Multi-energy Vector Integration Innovation Opportunities - Preliminary assessment of innovation opportunities for
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Multi-energy Vector Integration
Innovation Opportunities
Preliminary assessment of innovation opportunities for
SMEs
Bilaal Hussain / Adam Thirkill
May 2018
--------------------------------------------------------
This document is marked as confidential
Multi-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Contents
1. Executive summary ...................................................................................................................................... 4
2. Context ............................................................................................................................................................. 6
What is multi-energy vector integration? ............................................................................... 6
Purpose of this report & methodology ................................................................................... 6
3. Insights from the landscape review....................................................................................................... 8
Introduction ........................................................................................................................................ 8
3.1.1. Energy Technologies Institute Multi Vector Study............................................. 8
Observations ...................................................................................................................................... 9
3.2.1. Heating ............................................................................................................................... 9
3.2.2. Grid balancing ................................................................................................................10
3.2.3. Transition from gas ......................................................................................................10
Summary of multi-vector system opportunities .................................................................10
4. Key insights from the SME stakeholder survey ...............................................................................13
Purpose of the survey & methodology..................................................................................13
Key findings of the survey ...........................................................................................................13
Relevant capabilities and market offerings available within UK SMEs (identified by
the SME survey) ..........................................................................................................................................15
SME views on the barriers to multi-vector implementation in the UK ......................17
5. Key challenges and opportunities........................................................................................................18
Challenges and barriers to multi-vector implementation ...............................................18
5.1.1. Case Study 1 – Domestic ‘Multi Vector’ Heat ....................................................18
5.1.2. Case Study 2 – Vehicle to Grid (V2G) ....................................................................20
5.1.3. Case Study 3 – Power to Gas (P2G) .......................................................................23
Opportunities arising ....................................................................................................................25
5.2.1. Case Study 1 – Domestic ‘Multi Vector’ Heat ....................................................25
5.2.2. Case Study 2 – Vehicle to Grid (V2G) ....................................................................27
5.2.3. Case Study 3 – Power to Gas (P2G) .......................................................................29
2
--------------------------------------------------------
This document is marked as confidential
Multi-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Cross-cutting themes of potential relevance to future funded innovation
programmes .................................................................................................................................................30
6. Next steps .....................................................................................................................................................32
7. Appendix A – Landscape Review ..........................................................................................................33
Introduction ......................................................................................................................................33
7.1.1. Previous multi-vector integration work................................................................33
Multi-vector heating systems ....................................................................................................34
Power-to-gas ...................................................................................................................................36
Vehicle-to-grid ................................................................................................................................37
8. Appendix B – Stakeholder Survey Questions...................................................................................41
9. References .....................................................................................................................................................42
3
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
1. Executive summary
Multi-energy vector integration is a term used to describe a move towards increased
interaction between constituent parts of the energy system, (i.e. electricity, heat, transport, etc)
to enable new services and value streams to be realised to help to create a more dynamic and
flexible low carbon energy system. There are various challenges that need to be addressed to
enable multi-vector energy systems and approaches to play a more significant role in the
energy system. The presence of these challenges creates numerous opportunities for SMEs to
exploit their skills, capabilities and assets.
This report provides an initial understanding of where these opportunities are and how SMEs
can be supported to develop their capabilities to enable them to play a more significant role
in the development of multi-vector energy.
To provide the evidence in understanding where the opportunities arising from increased
multi-energy vector integration exist, a methodological approach was adopted as follows;
• A landscape review - This included a short analysis of literature in this area, and
examples of where multi-vector approaches are currently being applied which was
used to determine the level of maturity of pre-existing multi-vector solutions.
• A stakeholder engagement activity – which was used to obtain insight into the
degree of understanding within the UK SME community of multi-energy vector
opportunities, to provide the SME community’s views on the barriers they see to multi-
energy vector implementation, and to gain an understanding of the capabilities within
the UK SME community that could be used to exploit opportunities in this area.
• Analytical work – to identify the key challenges and opportunity areas for UK SMEs
arising from a move to multi-energy vector integration, along with preliminary
thoughts on where future innovation activities might be focussed.
A key finding of this preliminary analysis was that many of the key challenges relating to
enabling increased multi-vector integration are non-technological and are focussed on the
need to create innovative value propositions and business models to increase the pull from
end-users for multi-vector solutions.
A number of cross-cutting innovation themes have emerged across the multi-vector energy
case studies considered in this analysis. These can be characterised as those generic areas
likely to offer value to SMEs in the near term, and those that could form the basis of publicly-
funded innovation programmes to support multi-energy vector progression and the UK SME
community in the future. These cross-cutting themes are:
4
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
• Novel system control approaches - given the complexity of multi-vector energy
systems there is a need for the development of control schemes which can automate
decision-making and improve the system-level technical and commercial performance
of multi-vector systems.
