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Total rehaul: Helm’s energy review pulls no punches

October/November 2017

Visibility issues: Batteries grab headlines but what are the risks?

Using DSR to mitigate market risk this winter See page 14

Hospital pass: Bringing NHS Trusts into demand-side response

“You have two ears but only one mouth for a reason” p66

INSIDE THIS ISSUE

Commercial Heating

A major upgrade to the Royal Academy had to balance energy efficiency with strict controls for £millions worth of paintings

24 Energy Storage

Anesco opens the UK’s first subsidyfree solar farm and believes collocating battery storage could be key that unlocks large-scale solar in a postsubsidy world

Building controls

Tying together building controls data with a smart billing system enables landlords to correctly apportion tenants’ bill share

Finance

Emissions

There are new sources of finance for industrial and commercial firms. The Carbon Trust outlines who can get what and where to get it

Incoming legislation could have a material bearing on the forthcoming Capacity Market auctions as far as diesel generators are concerned

12 Instead of increasing the CCL discount for CCA participants, the discount should be more stringent – Policy Exchange

Battery Storage

Demand-side response

Battery storage is flavour of the month. But what do industrial and commercial firms think about the risks and rewards on offer? The Energyst asked those considering whether to invest

False gods: Is energy as a service the panacea it claims to be?

October/November 2017

Ups and downs: Three firms outline their DSR experiences

Hot and cold: Let CHP compete fairly in the capacity market

“We need a better, more consistent set of policies for energy efficiency” p22

Using DSR to mitigate market risk this winter See page 14

The challenges faced in corralling all stakeholders to deliver DSR in Scotland’s NHS Trusts

News & comment

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Front cover

npower outlines the importance of DSR as part of an integrated energy management strategy

Energy storage

Building controls

Insight

Standards

Finance

Gas & electricity

Lighting

Product news

Demand-side response

Commercial heating

Q&A

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October/November 2017

COMMENT

Change for the better? The pace of change within the energy sector appears to be accelerating. At least, if the volume of consultations, reviews and papers issued by Whitehall is any indicator of impending action.

Ofgem is also keen to ensure network charges are allocated fairly. But changes to charging rules may affect peak avoidance strategies, which for many firms, have become a core cost management principle.

Recent consultations and proposed changes include de-rating of batteries within the Capacity Market, changes to Triad exports, Ofgem’s broader review of charging plus National Grid’s plans to change products and procurement via its System Needs and Product Strategy (SNAPS).

The only certainty, therefore, is that using less energy will make economic sense regardless of policy.

Then there is the Clean Growth Strategy, a related consultation on emissions and carbon reporting, the Medium Combustion Plant Directive, and last, and by no means least, Dieter Helm’s governmentcommissioned review of energy costs.

The only certainty is that using less energy will make economic sense regardless of policy Keeping abreast of change is a full time job – and that’s a core function of a publisher of energy news. For the average energy manager, with resources in many cases already spread thin, it’s a tall order. Yet many proposed changes will have a direct impact on energy bills and energy management strategies. The Capacity Market charge, for example, will start to become a noticeable bill item in the short-to-medium term. While there is undoubted environmental merit in pushing unabated diesel off the system, the result of recent policy and regulatory action could be higher auction outturns, and potentially, higher bills.

Editor Tim McManan-Smith tim@energystmedia.com t: 020 3714 4450 m: 07818 574308

Sales director Steve Swaine steve@energystmedia.com t: 020 3714 4451 m: 07818 574300

Contributing editor Brendan Coyne brendan@energystmedia.com t: 020 3771 1267 m: 07557 109724

Commercial manager Daniel Coyne daniel@energystmedia.com t: 020 3751 7863 m: 07557 109476 Circulation enquiries circulation@energystmedia.com

In fairness to government, that appears to be the intention of its Clean Growth Strategy. If businesses can increase energy productivity by 20% in the next decade or so, the UK economy will be more efficient and robust. In theory, there should be no need for business incentives to invest in energy efficiency, other than bottom line benefits. However, we know the reality is not quite aligned. Even incentives available today, such as Enhanced Capital Allowances, are under-utilised due to perception that the paperwork is tricky (it isn’t), or that the benefits will be swallowed up centrally, rather than reallocated to energy departments. So whatever policymakers decide to do with regards to flexibility or energy efficiency, they have to make incentives as accessible and simple as possible for businesses - and encourage savings to be reinvested in energy. Otherwise, there is a risk that all that policy work will not deliver results. Brendan Coyne Contributing editor

Energyst Media Ltd, PO BOX 420, Reigate, Surrey RH2 2DU Registered in England & Wales – 8667229 Registered at Stationers Hall – ISSN 0964 8321 Printed by Warners (Midlands) plc No part of this publication may be reproduced without the written permission of the publishers. The opinions expressed in this publication are not necessarily those of the publishers. The Energyst is a controlled circulation magazine available to selected professionals interested in energy, who fall within the publisher’s terms of control. For those outside of these terms, annual subscriptions is £60 including postage in the UK. For all subscriptions outside the UK the annual subscription is £120 including postage.

4 October/November 2017

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NEWS & COMMENT

Stricter emissions rules put the choke on diesel generators Incoming emissions laws could have a significant impact on the level of diesel generation bidding into Capacity Market auctions this winter. The Medium Combustion Plant Directive (MCPD) is a set of emissions limits being implemented across Europe. It comes into force in December and affects plant between 1MW and 50MW, although smaller aggregated plants that are bid into balancing services or the Capacity Market are within scope. The UK interpretation of the MCPD will have an impact on forthcoming auctions for capacity because it has emerged that transitional arrangements for generators will not

It is an even worse case scenario than some generators would have envisaged six months ago now apply if they take new Capacity Market contracts. The transitional arrangements essentially give generators more time to comply with emissions limits. Generators with Capacity Market contracts awarded in 2014 and 2015 (for delivery in winter 2018 and in winter 2019) only have to comply

with the new rules when their existing permits expire – which could be in the mid-2020s. However, the department for environment, food and rural affairs (Defra) has now clarified that generators taking on new balancing services or Capacity Market contracts after 31 October 2017 and which remain active after 31 December 2018 will no longer benefit from the transitional arrangements. The move follows cuts to embedded benefits, specifically Triad export payments, which challenge the economics of distributed thermal generators, especially diesel peaking plant. Last April, consultancy Aurora suggested up to half of small generators with

Capacity Market contracts for delivery in winter 2018/19 and 2019/20 could give them up should Ofgem implement proposed Triad cuts. Head of energy research, Richard Howard, said that risk had since crystalised, and was compounded by the MCPD updates. “We see quite a lot of capacity that is at risk,” he told The Energyst. “It is hard to get a detailed picture of what [generators] will do, because they have not all declared their intentions. But it is an even worse case scenario than some would have envisaged even six months ago.” While generators can invest in abatement technology, the 190mg/Nm3 limit for NOx creates a challenge. Howard said “there are very few companies that manufacture and install that kit … so there is limited information available regarding the cost of retrofitting”.

