reduce the time required to connect new assets,
we will need to develop active management of generation output based
on network constraints.
What our stakeholders said
“Optimisation of cross coordination is the most important challenge,
followed by improvements in forecasting.”
“Cross-sector coordination requires effort in the medium term to enable
benefits to be delivered in the long term.”
Innovation potential
Current level of Future innovation Timeline
innovation opportunity Short Med Long
1.1 Improve network resilience to avoid
unplanned power outages (particularly
when moving towards the low High
carbon world)
1.2 Improve demand and generation
forecasting, and network High
planning processes
1.3 Improve network visibility
and controllability Low
1.4 Improve asset management processes Medium
1.5 Maximise the value and capacity
of existing assets Low
1.6 Optimise cross-sector coordination
between DNOs, TOs, and SO, as well
as licensees from other sectors (e.g. Medium
gas) and other countries23 Electricity Network Innovation Strategy
Case study This project explores the use of is spare capacity. The technique could
Transmission Network algorithms to ‘fine tune’ the network improve thermal capacity by 5-10%
by rerouting power flows away from across critical network boundaries.
Topology Optimisation heavily congested circuits to the
rest of the system, where there
National Grid Transmission Operator
Case study The principal objective of Angle-DC interconnecting circuit capacity by
ANGLE-DC is to bring the benefits of HVDC to 24%, minimise wider network losses,
Medium Voltage networks. As an help satisfy network constraints and
active system, a Medium Voltage maximise capacity headroom for
SP Energy Networks DC interconnector will increase the distributed renewable generation.
Examples of planned innovation projects and ideas
• LV connectivity modelling and mapping • LV operational monitoring and control • Manage the consequences
• New reactive power services • System coordination of power electronics of decreasing inertia
• Distribution operability framework • Develop power quality adaptive filtering • Improve fault response performance
• Develop network analogues • Develop adaptive protection and control • Optimise assets specification
• HV power electronics test laboratory • Manage assets throughout and performance
• Primary network power quality analysis their lifecycle • Manage ageing networks
Innovation strategy outcomes
Facilitate change Smarter networks Whole System
• Deliver solutions that maximise • Leverage communications • Expand planning activities to
the use of low carbon generation infrastructure of the future incorporate heat, transport and gas
at optimal overall cost • Develop forecasting methodologies • Provide mechanisms by which
• Implement smart reinforcement for changing behavioural patterns planning can be coordinated
solutions into BAU investment and new technologies between all appropriate parties
appraisal decisions • Develop asset inspection to drive optimisation
• Ensure resilience of the system techniques that reduce • Assess the impact of gas and
under emergency conditions manual workload other energy vectors when
(given LCT uptake) • Develop effective methods for producing forecasts
• Enable real-time visibility of the system restoration and new
LV network techniques for Black Start
• Develop means to manage tighter
capacity margins and develop
market signals for new investment
Now until 2019 2019 to 2022 2022 onwards24 Electricity Network Innovation Strategy
The requirement to connect more low carbon technology (LCT)
and distributed generation will necessitate a more active network
and provision of network access without resorting to ‘overbuilding’
assets. Innovation is aimed at providing essential flexibility as we
prepare our networks for the transition to a decarbonised energy
system. One of the main elements of providing flexibility is the
Theme 2 demonstration of demand side response solutions to assist in
allowing for faster network connections.
Transition LCT will require an active role in the operation of our networks, which can
to a low carbon be achieved by facilitating DNOs to become DSOs. Future DSOs will be
expected to bring access to new information about network performance
future close to real time, allowing whole system optimisation and establishing
an interface between distribution and transmission. This can be achieved
through developing new techniques and utilising enhanced data for more
dynamic network control (which includes the data from smart meters).
The result will provide customers with new services, enable faster response
to outages and establish a more intelligent network. Crucial elements in
supporting future electricity demand and generation requirements will be
to develop whole system planning and forecasting methodologies.
What our stakeholders said
“Enabling flexibility and facilitating the DSO transition are the most important
innovation areas.”
“We must future-enable our systems and markets to unlock the
benefits and to do that we must bring about change in a more flexible and
responsive manner.”
“It must be made clear to the DNOs how easily they will be able to access
the data and at what level of detail.”
Innovation potential
Current level of Future innovation Timeline
innovation opportunity Short Med Long
2.1 Efficiently facilitate the adoption of low
carbon technologies supporting the Medium
electrification of heat and transport
2.2 Enable flexibility in the GB low
carbon transition (e.g. increasing role Medium
of demand side response)
2.3 Facilitate the transition from DNO to
DSO, enabling the provision of new
platforms, market participants and Low
value streams
2.4 Create value from the introduction of
smart meters and work collectively
to deliver the wider public policy and Low
public interest benefits from data
2.5 Develop advanced whole energy system
planning and forecasting methodologies Low25 Electricity Network Innovation Strategy
Case study The National HVDC Centre is an NIC powerful simulators. Our safe and
The National HVDC Centre funded testing facility, supporting all secure modelling environment,
HVDC schemes connecting to Great combined with our experience of
Britain’s grid system. The centre delivering the Caithness-Moray HVDC
Scottish and Southern Electricity simulates and resolves potential issues project, ensures that we can provide
Networks Transmission before they impact the real network, robust solutions and practical training.
using some of the world’s most
Case study We launched a series of projects learning, could reduce our mean
PV Monitoring to investigate whether the acquisition PV forecast error. To date, half-hourly
of new and different types of PV national and regional solar output
monitoring data, as well as applying feeds have reduced error by
National Grid System Operator advanced analytics and machine approximately 100MW.