• Software development - a range of software solutions are required to make multi-
vector systems more attractive to market participants both from the operational and
commercial perspectives.
• Aggregation services and associated business models (for vehicle to grid multi-vector
solutions) - there is a need for aggregation services and associated business models to
manage the supply of energy derived from electric vehicle batteries and to incentivise
electric vehicle owners to participate in V2G systems.
5
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
2. Context
What is multi-energy vector integration?
As the UK progresses down the pathway to energy system decarbonisation, it is clear that
novel technologies, system solutions (including ICT), and business models will be required to
deliver this transition. Furthermore, there is increasing recognition that the transition to low
carbon will introduce changes in the nature and scale of flexibility services needed to deliver
a resilient and robust energy system in the future.
Historically, the various sectors within the UK energy system (electricity, gas, transport, etc)
have generally been operated as independent functions, with interactions being limited to
examples such as the provision of gas for power stations, or the provision of liquid fuel to
service the transport sector. To support the low carbon transition there is increasing interest
in enhancing the interaction and integration between the constituent parts of the energy
system such that new services and value streams can be realised across these historic
boundaries. This approach is referred to as multi-energy vector integration, i.e. the provision of
new services or enhancement of existing services using multiple energy carriers (electricity,
heat, gas, hydrogen, etc).
To progress multi-energy vector thinking and its application, there is a balance to be struck
between providing the frameworks needed to provide long-term stability for large-scale
investments, and the need to deliver sufficient value to potential market participants and
innovators in the nearer term to enable them to build and develop successful businesses. Many
of the systems and technologies of potential relevance to realising multi-energy vector
solutions are either not commercialised, or have come up against barriers for increasing
market penetration. There is also of course the challenge of having to displace or co-exist with
more conventional single-energy vector approaches that currently predominate.
Purpose of this report & methodology
The purpose of this report is to provide a preliminary assessment of some of the nearer-term
opportunities for UK SMEs that may materialise from a move towards increasing levels of
multi-vector energy integration within the UK energy system. This is intended to provide
evidence to the SME community to help them assess how best to position themselves for such
a change. In addition, the information in this report is intended to help inform considerations
of how future government innovation investments in this area might be best focussed in the
near term.
It is important to bear in mind that the potential scope for multi-energy vector interactions in
the UK is very broad and covers a multitude of applications and technology areas. This report
6
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
is therefore (inevitably) only a preliminary analysis of the landscape, focussed on three specific
case study areas, and it will be necessary for more detailed investigations beyond this analysis
to establish a full and detailed understanding of the opportunities that may be available for
SMEs arising from a move to increased multi-vector integration.
The analysis in this report is separated into three main sections, aligning with the three phases
of work undertaken in this project:
• A landscape review - to provide examples of types of pre-existing multi-energy
vector systems, technologies and approaches, and to identify examples of research
and innovation already being undertaken. This comprises a short review of current
literature in this area, and the identification of examples where multi-vector
approaches are currently being applied. This information is also used to gauge the
commercialisation/maturity of activities in this area.
• A stakeholder engagement activity - to provide an indication of the degree of
understanding within the UK SME community of multi-energy vector opportunities, to
provide the SME community’s views on the barriers they see to multi-energy vector
implementation, and to gain an understanding of the capabilities with the UK SME
community that could be used to exploit opportunities in this area. This was delivered
through a stakeholder survey that was distributed to around 100 SMEs known to the
Catapult.
• Analytical work – to identify a number of opportunity areas for UK SMEs arising from
a move to multi-energy vector integration, along with preliminary thoughts on where
future innovation activities might be focussed. This analysed the findings from the first
two activities (above) within the context of three different multi-vector case studies.
7
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
3. Insights from the landscape review
Introduction
A survey of existing academic and industry literature was performed to characterise existing
or under-development multi-energy vector systems and technologies, the level of maturity of
these systems, and where possible the identification of any market barriers that currently exist.
Technical maturity ranges from early development through to full commercialisation and is
loosely guided by estimates of technology readiness levels, although it should be borne in
mind that maturity does not necessarily give an indication of technical performance.
This section provides a summary of the key findings and observations from the landscape
review. More details can be found in Appendix A.
3.1.1. Energy Technologies Institute Multi Vector Study
A key input to the literature survey was an ETI-commissioned study led by Element Energy
(published in 2017)1 which focussed on the potential financial value of different multi-vector
system configurations. Seven case study systems were modelled and evaluated in terms of
their economic value compared to an equivalent single vector solution. An assessment of the
carbon emissions impacts of these options was also performed.