Ofgem confirms Triad cuts challenge Ofgem has confirmed that it faces a legal challenge to its decision to cut payments to smaller power generators that export during peak demand periods. The challenge was predicted ahead of the regulator’s final decision on cutting Triad export payments as part of its review of embedded benefits. The main element, the TNUoS residual (or Triad payment), is set to be cut from £45/kW to between £3 and £7/kW over three years from April 2018, which Ofgem says could potentially save consumers up to £7bn by 2034. Ofgem says such high payments for exporting during Triad periods are distorting the market and risk loading costs onto other

6 October/November 2017

consumers. Export rates are predicted to rise to £70/kW, increasing consumers bills by £650m a year by 2021. But firms that bid for Capacity Market contracts in 2014 and 2015, before Triad cuts were mooted, are dismayed at the decision. They bid into auctions based on Triad payments remaining in place and now stand to lose a significant chunk of revenue. They wanted Ofgem to ‘grandfather’ payments but the regulator decided against that approach. UK Power Reserve chief executive Tim Emrich told The Energyst in June that he was “100% certain” Ofgem faced a judicial review over embedded benefits cuts. Ofgem has now confirmed

Ofgem’s decision [to cut Triad export payments] stands unless quashed by the court

that challenge. Claimants have not been disclosed but are understood to be largely peak generation operators, i.e. gas and diesel farms. The regulator states: “Ofgem has been served with a claim for judicial review concerning its decision to approve WACM4

of CUSC modifications CMP264 and CMP265. “This decision stands unless quashed by the court. “We are defending the claim. National Grid Electricity Transmission plc has been named by the claimants as an interested party to the proceedings.”

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Sponsored column

New ‘transparent’ TPI in town SME energy platform Love Energy Savings has hired exutility staff in a bid to attract industrial and commercial firms to its new third party intermediary service. The company says Love Energy Solutions will make transparency over fees and commission one of its core principles. “There is a clear need for more openness within the energy broking sector,” said Shirley Isherwood, who joins the firm as senior relationship manager. “The current lack of clarity on commissions has justifiably

caused mistrust amongst energy consumers. We want to re-build trust, through honest and open communication.” Adrian Cieslake joins as head of corporate. He said the company’s 86% retention rate in the SME sector reflected demand for an open approach. “Energy managers at larger businesses want full transparency; that’s exactly what we’re offering,” said Cieslake. Kalpan Patel, experienced in energy procurement, account management, bill validation and compliance services, joins as business relationship manager.

‘Mega TPI’ Kinect buys Orchard TPI behemoth Kinect has acquired Orchard Energy, adding some 1,500 industrial and commercial customers to its books. Kinect was created last year when US giant World Fuel Services rolled together energy management and procurement firms Bergen Energi and The Utilities Exchange under one umbrella. Terry Cogan, vice-president EMEA at the Kinect Energy Group, commented: “The professional team at Orchard will immediately bring

capabilities and expertise renowned in the industry, allowing us to expand our product offering within the UK, Ireland, and Continental Europe. “We welcome Orchard to the Kinect Energy Group and look forward to working together to meet increasing demand for energy management services in multiple market segments.” Orchard, which was owned by Lakehouse, employs 72 people at its West Yorkshire headquarters and satellite offices in Glasgow, Bristol, Newcastle, and Northampton.

Three more councils launch energy brands Derby, Doncaster and Islington councils announced the launch of energy brands in October, all under white label agreements with Nottingham City Council’s Robin Hood Energy. The councils all have the same aims: to help constituents save money on energy bills and lift households out of fuel poverty.

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Islington Cllr Claudia Webbe

Derby and Islington launched their brands in October, Doncaster is set to launch in November.

Going Green in 2018 Dylan Crompton, head of corporate sales at British Gas Business, explains the myriad options available to large businesses seeking to align energy procurement with corporate social responsibility goals. For many years, the best way to demonstrate a business’s commitment to decarbonisation was to select a green electricity tariff. With the majority of suppliers, the cost of delivering electricity sourced from renewable generation was neutralised by the exemption from Climate Change Levy, meaning little or no premium. However, the closure of the Levy Exemption Certificates (Lecs) scheme in August 2015 meant that many customers that purchased renewable electricity were suddenly exposed to CCL costs, which in some cases increased costs. Electricity suppliers quickly adapted to this market shift and now provide supplies backed by Renewal Energy Guarantees of Origin (Regos). Regos are relatively well established and as the mix of electricity generators becomes increasingly dominated by low carbon options, the price of renewable energy is falling. However, in the short term, the high demand for green power is outstripping supply, which means green electricity often needs to be charged at a premium. The more positive outcome from the shift away from Lecs towards Regos and GoOs (Guarantee of Origin) is that these certificates are recognised under Scope 2 carbon emissions reporting for ISO50001 Energy Management standards. This makes them an effective way of demonstrating a company’s environmental credentials. For many large businesses

however, the optimal way to purchase low carbon power and fuel is through a Power Purchase Agreement (PPA) or even many PPAs. Increasingly, British Gas is working with customers that have sourced a portion of their electricity requirements from an independent renewable generator. This power is ‘sleeved-in’ to the electricity contract alongside their grid energy purchases. Under this arrangement, the customer benefits from a direct relationship with the generator and can look at longer-term pricing options. Once one PPA is in place, customers often begin ‘stacking’additional agreements, procuring increasing volumes of their total electrical demand through this method. One customer has just reached a landmark in matching all of its energy demand from PPAs. The other obvious area of focus is to reduce energy demand. Whether this is using data to eliminate waste, retrofitting energy efficient equipment or installing onsite renewables, reducing imported energy is at the heart of most sustainability activity. As we move towards a more connected future, we see the challenge as being able to integrate site energy reduction programmes with energy purchasing decisions while responding to market signals in real-time. Coordinating this activity requires a joined-up energy strategy between procurement, finance and operational teams to maximise energy savings and realise revenue streams available for organisations with the ability to flex their demand profile. Find out what British Gas can do for your business at: britishgas.co.uk/business/gasand-electricity/large-business

