Flexible energy markets key to sustainability, says expert in Q&A

Imperial is a partner in a new project funded by Ofgem that is researching how to make electricity networks more responsive to change.

FUSION is one of seven successful projects in the Ofgem Network Innovation Competition (NIC) which funds new approaches that tackle current or future problems facing electricity or gas networks.

Each of the projects are submitted and delivered by Distribution Network Operators (DNOs), which are the companies that distribute electricity from the transmission grid to homes and businesses. There are six DNOs in Great Britain that hold the distribution licences for fourteen regions.

FUSION is led by Scottish Power Energy Networks (SP Energy Networks), which covers Central & Southern Scotland, Merseyside, Cheshire, North Wales and North Shropshire. The project involves several partners and Imperial will be providing expertise to investigate the business model for flexible resources and to evaluate the benefits of rolling out the FUSION concept at the national level.

Dr Marko Aunedi, Research Associate in the Department for Electrical and Electronic Engineering at Imperial College London who is leading Imperial’s contribution, talks about FUSION, the importance of flexibility in electricity markets and Imperial’s role in the project.

What is flexibility in the energy market and why is it so important?

Flexibility is the ability to adjust the generation and consumption of energy in response to certain system conditions, such as price changes, or network constraints during peak hours of energy demand. Making power generation and demand more flexible will help ensure the amount generated and delivered always matches the amount we use.

A number of recent studies by Imperial carried out for the Department for Business, Energy & Industry Strategy, the Committee on Climate Change and the Carbon Trust have provided evidence showing that flexibility will be key in the evolution towards a cost-effective, low-carbon electricity system, and could potentially deliver cost savings of up to £8 billion per year in 2030.

How can the grid become more flexible?

There are a number of technological options to improve flexibility at the level of the distribution network. These include the use of energy storage options, such as batteries. Other options include distributed generation, which is the generation of electricity locally at customer level; and demand-side response, which is the use of special tariffs and schemes that reward consumers for changing how and when they use electricity.

How can you put a value on flexibility?

The value of using flexible approaches to solve a problem in the electricity network depends on the savings flexibility provides compared with a more conventional solution to the same problem.

Can you give an example of how flexibility could be made into a market commodity?

For example, if we are looking to improve electricity supply during times of peak demand then the value of using distributed generation from let’s say a biomass generator to supply electricity locally during these hours will be assessed by the savings made from not having to invest in technology such as a new transformer to supply peak demand. Without this additional investment, the DNO can maintain and operate grids at a lower cost, resulting in the overall cost reduction for the consumer.

Similarly, flexible services could also be offered and sold to the National Grid to help balance the national system. In a flexibility market, various providers could offer their services at a given price and the buyers of these services i.e. network operators could choose the most cost-effective to resolve their issues.

What challenges to the energy market will FUSION attempt to explore?

Currently the markets for the services that could be provided by these flexible options are centralised, fragmented and unfortunately do not facilitate trading by small-scale producers. FUSION will demonstrate how, by developing more local markets for flexibility, the potential from small-scale resources can be unlocked.

More specifically the project will implement a local flexibility market in East Fife, Scotland that is competitive, open and structured through the use of a network management solution called the  Universal Smart Energy Framework (USEF). FUSION will develop, implement, and trial the application of USEF and use the results to inform wider policy development around flexibility markets.

Why is smart technology so important in encouraging flexibility?

Smart technology enables localised flexible resources to connect with the electricity system and provide services. For example, smart technologies would enable a flexible customer to respond to signals from the local market by temporarily reducing or increasing their demand. The customers would be able to make choices like running the dishwasher outside peak times in order to save money, while also reducing load on the electricity grid.

What do the partners hope to learn from the project?

FUSION will allow the partners to identify and address key challenges and opportunities associated with the implementation of a localised flexibility market. New insights will cover technical aspects of USEF implementation and the integration into DNO operational practices, as well as the characteristics and willingness of various flexible providers on the customer side. This will provide valuable lessons for rolling out the flexibility concept in other DNO areas and throughout Great Britain.

What are projected outcomes in terms of financial and carbon savings?

It is expected that the benefits of FUSION-enabled development of smart energy markets in the distribution network will deliver savings to customers of £236 million by 2050, as well as reduce carbon emissions by 3.6 million tonnes.

Story written by Franca Davenport