The study identified that the heat sector (domestic, commercial, DH networks) provided
significant potential for multi-energy vector integration, due to:
▪ the large variation in diurnal and seasonal demand for heat requiring significant
investment in the reinforcement of the grid;
▪ the suitability of different energy vectors to provide heat;
▪ the ability to use decarbonised gas thus prolonging the usefulness of the existing gas
grid past 2050
▪ and the ability to store heat in hot water tanks (which is already widespread).
An additional area of interest for multi-vector systems was power-to-gas, with electrolysis
demonstrating some value in reducing system cost compared with the curtailment of
renewable generation which would occur without power-to-gas options. Electrolysers were
also identified as being flexible and responsive solutions but they are currently limited by their
relatively high capital cost.
1
“Multi Vector Integration Study – D6.1 Summary Report”, 10 September 2017, available from the ETI
website (www.eti.co.uk)
8
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
A third potentially-favourable scenario identified in the study related to transport, in particular
maximising the value of electric vehicle batteries in vehicle-to-grid (V2G) systems by providing
services to the electricity grid.
To bound the analysis within this project, the three areas highlighted above have been the
main focus of the subsequent analysis presented in this report.
Observations
Analysis of pre-existing literature and an examination of a number of current multi-energy
vector projects, has enabled an overview of the current multi-vector landscape to be
developed. The details of the review are presented in Appendix A. Some observations from
this work are:
3.2.1. Heating
The need to decarbonise heat is recognised in the Clean Growth Strategy (BEIS, 2017), however
85% of homes are supplied with natural gas to satisfy heating demand. Multi-energy vector
heating solutions typically involve a combination of gas and electricity to satisfy heating
demand in homes and therefore can help to decarbonise the sector by reducing the amount
of gas consumed to provide heat. Furthermore, appropriately designed and installed heat
pump based systems can deliver more thermal energy to an end user than electricity they
consume.
Additionally, CHP based systems are able to provide both heat and power and can therefore
deliver energy efficiency improvements and carbon savings, especially if they use low-carbon
fuel sources. Whilst electrifying the heat sector may contribute adversely to the peak electricity
demand, it is possible that CHP systems can help alleviate this potential grid stress at peak
times. The same argument applies to electric vehicle charging.
Many of the component technologies that can be integrated to form multi-energy vector
heating options are either available already and are widely deployed (e.g. gas boilers, heat
pumps, etc), or are in varying stages of development. However, there has been very limited
take up in the UK of multi-vector heating systems primarily because of the strength of the
incumbent technology that dominates the heating landscape in the UK (gas boilers), and the
lack of any real incentive to move away from this. In the context of the UK’s low carbon energy
transition however, a move away from the reliance on gas boilers for domestic heating will be
needed to support the delivery of the UK’s energy targets. Multi-vector heating options are
well placed to capitalise on this opportunity.
9
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
3.2.2. Grid balancing
Grid balancing services, including reducing the amount of curtailed renewable electricity, can
be achieved by multi-vector power-to-gas and vehicle-to-grid systems.
Electric vehicles (amongst other storage solutions) could be used to store surplus renewable
energy thus reducing the need for curtailment of renewable energy sources in these
conditions. The quick response time of the electric vehicle batteries, if suitably managed and
co-ordinated, provides an opportunity for load balancing and supplying low carbon electricity
in times of low renewable generation. It has been suggested that this could reduce the need
for back-up thermal generation such as that provided by CCGTs. However, a lack of electric
vehicle charging infrastructure in many UK cities has limited electric vehicle adoption to date,
although major initiatives are in place to significantly increase the charging infrastructure in
the UK in the coming years.
The provision of frequency and other services to the power system may improve the business
case for power-to-gas systems, despite these currently being a small share of the potential
revenue. There is a wide technical evidence base that demonstrates how electrolysis can
facilitate the long-term storage of electricity in the form of hydrogen, thereby enabling the
provision of grid balancing services.
3.2.3. Transition from gas
There will always be challenges transitioning away from gas for heating due to the widespread
connection of UK homes to the gas grid, the familiarity of end users with these heating
systems, the relatively low cost and high efficiency of gas boilers, and the availability of natural
gas as a resource. This is likely to be a significant barrier to the evolution and development of
a multi-vector heating market. Therefore, developing new value propositions, business
models, and supply chains to encourage the adoption of multi-vector solutions is seen as
being critically important. Targeting deployment in off-gas-grid applications and new-build
homes may help progress this.
Summary of multi-vector system opportunities
The review of the multi-energy vector landscape has revealed insights into the maturity, scale
and issues associated with example multi-vector system and technology solutions in heating,
vehicle-to-grid and power-to-gas applications. These are summarised in Table 1.