Examples of planned innovation projects and ideas
• Smart meter data for network • New constraint optimisation • Improve forecasting (generation,
operations techniques supply, demand)
• DSO/TSO shared services • Managing flexibility scarcity • Preparing network for LCTs and EVs
• H2 energy balance • Improve long term demand profiles • Faster, easier, more efficient
• Lower capacity margins • Enhance monitoring and settlement connections
Innovation strategy outcomes
Facilitate change Smarter networks Whole System
• Develop solutions that interact • Maximise benefits from smart • Manage significant penetration
with customers meter data of EVs and electrified heat
• Improve flexibility services to • Effectively utilise all available data
customers with mutual benefit to counter potential threats to
• Coordinate the deployment of EV the system
charging points • Coordinate connected resources
• Introduce technical solutions that to maximise system security and
allow us to quickly release capacity the use of low carbon generation
in our network at optimal overall cost
• Improve forecasting processes and • Improve advanced whole energy
disaggregate DER system planning and forecasting
Now until 2019 2019 to 2022 2022 onwards26 Electricity Network Innovation Strategy
The future electricity network will increasingly employ
commercial arrangements, as customers adopt greater use
of apps and smart technology to interact with us. The variety
of new technologies deployed on the networks will require the
system to be interoperable and adaptive such that new solutions
can be readily integrated. New automation schemes on the LV
Theme 3 network will allow faster restoration of customers using
embedded intelligence.
New technologies
Leveraging new technologies such as electric vehicles, smart appliances,
and commercial electricity storage, market platforms, blockchain platforms, peer-2-peer
evolution transactions, and big data will require new commercial models, including
flexible tariffs, new methods for settlement and market structures. All these
activities will multiply the amount of data flows leading to the need for
increased cyber security.
Finally, innovation will focus on better processes, as well as equipment
and technology that will ensure continued efficiency and performance
in the new realm.
Innovation potential
Current level of Future innovation Timeline
innovation opportunity Short Med Long
3.1 Maximise cyber security and data
protection in respect of privacy and Low
commercial sensitivity
3.2 Improve demand and generation,
maximise benefits provided by new
technologies, with particular focus on Medium
network services provided by electric
vehicles and energy storage
3.3 Facilitate the adoption of commercial
business models that leverage low Low
carbon technologies
3.4 Extract value from continued growth
in digital-enabled services, new and
improved sources of data, and Low
artificial intelligence
3.5 Shape and comply with evolving
regulations and standards Low
3.6 Inform the development of, and ensure
compliance with, new markets and
structures that allow greater competition Medium
in the energy markets
3.7 Facilitate sharing of services and
business functions between DNOs, Medium
TOs, and SO
3.8 Leverage cross-sector smart technology
benefits and lessons Low27 Electricity Network Innovation Strategy
Case study ENTIRE is a four-year project that address the conflicts between
ENTIRE will build on the lessons learned from a DNO and the SO contractual
the commercial trials within Project requirements.
FALCON. The project seeks to
Western Power Distribution
Case study CLASS seeked to demonstrate on their networks. The goal was
Customer Load Active System an innovative, easily implemented to demonstrate that demand for
Services (CLASS) solution to enable DNOs to cost- electricity can be reduced, without
effectively accommodate LCTs and customers noticing a difference to
the changing patterns of demand their supply.
Electricity North West Limited
Examples of planned innovation projects and ideas
• New construction techniques • Emergence of DSOs • Cyber security
• Smart network islanding • Innovation in markets • Modernisation of work practices
• Alternative transformer technologies • Innovation in ICT and business systems
• DC network feasibility • Unlocking the potential of big data
Innovation strategy outcomes
Facilitate change Smarter networks Whole System
• Identify and counter internal and • Provide aligned, financial incentives • Increase use of artificial intelligence
external cyber threats through innovative or flexible tariffs to make decisions on a more
• Use smart technologies to maximise • Enable settlement for all existing dynamic network
capacity within the power system customer profile classes to support • Collaborate with other energy
• Use smart technologies to flexible tariffs sectors to optimise across multiple
accommodate connections • Leverage next generation mobile sites and vectors
• Maximise benefits of network communications
services provided by electric • Identify available other dispatchable
vehicles and storage energy resources, restrictions in
real time
Now until 2019 2019 to 2022 2022 onwards
What our stakeholders said
“Cyber security is the most pressing issue; and we need
significant innovation in the area of maximising the benefits
provided by new technologies.”
“More inflexible, distributed and micro-generative sources, electric vehicles
and localised storage will exert greater pressures on the networks, and also
create more opportunities.”You can also read