NEWS & COMMENT

News in brief

Gateshead Council installs 3MW battery

Generational change

UK renewable generation capacity hit 38GW in the second quarter of 2017, up 4.4GW on the same period in 2016, according to government data. Renewable generation for the quarter hit a record 29.8%, Coal fell to 2.1%, its lowest ever share. Leadership change

Drax CEO, Dorothy Thompson, will step down at the year end. She will be succeeded by current chief financial officer, Will Gardiner. Drax chairman, Philip Cox, thanked Thompson, for an “enormous contribution to Drax” over her 12-year tenure at the helm. Name change

Danish state-controlled firm Dong Energy will change its name to Ørsted. Dong is an abbreviation of Dansk Olie og Naturgas (Danish Oil and Natural Gas). Dong sold off upstream fossil assets earlier this year and so believes the name is no longer appropriate for the world’s largest offshore wind company. However, the firm said it will continue to trade and sell gas to customers. Amenable to change

Severn Trent has awarded aggregator Open Energi a contract to help balance the grid by using its flexible load in demand-side response (DSR) programmes. The water company aims to bring forward more than 20MW of flexibility by 2020. No change

Ofgem has decided not to apply penalties to distribution network operators (DNOs) over perceived service failures within their grid connections operations. Following consultation, the regulator decided DNOs had ‘met minimum acceptable criteria’.

8 October/November 2017

The council-owned Gateshead Energy Company will now look to generate significant income from current and emerging markets

Centrica is to manage a 3MW battery storage system for Gateshead City Council. The system has been installed alongside CHP units at the council’s District Energy Centre. Aggregator Flexitricity recently signed a 15-year deal to manage that CHP output within balancing markets, which it

said would earn the council around £1m over the contract. The council-owned Gateshead Energy Company will now look to generate significant income from current and emerging markets via the speed of response afforded by batteries. Announcing the deal, Centrica said it will operate the

system to provide various grid balancing services, generating revenue for the council, on a ten-year contract. The company added that the system will also, eventually, provide local grid balancing services, which is where many analysts believe considerable future value lies for battery storage investors. Cllr John McElroy, Gateshead Council’s cabinet member for environment and Transport, said: “This battery installation completes the wider District Energy Scheme, which will provide low cost heat and power to homes, organisations and businesses in central Gateshead. “It’s a bold, imaginative scheme that means we can also store and release power when we choose, as well as supporting the National Grid, which helps raise more income to support Council services.”

Clean growth plan puts onus on business The government’s clean growth plan outlines its intention to task industry to deliver energy efficiency improvements of at least 20% by 2030. The paper says government will create a ‘simpler, more ambitious and long-term policy and regulatory framework’ to enable that ambition, through it states a final decision on any target will not be taken until 2018. The strategy outlines plans for an industrial energy efficiency scheme, as mooted in the Tory manifesto, to help large companies install measures to cut consumption and bills. The document illustrates that UK industrial firms pay the second highest electricity prices in Europe, with policy costs driving those bills upwards. Meanwhile, it highlights that of the 5.5 million businesses in the UK, the majority of energy use comes from around 7,000 large companies. The government believes that by incentivising large firms to cut consumption, UK industry can become more competitive while driving down overall energy use and emissions. The strategy sets out a ten point, high-

level plan to unlock business energy efficiency, starting with a commitment to consult next year on how to support UK firms to improve energy productivity by at least 20% by 2030. It commits to assess and potentially reform Esos, some funding to improve use of industrial heat and a consultation on a new, streamlined energy and carbon reporting framework. For smaller firms, there was a commitment to ‘explore with stakeholders how we can improve the provision of information and advice to SMEs to encourage the uptake of energy efficiency technologies’. See plan, which outlines the direction of travel of UK energy policy across energy, heat and transport, at beis.gov.uk

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Government moves to change smart meter rules for small firms Government has outlined plans to change the rules around smart meters for small and medium sized businesses. The department for business, energy and industrial strategy (Beis) believes smaller companies would be disadvantaged by current rules, which allow suppliers to install an advanced meter rather than the latest ‘Smets2’ smart meters. It has suggested that firms with annual energy consumption of less than 3GWh should instead be offered a smart meter, and that advanced meters will otherwise no longer count towards suppliers’ smart meter targets. Suppliers will still be able to count advanced meters within their smart meters targets at larger customer sites, those consuming at least 3GWh of electricity and/or gas. The consultation also

proposes that suppliers will no longer be able to opt out of the smart meter central comms infrastructure –the DCC – provided they only supply large businesses. It reasons that firms supplying more than 1,000 non-domestic customers will likely have some SME customers on their books. They will have to register with the DCC and use the platform’s comms

Blockchain firm hits jackpot, hires Jon Ferris Electron has been awarded £637,000 in government funding to scale its prototype blockchain trading platform for demand-side response. The company’s application for the funding was supported by National Grid and Siemens and the two firms will feed-in to the project. Electron says its platform uses blockchain technology to allow multiple parties to coordinate and share the value of a single consumer’s action. If adopted at scale, the firm believes this will maximise the overall value and liquidity of the flexibility market, while enabling individual purchasers

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of flexibility to share costs. The company refers to this concept as “collaborative trading”. “Blockchain is not just a technology. It is a revolutionary new way of transacting business without a central intermediary,” said Electron CEO, Paul Ellis. “Removing this intermediary enables new, better models of co-operation on an efficient, demonstrably fair platform.” Meanwhile, Electron has hired Jon Ferris, formerly strategy director at TPI Utilitywise. Ferris assumes the same title at Electron and said he was “very excited to join at such a time of change in the energy industry”.

infrastructure. Beis says that will ensure interoperability, i.e. smaller customers will be able to better switch suppliers and make use of smart benefits. Suppliers with less than 1,000 non-domestic customers will not have to become a DCC user, although Beis said that policy would be kept under review. Beis seeks views on its proposals. See the consultation at beis.gov.uk

EMA’s Redesdale joins Energi Mine EMA chief executive Lord Redesdale has joined the board of third party intermediary Energi Mine. It has also appointed an AI robot to its management board. The Bot, Sasha (Strategy and Support – Human Analytics) will aid human decision making within the company.