Technology and system maturity ranges from those in early stage development to those that
are already fully commercialised. Key issues identified in the literature that limit the
performance or the market for these multi-vector systems are also summarised and have been
used to inform later thinking as to where opportunities might lie in the multi-vector landscape.
10
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Table 1: Level of maturity of multi-vector systems
System Maturity Scale Sector Issues
Gas boiler/Air source heat Available (individual Approx. 95,000 ASHPs and Heating Technical/performance issues
pump (ASHP) or Ground technologies) 10,000 GSHPs operational in related to building and
source heat pump (GSHP) UK in 2013 (Hannon, 2015) installation quality;
Low thermal efficiency of
existing buildings;
Incumbent gas network makes
transition from gas hard
Gas boiler/solar thermal Available 100,000 solar thermal systems Heating Highly variable heat output of
in 2013 (Greening & solar thermal systems;
Azapagic, 2014) Reliant on gas network, which
would need decarbonising
ASHP/Quantum Boiler Early stage demonstration 1 demonstration system at Heating Incumbent gas network
BRE supplying 85% of homes –
difficult transition
Combined CHP/solar PV Concept Combined heating and power
systems (CHP-PV)
Power-to-H2 Late demonstration/early A number of demonstration Long term storage of surplus Capacity factors of electrolysers
commercial in EU. plants in EU and UK renewable electricity / grid limited by the amount of surplus
Early commercial large- (HyDeploy, InTEGReL) balancing / decarbonisation renewable electricity
scale plant Japan. of gas grid
H2 grid injection Early demonstration L-M Hydrogen Cluster project Decarbonisation of gas grid
CCS
11
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Flexible H2/power Early demonstration Orkney-Kirkwall, tidal energy Storage of renewable H2 for
generation electricity generation
Fuel Cell-CHP Available – Japan 60,000 units – Japan (2013); Combined heating and power High capital costs;
Late demonstration / early ~1000 units Europe (2017); Lack of policy and regulation in
commercial – Europe & ~1000 units – Korea (2013) UK and Europe
Korea
Vehicle-to-grid (V2G) Early demonstration Four Cenex projects and Transport / grid balancing EV policies do not appear to
Nissan projects in the UK and increase the penetration of EVs
Europe (Heidrich et al., 2017);
Lack of investment in EV
infrastructure in many UK cities
(Heidrich et al., 2017)
Vehicle-to-home (V2H) Available >7000 installations in Japan Used extensively after the
Jumpsmart Maui, Hawaii Tōhoku earthquake and
tsunami to provide power to
homes
Energy storage Ranges from available / 40 different energy storage A variety of grid services Market and regulatory barriers
significantly deployed to projects in the UK limiting market participation
early stage demonstration
12
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
4. Key insights from the SME stakeholder survey
Purpose of the survey & methodology
To be able to identify potential opportunities for SMEs arising from increased multi-energy
vector integration, it is important to understand the capabilities and interests of the UK’s SME
community. This was achieved through a stakeholder survey that was distributed to around
100 SMEs known to the Catapult. These SMEs either already have direct interests in multi-
energy vector applications, or that have capabilities that could potentially be applied to multi-
energy vector applications.
This survey had the purpose of:
• Providing an indication of the degree of understanding within the UK SME community
of multi-energy vector opportunities
• Provide an understanding of SME thinking in the multi-energy vector domain
• Gaining an understanding of the capabilities with the UK SME community that could
be used to exploit opportunities in this area.
• Providing the SMEs community’s views on the barriers they currently see to multi-
energy vector implementation
The survey questions are presented in Appendix B, and the key findings are presented in
section 4.2 below.
Key findings of the survey
The key findings from the stakeholder survey can be summarised as follows;
• There is clear evidence within some SMEs of an appreciation of the opportunities that
multi-energy vector integration might afford - in some cases this is an integral part of
the organisation’s thinking. But there is a dramatic difference between those SMEs “in-
the-know” and those that have had no exposure to multi-energy vector opportunities.
There was a strong call for more information to be shared about what multi-vector is
and what it means for SMEs.
• Most SME activity of relevance to multi-energy vector applications is focussed on the
development of solutions for the electricity sector that may have additional value in
non-electricity parts of the energy system. In other words, their prime interest is the
electricity sector, the details of this are illustrated in Figure 1. There is limited evidence
of bespoke solution development addressing the multi-vector space.
13
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Figure 1: SME activity / sectors of interest identified by the SME survey
• There is considerable interest and development activity in control, aggregation, and
the provision of “services” as opposed to the development of specific technology
hardware.
• A range of capabilities already exists in the UK SME community (see section 4.3), but
this is (inevitably) dispersed among many organisations and there is little evidence of
interaction between these organisations. There must be significant opportunities for
increased collaboration, partnering and knowledge-sharing to improve market
offerings and maximise commercial value.
