Smarter Network Storage

ukpowernetworks.co.uk

Maximising the whole system value of grid-scale storage

Between now and 2050 we will see significant changes in the way our electricity is generated and distributed.

Currently, our electricity is largely generated from high carbon dioxide-emitting fossil fuels which contribute to global warming. By 2050 the UK has been targeted to cut carbon dioxide emissions by 80% from 1990 levels to support a ‘greener’ electricity system (as per the Government’s Carbon Plan) in order to reduce the effects of climate change. For Distribution Network Operators (DNOs), like UK Power Networks, to support this, we must find ways to allow our electricity network to operate more flexibly, to allow us to accommodate more low-carbon and intermittent production of electricity (such as generation by wind and solar panels etc), while ensuring that customers still receive a low-cost distribution service.

This results in some significant challenges for Distribution Network Operators and this is where Smarter Network Storage (SNS) fits in. Energy storage is a source of flexibility and is a key smart intervention likely to feature in the future smart grid. Other countries, like the USA, are already taking advantage of using storage on their electricity networks. Challenges in accessing the full value of electricity storage, by utilising the full potential on both distribution networks and across a number of other utility industry applications, as well as a lack of scale demonstrations, are currently hampering the efficient and economic uptake of storage by the electricity sector in the UK. Smarter Network Storage aims to address this challenge!

Background

By 2050 the UK has been targeted to cut carbon dioxide emissions by 80% from 1990 levels

What is Smarter Network Storage

The project is providing the industry with a greater understanding and a detailed assessment of the economic business case for energy storage, helping to encourage adoption and accommodating the connection of increasing levels of intermittent, less predictable low-carbon generation on our network.

The Smarter Network Storage project is carrying out a range of technical and commercial trials to tackle the challenges caused by more intermittent production of electricity and changes in demand patterns. It aims to allow the more efficient and economic adoption of electricity storage. Through demonstrating the multi-purpose application of the installed 6MW/10MWh energy storage device at Leighton Buzzard primary substation, the project is exploring the capabilities and value in alternative revenue streams for storage, while deferring traditional network reinforcement at the site.

TrialsThe SNS project is exploring the capabilities and suitability of the chosen storage technology (advanced lithium-ion battery) for a number of system applications, identifying the requirements, potential value and benefits to the whole electricity system.

The initial set of system applications/services, trialled in conjunction with the project partners, have been categorised into the following core areas, each is being trialled individually.

The storage system can offer various valuable services to the DNO, primarily in ensuring sufficient capacity to maintain good network security. The testing phase of the project encompasses the following:

• Peak shaving by active power control – electricity can be drawn from the energy storage system to shave peak load demand at the substation level (covering thousands of homes and businesses) and keep electrical equipment within the rating limits.

1 DNO Service demonstration and validation trial

The storage system can provide benefits to other parts of the electricity system. It can support the balancing and stability of the wider national grid while aiding the financial viability of electrical energy storage for DNOs. The following ancillary services are being trialled:

• Response system balancing services – by responding to changes to the frequency on the National Grid transmission system. System frequency is a continuously changing variable that is determined and controlled by the real time balance between demand and generation. If demand is greater than generation, frequency falls and more

Ancillary Service demonstration trial2

Battery racks as they will appear inside the Smarter Network Storage facility

DNO Service demonstration and validation trial

Ancillary Service demonstration trial

• Power factor support by reactive power control – high levels of reactive power can lead to increased losses on the network. Storage can help to compensate for high reactive power by absorbing excess reactive power through the Power Conversion System (PCS) thereby improving the power factor (ratio of real power flowing to the load, to the apparent power in the circuit) and reduce distribution system losses.

• Voltage support by both active and reactive power control - active and reactive power can be provided by the energy storage system to help stabilise changes in voltage due to high demand or a high level of small scale generation in the area. This will be by either deploying energy onto the network or charging the battery from the network.

generation may be needed. As an alternative to increasing generation, the battery can provide support by dispelling its energy on to the network. If generation is greater than demand then frequency increases and the battery can provide support by charging from the network and using spare capacity. The management of frequency is a requirement under the Electricity Supply Regulations.