Ofgem outlines energy storage rule changes Ofgem has outlined plans to clarify how energy storage is licensed and classified, proposing that storage be treated as a form of generation. The regulator will modify the existing generation licence to accommodate storage, ahead of government changes to the Electricity Act. Ofgem thinks that will be the fastest way to address market barriers, with change effective in the first half of 2018. The move stops distribution networks operating storage, as they are not allowed to own generation.

The Oldham-based outfit has also launched a ‘token’ reward scheme for energy conservation. Its blockchainbased platform will reward users with tokens in a bid to encourage energy efficiency. Founder Omar Raheem (pictured with Sasha) believes decentralised trading platforms can give consumer/ producers far more choice in how they buy and sell power.

October/November 2017

NEWS & COMMENT

Battery storage report: Risks, rewards and business cases Businesses surveyed by The Energyst have significant appetite for battery storage, but revenue visibility and regulatory uncertainty are investment barriers

alf of firms surveyed for The Energyst’s 2017 Battery Storage Report said they were mulling behind the meter storage projects, with about a quarter considering collocation and a quarter standalone batteries. However, these definitions are not clear-cut. Some collocated projects may also be behind the meter and vice versa – and seven in 10 firms said they plan to combine batteries with other assets. Rate of return A third of respondents believe their planned projects would pay back in 3-5 years, and just over a third 5-7 years. Around four in 10 firms considering battery storage are already involved in demand-side response. Two thirds of respondents plan to finance the battery internally, suggesting some appetite for risk, given lack of long-term visibility

over revenue streams. Peak charge avoidance was cited by 58% as a means of monetising the asset, with 55% stating they would pursue frequency response, should they decide to invest in storage. Some 44% said they would try to make revenue from the Capacity Market. Visibility issues However, a significant review of network charging arrangements is underway, and regulatory intentions regarding behind the meter storage are not yet clear. While Capacity Market contracts provide longer-term certainty, these are a relatively small part of the revenue ‘stack’ required to reduce rates of return to acceptable levels for many companies. Meanwhile, batteries will be de-rated within the Capacity Market, which could affect earning potential. Frequency response contracts are currently

Figure 2: Have you faced any challenges in securing funding?

40%

47%

32%

23%

No, we had no problems

Yes, predictability of revenues

Yes, predictability of policy / regulations

Yes, investor appetite

50%

40%

30%

20%

10%

10 October/November 2017

Figure 1: How do you plan to monetise the asset?

60%

55%

49%

44%

19%

58%

15%

Grid services (EFR / FFR)

DSR

Capacity market

Wholesale market (Arbitrage)

Peak charge avoidance / load shifting (Triad)

Other

50%

40%

30%

20%

10%

valuable, but only provide visibility for up to two years with analysts warning of “acute risk of revenue compression” due to the volume of potential providers eyeing a relatively small market. Early days While only a third of respondents said regulatory uncertainty had posed a challenge securing funding, many considering storage projects are not yet at the investment stage, given only 25% of respondents had either applied for or secured a connection agreement. Interviews with respondents and investors suggested both regulatory uncertainty and unpredictability of revenue (cited by 47% of survey respondents as a funding barrier) are the key challenges – and essentially part of the same equation. The report contains qualitative interviews with end users in the public and private sector, as well as

input from consultants and analysts and views on the market opportunity from co-sponsors Endeco and Eon. National Grid also outlines its plans to level the playing field for storage within balancing services. Read some of the qualitative interviews with public and private sector end users on pages 22 and 23 of this issue of The Energyst. te

Download your free copy of the 2017 Battery Storage Report at theenergyst.com/storage

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NEWS & COMMENT

Bring public sector into Esos and hold directors to account The public sector should be made to take Esos audits and the energy efficiency scheme should be given sharper teeth, according to a new report by Policy Exchange

hink tank Policy Exchange says billions could be saved by putting energy efficiency at the heart of energy policy. It calls for the government to set up an Energy Efficiency Delivery Unit to bridge the gap between viable projects and available capital, and make its existing policies more targeted and more strict. The report suggests the public sector could lead the non-domestic market on energy efficiency. Bringing the public sector into the Energy Savings Opportunity Scheme (Esos) could shave 13TWh off the UK’s annual energy consumption, it states. The report also called for tighter reporting: “The scope of [Esos] sanctions should be increased so that mandatory reporting on progress in implementing ESOS recommendations is also covered,” it added. Boards should also be required to take “action on energy efficiency recommendations by either rejecting or

Figure 1. Scale of the opportunity by sector Sector

Total TWh/ year saving

< 3 years payback (total TWh/ year saving)

<3 years payback (total TWh/ year saving)

Total reduction from current consumption (%)

Capex required to deliver abatement potential (£B)

Energy cost saving < 3 years payback (£B per annum)

Retail

9.4

2.2

7.2

5.8

0.2

Offices

10.5

2.1

8.4

6.8

0.1

Hospitality

4.3

1.6

2.7

1.8

0.1

Industrial

11.7

7.3

4.4

4.6

0.4

Storage

5.1

0.2

4.9

2.5

Health

3.9

3.1

1.7

0.2

Education

6.7

2.1

4.6

2.1

0.1

Emergency services

2.1

0.7

1.4

0.6

Military community

0.5

0.3

Community, arts and leisure

0.9

4.1

2.2

0.1

Total

63.1

41.1

28.4

1.3

Source: Policy Exchange

accepting them”. Currently, there is no requirement for boards to do anything with the recommendations presented by Esos audits. Industrial strategy Policy Exchange believes the government is getting key parts of industrial energy policy wrong: “Contrary to the government’s decision to

increase the CCL discount available to Climate Change Agreement (CCA) participants from April 2019, this report recommends that CCA discounts should become more stringent in order to drive further energy efficiency within the industrial sectors,” it states. The report urges government to ensure both public and private sector are also up to speed on

new accounting rules that come into force in January 2019. Under IFRS16, leases that used to be treated as off balance sheet must come on balance sheet, which could create a substantial challenge for organisations considering investment in energy efficiency. Biggest savings Challenges aside, the report analyses the potential for savings by sector (see table). Of public bodies, the health sector has some of the largest potential and the savings would cost the least, according to Policy Exchange’s analysis of government figures. It recommends the NHS “commission an assessment of energy efficiency opportunities and lead in its implementation”. Across all sectors, government figures suggest some 63TWh could be cut from UK annual energy consumption, equating to a total demand reduction of 39%. te Download the report at: policyexchange.org.uk