• Figure 2 presents a summary of the types of barriers identified by SMEs to increased
multi-energy vector integration in the UK. Further detail is provided in section 4.4.
Around 75% of all barriers that in their view were prohibiting the progression of
increased multi-energy vector integration, can be categorised as “non-technical” and
therefore not related to the development of new technology and systems; a conclusion
that can be drawn from this is that in the eyes of SMEs many of the core “hardware”
needed to deliver multi-energy vector integration already exist, and the real
opportunities actually lie in areas like applications engineering, system integration and
the provision of operational/market “services”.
14
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Figure 2: Barriers to Multi-Vector Integration Identified by the SME survey
Relevant capabilities and market offerings available
within UK SMEs (identified by the SME survey)
Although the survey was inevitably limited in its scope, it did provide helpful insight into the
types of capabilities that already exists within UK SMEs operating in areas of relevance to multi-
energy vector integration.
Overall there is a very broad range of relevant skills and market offerings already available
among UK SMEs, although many of these are currently not being targeted at multi-energy
vector applications. Examples of these are summarised generically below, and for simplicity
they have been categorised under the headings of capabilities, products or services.
Capabilities
• Energy sector knowledge
• Software development & data management
• Asset management
• Cyber security
• Industrial process integration
• Big data
• System design & integration
• Technology innovation
15
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
It should be noted that not all of these capabilities are energy sector specific, however all of
them have potential relevance to the development and progression of multi-energy vector
integration. Furthermore, many of the SMEs offering these capabilities are not yet operating
in the multi-energy vector space, and hence there is significant potential for them to deploy
these skills and assets into new opportunity areas.
Products
• Heat pumps & hybrid heat pumps
• Sensors, controls
• Peer-to-peer trading platforms
• DSR technologies
• Micro-grids
• End user interfaces
• Cloud-based systems for multiple asset control
• Energy storage systems
• PV, solar thermal
• Electric vehicle connections and charging regimes
Available products include many technologies and systems that can be used within or are
necessary for the development of multi-energy vector systems. They include but are not
limited to technologies that produce, store or transfer energy, and very importantly they also
include a range of enabling technologies such as sensors and controllers. In many cases these
products have been developed or are being primarily deployed in a specific (single energy
vector) application, however there are clear opportunities for these products to be exploited
within multi-vector applications.
Services
• Commercial optimisation of asset operation
• Monitoring & controls
• System design & integration
• “Energy as a service” business models
• Frequency response services (aggregation, etc)
• System balancing services
• Intelligent management of multiple connected devices
• Virtual power plants (management, etc)
Again, many of these services have been developed or are currently being targeted at specific
(single vector) applications, but all are potentially relevant or are enablers for multi-energy
vector systems.
16
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
SME views on the barriers to multi-vector implementation
in the UK
A range of barriers to multi vector implementation were identified by the SME survey. These
barriers can be grouped into 6 broad categories as follows:
Category Barriers
There is currently little customer pull to change
Value of carbon is not currently realised in financial investments
Business model / Value
There are difficulties in communicating payback to clients
proposition
There is greater caution among investors in higher risk projects
There are high capital costs and value propositions are not
always clear
Need to change “old habits” in the industry
There is a requirement for greater sharing of ‘good practices’
Cultural Siloed thinking at all levels in the system
Unrealistic expectations on end users to optimise their energy
usage
Multi-vector = complexity & multiple challenges
Conflicting drivers and values (probably due to “single vector
Complexity thinking”)
Too much time and effort needed for adaptation
Need more information (from authoritative independent actors
with industry knowledge) to inform the debate
Lack of awareness Lack of consumer/end-user knowledge
Still unclear what “multi-vector” really means
Need more opportunities to hear about work in this area
Technology / innovation Lack of access to innovation funding
funding DNOs not funding / investing in community schemes
There is currently too much regulation which is preventing
innovation
Subsidies promote some technologies over others
Energy trading scheme needs to be developed
Policy / regulation
Lack of a common framework and long-term signals for
innovators
Lack of clarity on the value of flexibility in the energy system
Low policy stability
17
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
5. Key challenges and opportunities
Challenges and barriers to multi-vector implementation
The stakeholder survey along with the landscape review identified a range of challenges and
issues that introduce barriers to greater multi-energy vector implementation. To help
understand the drivers behind these challenges, which can then in turn be used to derive a
series of opportunities for the UK SME community, it was necessary to focus the next phase of
analysis on a manageable number of case studies. The following three very different case
studies were selected on the basis of their relevance to the multi-energy vector debate, the
breadth they provide to the analysis, and having been identified in the landscape review:
• Domestic multi-vector heat
• Vehicle-to-grid
• Power-to-gas
For each case study the challenges identified in the survey have been used to explore and test
the arising opportunities potentially available to SMEs through a series of workshops. This
analysis has focussed on the challenges that the SME community could reasonably be
expected to address, so for example, issues relating to the policy environment were viewed as
the domain of Government rather than SMEs and were therefore excluded.