• Reserve system balancing services - a service for the provision of power from generation and/or demand reduction, to be made available when National

Grid need to access sources of additional supply to deal with unforeseen demand increases or generation unavailability. The storage device is able to release this energy, effectively having the same impact as additional electricity generation. Alternatively, when there is low demand or excess supply, it is able to absorb this by switching to charge mode.

• Wholesale market services – this allows us to sell excess electricity on the wholesale market to suppliers on either a consistent or ad hoc basis.

There is an increasing need for DNOs to actively manage networks and to work with new industry partners who are able to influence demand and generation across their networks. This will require new business processes and contractual arrangements to allow operators to transition to more of a Distribution System Operator (DSO) role. New technology platforms and interfaces are required to manage flexible assets such as storage and their interactions across the wider system.

The Smarter Network Storage project is developing and trialling a new Smart Optimisation and Control System (SOCS), in collaboration with project partner AMT-SYBEX. SOCS is the interface between the control system within the energy storage device, UK Power Networks’ control room and the other electricity system participants, such as, National Grid and their ancillary services market. Interfaces with other relevant industry parties are being designed and developed to provide for future services that may be required to allow storage and other forms of flexibility to be made visible and controllable by multiple system participants. Project partners SmartestEnergy and KiwiPower, for example, are facilitating our participation in ancillary service demonstration trials and our interaction with the wholesale market.

Smart Optimisation and Control System

The core functional elements of the SOCS include:

Forecasting and Capacity Engine will estimate whether the storage capacity is likely to be required by the DNO based on historical demand profiles and forecasts of demand-drivers such as temperature and season.

Optimisation Algorithm will make an assessment of the optimal service(s) that the storage should be used for in order to maximise the desired outcome, such as economic return, carbon benefit or battery lifespan.

Commercial agreements are being developed and implemented for the SNS trial demonstrations. These will initially be based on existing commercial frameworks to support the trials but a range of market products and services will be designed and will generate key learning around the future value of energy storage. These products and services will develop in such a way as to not distort existing competition.

The project is also designing and developing new commercial strategies and arrangements that will enable and enhance the flexibility of storage. These will be demonstrated using the full capabilities of the Smart Optimisation and Control System (SOCS). Synergies across a range of applications are being identified and trialled simultaneously, while capturing the value to the system in a more optimised approach, ie utilising the storage system for a number of the trials to find an optimal level of participation in each. These flexible commercial arrangements and demonstrations will further add to the key learning outcomes that will help inform the future design of market products and services that make best use of storage, including services that may be procured from third-party energy storage operators by DSOs and TSOs in the future.

Commercial agreements

The project is also researching how best to identify the type(s) of business model structures that are most likely to be viable for grid-scale storage installed across British distribution networks. The possible models initially identified are as follows:

Business ModelsIn

crea

sing

com

mer

cial

risk

for D

NO

• The DNO sets the Distribution Use of System charges (DUoS) to create signals for peak shaving that reflect the value of reinforcement

DetailModel

DNO Contracted

ContractedServices

ChargingIncentives

Distribution System Operator

DNO Merchant

• The DNO builds, owns and operates the asset and has full operational control

• The DNO taps into additional value streams directly, on a short-term basis (for example, energy trading)

• The DNO builds, owns and operates the asset and has full operational control

• The DNO has a Distribution System Operator role, co-ordinating real-time local balancing schemes through a centralised

• DNO builds, runs and operates the asset and has full operational control

• Prior to construction, long-term contracts (for example, 10 years) for the commercial control in certain periods

• The DNO offers a long-term contract (for example, 10 years) for services at a specific location, with commercial control in certain periods

Increasing comm

ercial risk for third party

Full risk lies with DNOs, who are exposed to power pricing and balancing services

RiskDetail

There is no guarantee of the asset being built in the first place

There is low commercial risk for the DNO

The DNO is exposed to construction and operational risks

The DNO is exposed to the incentive scheme and carries the risk if it is not bought into