National Grid: Winter looks more comfortable

alling demand on the transmission system and the start of the government’s insurance policy for power have given National Grid greater headroom over winter. The transmission system operator has forecast a margin of 10% of generation over peak demand, significantly more

12 October/November 2017

comfortable than last year. The 6GW margin is higher than National Grid’s previous estimates due to power generators without capacity market contracts indicating they will also be available to provide power. As such, the system operator said it is “confident that we have the right products and

strategy in place to help us to balance the system, even under colder conditions than we have experienced in recent years”. Sufficient gas National Grid also anticipates sufficient gas coming into the UK to meet demand. While Centrica is to close Rough, the UK’s largest storage facility,

it will enable withdrawals during winter, and expects 1 billion cubic meters (bcm) will be taken out. The outlook states: “Total gas demand for the winter is forecast at 51 bcm, with a peak demand forecast for a 1-in-20 winter of 502 mcm/day. We expect there to be sufficient gas available to meet this demand.” te

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INSIGHT

Helm’s bonfire of the policies Dieter Helm’s cost of energy review goes far beyond costs. Brendan Coyne reports

ieter Helm’s governmentcommissioned energy cost review recommends scrapping much of the current structure and starting again with a decentralised, public-private core. Helm also urges a common carbon price across the economy to deliver carbon budgets. By not following his recommendations, Helm suggests policymakers run the risk undermining security of supply, carbon budgets, UK industry, the transition to electric vehicles, hurting the fuel poor and locking in high costs for UK bill payers. Beis is mulling the 242page document. Whether it has appetite for scorched earth policymaking remains to be seen. The department has perhaps been given considerably more than anticipated when commissioning a review of energy costs. Bonfire of everything Tasked with finding the most cost-effective way of meeting carbon targets, Helm delivers a scathing assessment of interventions to date. Market auguries have been misread and expensive technologies pursued over the cheaper ways of decarbonising the economy, he states. Poor assumptions and modelling from government and regulator have driven up costs, the report underlines. Recommending that the state steps away from interventionist policy is the Oxford economist’s least surprising proposal. However, Helm also recommends public ownership

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customer bills” with industrial firms exempt, says Helm. “Once taken out of the market, underlying prices should then be falling,” he states.

Helm: thinks networks should be publicly-owned

of the organisational function of the transmission and distribution networks, taking some of the responsibility from market incumbents and introducing greater competition to their core roles, effectively reducing them to ‘contractors’. These entities would run competitive auctions for security of supply and network services, thereby increasing competition and driving down cost, in Helm’s view. Other recommendations include pooling all current low carbon and renewables subsidies into a single mechanism – an ‘equivalent firm power (EFP) capacity auction’. Helm believes that will put the cost burden of balancing the system “back on those who cause them” and encourage investment by renewable generators in capabilities such as storage and demand-side response. Helm also urges caution over procuring firm capacity, suggesting that procuring flexibility may be more appropriate. Low carbon and renewables subsidies should be “separated out, ring-fenced, and placed in a ‘legacy bank’ and charged separately and explicitly on

Wires crossed Helm suggests regulated network owners, national and regional are being allowed to earn too much. He points to “the valuations infrastructure funds report to their investors, and in the premia to RABs [regulatory asset bases] in takeovers” to substantiate that theory. The review sets out three redress proposals for Ofgem to consider to cut costs to consumers in the short-to-medium term: “do nothing; arm-twisting; and a one-off resetting” of allowable revenues. State-owned system operators In the longer term, Helm suggests the current price control formula has “run its course” and that “something much more flexible is needed” to regulate energy networks He suggests a fundamental change to the structures and functions of networks and their regulation: semi-public ownership. That approach would mean much of Ofgem’s network regulatory role “at a stroke is no longer needed.” The report recommends creating National System Operators (NSOs) and Regional System Operators (RSOs), with licence distinctions between distribution, generation “abandoned at the regional level, to be replaced by a single, simpler licence”. Regional operators would then “be free to engage in

generation and supply, and hence incentivise choices between investment in new-generation capacity, including renewables, and networks”, the report states. Publicly-owned RSOs would be responsible both for security of supply and overseeing distribution, while DNOs “could in effect become contractors, and one among many competitive suppliers.” While “there is no need for a radical cliff edge” in terms of network ownership change, it is “implausible for the NSO and RSOs to be owned by the current private network companies”, says Helm. Retreat and gain ground Some of the review’s many recommendations are radical. Implementing proposals on harmonisation of renewables and low carbon subsidies could be relatively straightforward. Taking ownership of public utilities, or removing some of their roles, less so. But Helm dangles a carrot for the business and energy department, should it decide to proceed with his remedies: “Beis can gradually retreat and close down many of the activities it has taken on, on the back of the plethora of policy interventions,” he suggests. By raising the spectre of taking away assets and responsibilities and tightening subsidies, Helm gives government ammunition to make gains in current political battles with energy companies over costs. But by castigating poor policy and regulation, he provides energy firms with a legitimate defence. Which may mean going around in circles for a while yet. te

October/November 2017

COVER STORY

Taking advantage of demand-side response The Energyst’s Tim McMannan-Smith joins npower Business Solutions’ Dan Connor to discuss how and why DSR should be included in energy management strategies going into winter 2017 What’s your market outlook for the coming winter? The UK entered winter 2016 with the slimmest reserve margin since market liberalisation, and while margins look a bit better, there are a number of factors that could make for a fairly volatile season again this winter. The summer has already been peppered with unplanned gas plant outages; LNG deliveries have been lower than anticipated and the European market will struggle to compete with Asian demand over the winter. In France, EDF has been required to carry out an audit of all reactors manufactured at Areva’s Creusot Forge foundry and the outcome of that could cause disruption of interconnector supply – which the country is more reliant on with Rough storage out of action. Along with a volatile pound in the face of Brexit uncertainties, customers would be wise to plan ahead and hedge for risk. Is volatility the “new normal”? Readers of The Energyst will remember that in April 2017 we witnessed the first day in