To appreciate where the opportunities exist it is necessary to deconstruct the challenges and
understand the root causes of the issues raised in the survey for the three case study areas.
The results of this process, delivered through a series of workshops and subsequent analysis,
are presented in Tables 2-4. The tables present a deconstruction of the identified issues at
different levels, with the high-level issues raised from the survey being referred to as “Level 1”
Challenges. Each increasing challenge level within the tables provides greater granularity on
the drivers behind the particular issues that have been identified. This information can then be
used to assess and identify the key areas of opportunity for SMEs, as described in section 5.2.
5.1.1. Case Study 1 – Domestic ‘Multi Vector’ Heat
An example of a domestic ‘multi-vector’ heating system would be the use of heat pumps,
coupled with gas boilers used at times when there are peaks in heat demand. While these
individual technologies are commercially available and widely deployed, there is little evidence
of deployment of these systems in combination and therefore there remain challenges (and
potential market failures) that need to be addressed as shown in Table 2.
18
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Table 2: Case Study 1 - Domestic 'Multi Vector' Heat
Challenge Challenge Challenge Challenge
Level 1 Level 2 Level 3 Level 4
Lack of desire/time &
skills to manage
Multi-vector Lack of trust in
heating systems are equipment
too complex for Thermal lag means
consumers to consumers can’t relate
understand & inputs to output
operate response
A complex control
strategy is needed
High upfront costs of Reduce installation
changing heating costs and equipment
systems CAPEX
Lack of awareness of
Lack of customer alternative multi-vector
pull & lack of options
incentive to change. Insufficient carbon price
Lack of business
signals to drive multi-
models and value
vector solutions
propositions
Lack of clarity of
Standards
Not ‘counting’ non-
monetary benefits (e.g.
comfort, etc)
Perceived value not
‘Client payback’
realised quickly (payback
too long)
Assumes customers only How can better heating
value cost/lower price services be valued?
Uncertain revenue Lack of sight of future
mechanisms market mechanisms
Lack of investor ‘risk Unknown plan for future
Uncertain future market
appetite’ heat decarbonisation
Lack of clarity of
Standards
Insufficient support
Perception that there is
for higher TRL
an over reliance on TRLs
solutions to de-risk
to determine funding
innovation
levels
Access to innovation investment.
funding Funding flowing
through
‘DNO/CDO’ (Tier 1
supply chain) rather
19
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
than solution
developers
The support needed
for increasing unit
Scale-Up
production is different
(Different needs to
to that needed for
demo)
technology
demonstration
Not all conditions for
Identifying funding streams
success can
that straddle multi-vector
be addressed by 1
opportunities
Benefits cases too proposal
restrictive Benefits cases don’t
take account of the
benefits of multi-
vector solutions
Single vector
orientated funding
mechanisms
5.1.2. Case Study 2 – Vehicle to Grid (V2G)
Vehicle to grid systems can potentially be used to provide a range of services to the electricity
grid, including stabilisation, voltage control, etc. Given that only a small proportion of the UK
vehicle fleet is currently electric vehicles, and that many vehicles are likely to be needed to
deliver the required levels of service, using these vehicles to provide grid services is still very
much in the early stages of development and testing. However due to the expected rise in
electric vehicle ownership there are likely to be significant opportunities for SMEs within
vehicle to grid applications as they develop. Table 3 shows a range of the issues that need to
be addressed.
Table 3: Case Study 2 - Vehicle to Grid
Challenge Challenge Challenge Challenge
Level 1 Level 2 Level 3 Level 4
Making V2G solutions
attractive propositions for
consumers
Increasing V2G awareness
Lack of business within consumers
Consumer perception
models and value Ensuring users are not
propositions worse off by engaging in
V2G
Negative perception of the
impact of V2G on battery life
20
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Reluctance to connect due
to (for example) a loss of
range if battery used for
V2G before vehicle use
Developing suitable
contract arrangements
reflecting acceptable share
of financial risk across value
chain
How best to capture driver
preferences
Services not available when
How services are valued
needed (e.g. vehicles not
and controlled
connected when required) –
how to incentivise vehicle
connection for V2G
Roles and responsibilities
for control
How is the service billed,
who is buying the service,
etc
Additional equipment
Control/charging
needed for V2G
Reduce cost of providing
V2G equipment
Cost of service provisions
Impact on vehicle
performance, degradation
of batteries, etc, and how
are these costed?