• There is a potential barrier, as the cost of accessing the market is unknown at this point

control mechanism (in this case the SOCS)

• The DNO’s commercial risk is dependent on the design of the

incentive scheme

• The possible barrier is whether long-term contracts are feasible in terms of risk appetite and credit risk

• A third party is responsible for building, owning and operating the asset and monetising the additional revenue streams

• The barrier is that there is a lack of operational control for the DNO, which means that the operation cannot guarantee security of supply

UK Power Networks is committed to sharing what it learns from the Smarter Network Storage project with the wider energy industry. We recognise that the solutions developed during this important research project will be useful to other DNOs who face similar challenges and could help other network operators deliver more efficient investment in areas where storage can be used to provide the flexibility required to defer traditional reinforcement.

Learning

FundingThe project was awarded funding of £13.2 million by Ofgem, under the Low Carbon Network Fund scheme, in December 2012. In addition, UK Power Networks has contributed £4 million, with a further £1 million from project partners. The total project funding is therefore £18.2 million.

Partners - who are we working with?The Smarter Network Storage project is led by UK Power Networks but involves a number of core partners providing valuable expertise and input across a range of areas:

AMT-SYBEX creates enterprise software and delivers associated services to the infrastructure and energy industries.

Role summaryAMT-SYBEX has been selected to develop, deploy and test the Smart Optimisation and Control (SOCS) platform for the project.

Newcastle University has developed modelling and simulation tools to research the network impact of UK Power Networks operating the small-scale storage installed as part of LCNF project UKPNT1001.

Role summaryNewcastle has been chosen to provide development of algorithms to determine optimum use of the storage device, data analysis and learning capture throughout the operational phase of the project and co-ordination and audit of the knowledge dissemination.

Imperial College London’s research group has intensive, internationally-recognised experience in analysing, modelling and optimising electricity systems, with particular emphasis on future systems characterised by intermittent renewable generation, electrified transport and heat demand, and high penetrations of distributed generation.

Role summaryImperial College is designing and delivering a number of studies and models to assess the long-term technical and commercial benefits of storage within a distribution network.

KiWiPower is a smart grid company that specialises in managing the demand side of energy consumption for large industrial and commercial consumers of electricity and for government regulators.

Role summaryKiWiPower is providing ancillary services management for UK Power Networks, acting as the main interface with National Grid when the storage device is providing ancillary services and completing the necessary reporting and management of delivery.

National Grid is an international electricity and gas company and one of the largest investor-owned energy companies in the world. They manage the transmission network and play a vital role in providing energy to millions of customers across Britain in an efficient, reliable and safe manner.

Role summaryNational Grid is a key operational partner. As a potential purchaser of several services, National Grid is pivotal in helping the project manage the potential conflicts in shared usage between the DNO, the transmission network and the energy market.

Swanbarton is a specialist consultancy in electrical energy storage services and has been active in the electricity storage arena for 20 years. Swanbarton has experience in market analysis, energy storage applications, costs, planning, contractual and regulatory frameworks gained from its own research and from participation in many projects of various sizes in the UK and overseas.

Role summarySwanbarton is providing general support to the overall development of the project and specialist support in energy storage concepts, design, hardware and operation.

Pöyry Management Consulting offers in-depth modelling capability for the full electricity sector value chain, including networks and storage, which enables modelling of future energy scenarios taking into account the impact of intermittency among other economic factors.

Role summaryPöyry Management Consulting has been selected to deliver market and regulatory expertise to assess the potential changes needed to the regulatory framework(s) to allow the large-scale adoption of storage technologies by DNOs.

SmartestEnergy is the leading purchaser of renewable energy from the independent sector and supplies electricity to a range of business and industrial customers.

Role summarySmartestEnergy is arranging the route to wholesale markets, providing pricing information to allow service decisions to be made and reconciliation in the market.

UK Power Networks (Operations) LimitedRegistered office: Newington House, 237 Southwark Bridge Road, SE1 6NPRegistered number: 3870728 registered in England and Wales

v1 Oct 2013

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