14 October/November 2017

over a century in which there was no coal power generation in the whole of the UK. Then in June, the combined output from wind, nuclear and solar plants was greater than coal and gas combined for the first time; a real landmark in low carbon generation. There is currently 5GW of renewables under construction around the country and another 33GW in pre/post planning stages. We have regularly seen in excess of 6GW solar and wind generation entering the grid this summer. That’s good news, but the increase in intermittent generation from renewables means that volatility in the power market is likely to increase – particularly when margins are tighter in winter months. Can customers hedge against that risk? Yes, is the short answer, and it is important that buyers do so. For context, French nuclear outages and a number of other factors last winter meant that the price range for gas plant generation margins – which

over the past five years have hovered around 0-£5/MWh – soared towards £30/MWh. So making sure you are reducing exposure to that kind of volatility is highly important. One of the most important and potentially profitable ways for our customers to do this is using the opportunities provided by demand-side response. Those who can scale back their demand by turning off processes or offsetting their demand with onsite generation already have significant opportunities to both drive revenue and savings. This is going to grow in coming seasons, so an effective DSR solution package that provides this facility is vital. Are policy makers recognising (and rewarding) DSR? Absolutely, DSR delivers value for literally every actor in the supply chain: for consumers it optimises assets and creates new revenue opportunities; for suppliers and aggregators it increases product range and allows them to deliver more value to customers – which in turn leads to improved customer retention; for UK businesses it increases security of power supply as well as supporting wider use of renewables and for the National Grid, it helps it meet its licence obligations, while demonstrating efficient and economic management. That recognition is there and the National Grid has introduced a wide range of products that customers can access to participate in DSR. These are currently being reviewed.

Is it only big businesses that can really capitalise on DSR? New technologies and platforms have opened up huge opportunities for any business that can scale back demand as well as provide smaller generators, particularly coming into triad season – the three half-hour settlement periods with highest system demand between November and February are used by National Grid to determine charges for demand customers. We have created a solution that enables our customers to capitalise on this – and we like it so much that we use it ourselves: we have seven assets of 4MW (cumulative) across our sites participating in our Automated Triad Service and Access STOR, which have generated well in excess £500k in revenue and cost avoidance for the company since 2012. All of our customers have access to DSR solutions via our aggregation platform and Energy HQ solution. What market products are available to reward DSR? We support various products including Access STOR. This is for customers that can

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reduce demand or increase generation at just 10 minutes’ notice, then sustain this for up to two hours. Participants get paid for being ready to respond to a STOR event and also paid for utilisation. Access Static Fast Frequency Response (FFR) is another product we support. This is more suited to businesses that are able to instantly (sub 1 second response) vary their import /export and can sustain this change for 30 minutes; participants in this also earn an availability fee. Our customers can also secure significant savings from Transmission Network Use of System (TNUoS) charges. These are levied against consumption during Triad periods, and are £50,000 per megawatt in some DNO regions – a cost that may already seem eye-watering but which is forecast to increase substantially to circa £70,000 by 2020. We also offer our market leading Wholesale Market Access product where we can trade an on-supply customers flexibility in the wholesale market allowing their assets to access peak prices in excess of £800 for some half-hour

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periods over the winter peaks. We have developed the ability to stack these revenue streams meaning assets can access multiple revenue streams, increasing revenues and derisking business cases. Anyone wanting to learn more can visit our dedicated DSR microsite: demandsideresponse.co.uk You mentioned Energy HQ, can you elaborate? Energy HQ is a dynamic new energy management concept that has been created to give businesses a service which truly has everything an energy professional could need ‘under one roof’. From advanced data analytics to site audits; strategic support from our optimisation desk to counsel from highly qualified ‘carbon psychologists’. The aim is to help equip businesses with a fully integrated strategy that covers energy and risk management requirements end-to-end. We even use it ourselves! This has not only saved the company money but we’ve racked up awards and certifications along the way, including triple Certification from the Carbon Trust (making us the first energy company

to be accredited with all three – carbon, water and waste – awards) for ongoing reductions in each area, as well as being the first energy company to be accredited with ISO50001 – the international standard for best practice in energy management. How has technology helped shape improved rewards from flexibility? I think intelligent analytics and the ability to crunch vast amounts of data rapidly and visualise that in a digestible manner for non-expert market participants has been a gamechanger. For example, we can now track cost, carbon and kWh, at half-hourly intervals, with all sorts of bespoke alarms and targeting functions for customers; we can create virtual sites and meters, help customers to hedge and load manage at a half-hourly level, and so on.

While buying – or selling – via a flexible contract was previously considered by many businesses to be time consuming and complex, we can now demystify and streamline the process: providing direct access to the wholesale market, timesaving market intelligence, risk management expertise and a range of innovative trading services in a very simple way. What should readers be wary of ahead of the winter season? As the weather gets colder, some energy buyers are going to sit on their hands. It is not the most effective strategy for staying warm. Get in touch with us and we’ll help you craft a bespoke strategy to minimise risk of exposure to spikes in prices and drive revenue from the range of market opportunities that are opening up in demand side response.