Identifying the services that
could be provided and
establishing their value
Developing appropriate
business models for
aggregation
Reducing the complexity of
control/charging
Aggregation
Meeting drivers’ needs (e.g.
(Virtual car parks)
minimising
charge/discharge
disruption)
Returns for
businesses and
Assessing the value of
consumers involved
aggregation
Cheap charging
methods
21
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Recruitment of a critical
mass of vehicles to enable
aggregation to work
Making the value of in V2G
sufficient to attract
Willingness of participants
participants to connect Delivering charging at the
and permit use in V2G lowest cost
mode when battery is full Minimising the risk of users
only connecting when they
need to charge
Encouraging participants to
connect when battery is fully
charged
Bespoke business models
required (e.g. Taxi fleets,
Corporate fleets, etc)
Management and
Fleet business models Control
scheduling of fleets
Aligning fleet business
models with V2G business
models
Definition and agreement of
which participants have
access to what information
Location of service (e.g.
tracking where vehicles are,
where charge/V2G points
Status monitoring are, etc)
Identifying the state of
charge of participating
vehicles
Assessing how much battery
capacity is available (vehicle
level, fleet level, etc)
Complexity Financial risk management
Identifying and agreeing
who pays for the connection
infrastructure
Who pays for this
Delivering the interface with
Making interfaces
Connection the grid
“Grid Friendly”
infrastructure
Where to locate the
charging/V2G points
How much capacity is
needed in the charging
points and electricity
infrastructure?
22
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Enabling two-way power
flow
Protection arrangements for
Physical protection the charge/V2G points
EV disconnection in
response to grid
disturbances
Management & scheduling
Volume of participants
of many participants
Service guarantees
uncertain
Clarity needed on the value
split across the supply chain
How to remunerate many
Value chain
actors/large number of
participants
Fragmented value
chain/many parties
providing services
Brokering services needed Raise awareness
Identification and
SMEs unaware of multi- communication of new
Lack of
vector opportunities for market opportunities
Awareness of
their needed
V2G
services/technology Market visibility very limited
opportunities
and long-term prospects
unclear
5.1.3. Case Study 3 – Power to Gas (P2G)
Power to gas (P2G) relates to when electricity is used to produce a gas (typically hydrogen),
which can then be sold or utilised within different parts of the energy system. The carbon
intensity of the hydrogen product will decrease as the carbon intensity of the grid or the source
power plant decreases.
Table 4: Case Study 3 - Power to Gas
Challenge Challenge Challenge Challenge
Level 1 Level 2 Level 3 Level 4
Needs of small
users vs large
users of H2 need
Lack of customer pull
Lack of business defining
and lack of incentive Scalability
models and value Is enough excess
to change
propositions power available to
make the
economics work?
23
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Is enough H2 likely
to be produced to
make the
economics work?
Renewable energy
curtailment not seen as a
sufficiently significant issue
Users of H2
currently niche
Uncertain future
Demand for product (e.g.
demand (role of
hydrogen) unclear
hydrogen in the
future remains
uncertain)
Upfront costs Cost reduction
Insufficient carbon price
signals to drive P2G
Long-term role of DSR
unclear
Where is the value likely to
be geographically located?
Uncertainty whether enough
curtailed electricity available
Value proposition not
to make P2G viable
clear
Comparison with
alternative means
of producing
Need to be able to assign a
hydrogen (e.g.
value to the H2 derived from
SMR, CCS, etc)
electrolysis
Comparison with
other energy
storage options
Safety of hydrogen as a fuel
User perceptions
(research ongoing)
Uncertainty about amount of
low cost/curtailed electricity
available for P2G
applications
ROI (future market remains
uncertain)
Lack of investor risk
Limited capacity factor of
appetite
electrolyser could diminish
financial returns
Uncertainty about the value
and role of H2 in the UK
energy system in the long
term
24
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Lack of clarity on hydrogen
transportation futures (e.g.
the amount and cost of
pipelines, etc)
Uncertainty regarding H2
Infrastructure rollout rates
H2 Storage requirements
and options
Fraction of H2 permitted in
gas grid (what is it likely to
be in the future?)
Validation of how much is
Complexity
available, how is it
“measured” and allocated to
Curtailed electricity
P2G, etc
Control and management
issues
Ensuring that P2G
Life Cycle Analysis
applications deliver genuine
(LCA)
carbon benefits
Where are the optimal siting
Siting of electrolyser locations, how are they
characterised, etc
Opportunities arising
Using the analysis presented in the tables above it has been possible to identify the types of
near-term opportunities that could arise for SMEs as a result of a transition to increased levels
of multi-vector integration. Many of the opportunities presented in the section that follows
are likely to address a range of issues identified in the three case studies.