To learn more about how Energy HQ could help your business this winter visit: energy-hq.co.uk

October/November 2017

GAS & ELECTRICITY

Key trends in the TPI sector Cornwall Insightâ&#x20AC;&#x2122;s Kate Hill provides a snapshot of the TPI market, outlining movers, shapers and varying interpretations of pricing transparency

ompetition in the business energy third party intermediary (TPI) market continues to intensify and is now at its highest ever level, as recorded by the Cornwall Insight TPI Indexes. TPIs provide an important route to market for many suppliers, particularly smaller suppliers, and are increasingly being seen as an important renewal partner. When dealing with suppliers, TPIs highlight that the most important factors that determine whether business is placed with that supplier are competitive prices, an account manager who will help solve problems quickly and a quick response to tenders. While some TPIs will place the customer with the supplier that can offer the most attractive commission or best price, there are many TPIs that are reluctant to recommend a supplier if they know the supplier has poor customer service and that the customer will not be looked after by the supplier, even if they have the best price. Each quarter, Cornwall Insight tracks developments in the TPI market, both on a TPI level and on a regulatory and policy level. Our latest TPI report, which covers quarter two of this year (Q217), highlights three important trends in the market: 1. Acquisitions broaden service offers Acquisitions have often been used as a way for TPIs to expand and increase their presence in the

16 October/November 2017

Figure 1: SME Index top ranked TPls

Source: Cornwall Insight

Figure 2: l&C Index top ranked TPls

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market, grow their portfolio and expand their service offerings. One such TPI that has regularly used this strategy to raise its profile in the market is Inspired Energy. Since April 2012, Inspired Energy has made nine acquisitions, giving the TPI broader reach in terms of customers and provided services. Three of these acquisitions took place in Q217 when it added Flexible Energy Management, Churchcom and Horizon Energy Group to its portfolio. The TPI market is one that also attracts continual interest from private equity investors in both the larger companies and the smaller and medium companies in our TPI indices. 2. Highest ever level of competitive activity in Q217 Our latest quarterly report has shown that TPIs have been particularly busy from a strategic standpoint, recording the highest number of developments since we launched the report in 2013. We have seen an array of developments, from new product launches to awards and acquisitions, across both the SME and I&C sectors. Compared with the last quarter, activity represented through our indices is up 15%, although this is not wholly

Activity through Cornwall Insight’s indices in Q217 is up 15% compared with Q1217 unexpected. Cornwall Insight usually records an increase in award activity in the second quarter due in part to the Telca Awards, which are held in June, though there have also been increases in other measures of market activity. Much of this activity is related to the growth of businesses and expansion of workforce across both the SME and I&C sectors, in particular for TPIs such as Green Energy Advice Bureau and Utilitywise. However, Utilitywise, one of the leading TPIs in the Cornwall Insight Indices, has also announced that it has made internal changes in response to issues that emerged in June and July. Reports of under-consumption on certain contracts and the required repayment led the TPI to issue a profit warning, suspend its full-year dividend and adopt a new accounting standard a year ahead of schedule.

3. Price transparency creates new challenges As a result of the CMA’s Price Transparency Remedy, which required suppliers to disclose the prices of all their available contracts to certain micro-business consumers from 23 June 2017, Cornwall Insight has found there to be a varied interpretation of compliance with the licence condition. This has created quite a disparity as to the quality of information published. Businesses obtaining price information can be faced with a relatively laboursome process, with information not necessarily being provided in the most user-friendly format. With the lack of consistent requirements for input information across suppliers, inconsistency in the way prices are displayed and the format these prices are displayed in, tariff comparisons are a time-consuming and difficult activity for business users. Cornwall Insight has heard anecdotal evidence that the provision of this information online is increasing the number

of enquiries being made to suppliers. This can create a backlog for suppliers in getting SME prices through the TPI channel. However, in many instances, this may encourage businesses to use TPIs as they might feel they lack the time, knowledge and expertise to find the most suitable contract themselves. Cornwall Insight TPI Indices As part of the report, Cornwall Insight scores the TPIs listed in its indices according to the services they provide, their financial scale, their number of employees and the number of contracts or amount of volume they procure each year. Its SME TPI Index tracks approximately 200 TPIs, while its I&C TPI Index assesses upward of 150 TPIs. The TPIs scoring highest in each of the Indexes are set out in figures 1 and 2, which highlight that Make it Cheaper continues to lead the SME TPI market while Utilitywise and Schneider Electric jointly lead the I&C TPI market. te

Cornwall Insight has found there to be a varying interpretation of compliance with the CMA’s rules around price transparency

Haven trumpets top I&C credentials Haven Power has been named the UK’s best performing energy supplier by third party intermediaries (TPI’s) in this year’s Cornwall Insight Report. The report, which provides suppliers with analysis of the energy landscape, ranks Haven Power as the top performing energy supplier for brokers for large industrial and commercial businesses. The report also recognises Haven Power’s growth and its continued development of its account management and services. According to the report a dedicated account manager was consistently cited as the most important service beyond energy contracts for large businesses, where Haven Power ranked highest with 96% of TPIs’ needs being met. Paul Sheffield, chief operating officer at Haven Power, said, “Everything we do at Haven Power is about helping our customers make a better use of energy. We’re continuing to build on our reputation, specifically with a focus on providing the right solution for the right customers whether they come to us via a broker or direct.” Haven Power also topped the rankings for the flexibility of its products, with 83% of TPIs saying their needs were met and that its willingness to offer a more bespoke service to large businesses was a refreshing quality. Sheffield continued: “We’re committed to maintaining a close working relationship with leading TPIs to ensure that we can provide the right energy supply to their customers. “To be recognised as the leading provider to TPIs in the Cornwall Insight Report is something we’re extremely proud of at Haven Power, and we’ll continue the hard work.”

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October/November 2017

GAS & ELECTRICITY

Hedging for winter volatility Ben Spry, head of risk management services at Npower’s Energy HQ, looks at the coming winter and asks how stormy will gas and power markets get?

ast winter was one of the most volatile for gas and power markets that the UK has faced in recent years. This was driven largely by French nuclear outages – which exposed the UK’s vulnerability to unplanned events – as well as reliance on European interconnectors. Allied to the retirement of ageing thermal plant, the UK entered winter 2016 with the slimmest reserve margin since market liberalisation in the 1990s. The previous five years had seen a price range for gas plant generation margins, for example, of 0-£5/MWh. Yet going into Q4 of 2016, so-called ‘Clean Spark Spreads’ (the revenue from generating a unit of electricity during ‘baseload’ operation, after fuel and carbon costs) soared towards £30/MWh. Businesses are understandably keen to mitigate the risk from exposure to such volatility. So Npower Business Solutions has produced a Winter Outlook report to help inform hedging strategies. Below are the highlights and factors to consider this winter. Storage Both gas and power markets steadily pushed up as we got closer to the winter, largely driven by a series of unplanned gas outages which continued into October. This combined with scheduled maintenance saw risk premium priced into the forward curve. The absence of the UK’s largest natural gas storage facility, Rough, has also provided support for both gas and power markets. Its closure was widely anticipated