5.2.1. Case Study 1 – Domestic ‘Multi Vector’ Heat
Within the domestic multi vector heat space two generic nearer-term areas have been
identified in which SMEs could play a significant role: (1) Development of technology solutions
to minimise the complexity of multi-vector heating systems; and (2) Offering heating solution
audit and installation services to dwelling owners.
In relation to the minimisation of system complexity, given that multi vector heating systems
are likely to involve multiple technologies (e.g. heat pumps with peaking boilers), robust and
flexible control strategies will be important to ensure that system can work to deliver the
service that is needed. The potential opportunities for SMEs to target in this area include;
25
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Control Systems
The development of smart control systems that maximise overall system efficiency and system
performance, and that can ensure that the different heating technologies can work in a
complementary manner. Such a system should be able to make decisions on the optimal
method of operating the technologies given the user requirements for water and space
heating, e.g. local environmental conditions, financial considerations, etc. It should also be able
to take information on electricity and gas prices and optimise the system on a cost basis.
Software Development
One of the challenges raised in section 5.1.1. is how the complexity of a multi vector system
(when compared to equivalent single vector solutions) might impact on the ease of use by the
user, and might simply be perceived to be too complicated for a user to install and operate.
Therefore, there is a need for software solutions that enable a user to specify their demands
for space heat, hot water, comfort, etc, in a simple manner and which then delivers the required
services automatically without the need for further user intervention via an intelligent
software-based system. An example of this might include an app based system with an easy
to use user interface.
Measurement Devices
For any “intelligent” multi-vector heating system there will be a need for equipment that can
measure the physical conditions of the local environment, technologies, etc, on a real-time
basis to inform heating system decisions. This offers opportunities in the development of
measurement technologies and methods which can be integrated with multi vector heating
systems.
The second broad opportunity area arising from multi-vector domestic heating relates to the
provision of heating solution audit and installation services to dwelling owners. Examples of
these opportunities include:
Housing and Technology Matching
A range of technology solutions are likely to be available, and these need to be matched with
the particular requirements of the dwelling under consideration. This creates opportunities for
audit/assessment processes for each house or each house type, that can then be used to
identify the optimal multi-vector solution(s). This may include the development of models that
can take in inputs from a housing assessment and use this information to develop optimised
multi-vector heating solutions for the dwelling, incorporating assessments of the technologies
that should be used and how they should be operated.
26
--------------------------------------------------------
This document is marked as confidentialMulti-energy vector integration innovation opportunities project: Preliminary assessment of
innovation opportunities for SMEs
© 2018 Energy Systems Catapult
Installation Services
Deploying multi-vector heating solutions will require technical expertise in installing a wide
range of technologies in a wide range of housing types. This lends itself to a series of local
installation and servicing models that are well suited to locally-based SMEs.
Development of Innovative Financial Frameworks
It is clear that tackling the challenge of the (potentially) significant up-front costs associated
with multi-vector heating solutions will be key to moving these solutions towards commercial
reality. The development of innovative financial frameworks, leading to new business model
offerings, is an area that SMEs may be able to position themselves within. An example of such
an offering might be low-cost but long-term financial arrangements that are easily transferred
from one home owner to another when houses are bought and sold (akin to providing heat
as a service rather than delivering a bespoke technology solution).
5.2.2. Case Study 2 – Vehicle to Grid (V2G)
As described earlier, a vehicle-to-grid system is a potentially novel multi-energy vector
approach to providing services to the electricity grid. There are however challenges that need
to be addressed to enable a vehicle-to-grid system to be able to operate, and these in turn
provide innovation opportunities for SMEs.
There are several areas of opportunity for SMEs that have been identified in this initial analysis
within vehicle-to-grid development. Much of this opportunity is associated with the provision
of aggregation and other control-related services to manage the energy supply to/from
vehicle batteries and to use this to deliver services to customers (e.g. DNOs, energy companies)
when required.
The first broad theme of interest comes under the umbrella of system control. This can address
many of the challenges that have been raised in section 5.1.2:
EV Usage Control Systems
To help manage the sometimes-negative perceptions consumers have in relation to electric
vehicle battery operational life, performance and degradation, there is an opportunity in the
development of systems that give the electric vehicle owner a level of control over how their
battery is used when connected to a charging point as a generator (either as an individual unit
or through aggregation). Such a system would allow the user to define the parameters under
which the battery is used and operated. This may include the vehicle owner specifying a
minimum charge the battery must always have, or over what time periods the car may be
utilised by the grid.
27
--------------------------------------------------------
This document is marked as confidentialYou can also read