18 October/November 2017

The UK energy market is bracing itself for another volatile winter, with weather a key driver of price

by the market meaning prior to the announcement in June from Centrica Storage, and had already been priced in. Centrica has been granted permission to convert 0.868 billion cubic metres of cushion gas into working gas which, from the start of October it has been withdrawing at an average rate of 12mcm/day. The site is still awaiting approval to withdraw the cushion gas beyond Q4-17. However, this is unlikely to impact the market, as withdrawals will be at a flat rate and will not be significant volumes. Compared with last year, gas storage levels in the UK are significantly lower, as a direct result of Rough’s closure. There have been some bullish movements in the gas market recently, largely driven by unplanned outages, some cooler temperatures and lower renewable generation which has increased gas demand for power generation. This has incentivised storage sites to withdraw earlier than normal, with there also being a lack of LNG arriving in the UK as a heat

wave in Asia diverted cargoes. In the case of cold temperatures UK prices will have to increase to incentivise imports from Europe and LNG cargoes. Geopolitical factors Geopolitical risk has returned to the oil market, which has seen the front month Brent contract increase from $45/ bbl in June to currently trade around $58/bbl. Instability in the Middle East results in the risk of interrupted supplies from the oil-rich region. IraqKurdish tensions have recently resulted in Iraqi Kurdistan’s oil exports more than halving. Iranian exports could also be at risk after US President Donald Trump “decertified” the 2015 Iran nuclear deal. US production figures have been providing the main downside to oil prices in the second half of 2017. There has been a slowdown in shale production in the US. However, this takes time to filter through into the market. With an increase in the slowdown of production, upside risk to prices has increased. Overall, there are clear

signs the market is tightening gradually, supported by Opecled cuts, tension in the Middle East and lower US production. LNG LNG cargos arriving in Europe and the UK have been subdued heading into winter. Last September the UK received nine tankers, totalling more than 2 million cubic metres of gas compared with just two full tankers and a half load with just 500,000 cubic meters this September; this has been a bullish driver heading into the winter period. In fact, LNG deliveries to the UK this year have lagged significantly behind last year’s levels. The rate of LNG supply is, however, likely to outweigh the rate of demand growth in the future as more projects come on stream globally. Cargoes that are surplus to Asian demand are likely to end up in the European market, due to the liquidity of hubs and the ability of the power sector to absorb gas, with CCGT on the rise in the wake of de-commissioned coal. Prices are also likely to

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Sponsored column

be pressured, with surplus LNG weighing on European, Asian and US differentials. Additionally the US has committed to the delivery of 80bcma to come online in 2018-19, so we may see more LNG heading to Europe in the second half of the winter 17/18 period, easing gas price volatility. This does, however, depend considerably on four uncertainties driving the future of Asian demand: the rate of Japan’s nuclear re-start programme, the scale of switching from coal to gas in China, the scale of imports in declining markets such as Pakistan, Bangladesh, Thailand; and the cost of LNG in India, where the subsidy regime and scale of infrastructure investment are key factors. Renewables impact The UK’s renewable capacity is ever increasing, with 5GW of renewables currently under construction and another 33GW in planning. Greater renewables volume is likely to increase volatility in the power market. This is particularly expected when renewable generation moves with the weather outlook and margins are tighter in winter months. Although coal generation is decreasing, facilities are likely to be relied upon to balance the system when renewables are low. National Grid’s winter outlook states that the forecast power margins for this winter are looking healthier than previously expected. This has been aided by new policies and schemes which have resulted from the Electricity Market Reform. Capacity market When it comes to electricity, this winter we have the added factor of a fully operational Capacity Market. This should

– in theory – improve National Grid’s ability to cover any demand increases or shortfall in generation caused by lower wind generation or slumps caused by unplanned outages. However, we still anticipate some volatility due to increased renewables and decarbonisation of generation. Conclusion To sum up, there are a number of bullish factors for prices this winter, with low storage levels and subdued LNG tanker movements, meaning we are more likely to rely heavily on imported gas from Europe – which leaves the UK vulnerable to any unplanned outages or flows being directed elsewhere. There are also ongoing reviews of hundreds of components at French nuclear plants; the risk of the plants shutting down in a repeat of last winter has left traders nervous and significant risk premium has been priced into winter power contracts. Pound volatility is likely to remain throughout the winter period amid the ongoing Brexit negotiations, with no clear vision currently on the table. With the UK heavily reliant on European imports, especially due to the loss of Rough, a weaker pound will drive upside risk. As always, weather will be a key price driver over the winter months. Initial indicators are pointing towards a cooler than average winter for the UK and North West Europe. It is, however, too early to forecast this with any reliability. Unforeseen events often have the largest impact on the market. But by understanding some of the underlying fundamental drivers, you are better equipped to implement an effective purchasing strategy for this winter. te

The UK entered winter 2016 with the slimmest reserve margin since market liberalisation in the 1990s theenergyst.com theenergyst.com

DCP 228 – Monitoring the effects and mitigating the impact From April 2018 the new regulatory change from Ofgem, DCP 228, will alter the way in which electricity distribution charges are calculated. This will affect the way business properties are billed. Distribution charges currently account for up to 19% of your bill. As a result, you may look to re-examine the times at which you use energy in order to reduce costs. The main distribution charge is DUoS (Distribution Use of System) which correlates to usage and is calculated using a Red, Amber and Green banding system. The aim of DCP 228 is to revise how DUoS charges are calculated, so they accurately reflect the costs incurred by network operators during peak and non-peak periods. The change will also affect Common Distribution Charging Methodology (CDCM) and how customer tariffs are set. Under the existing CDCM structure, energy consumed during DUoS Red Band (peak) periods is priced much higher than during either Amber or Green (non-peak) periods. However, the new change will mean that charges will be lowered during Red Band periods, and raised during Amber and Green. This will essentially flatten the charging structure, creating more of a balance across the bands. How will your business be affected? All businesses will be affected by DCP 228, excluding the UK’s larger electricity connectors, whose charges are governed by the Extra High Voltage Distribution Charging Methodology. For many half-hourly businesses, DCP 228 will mean a rise in energy costs. However, those with a high use at peak times may see a small decrease on their bills. The level of impact will be based on your region and DNO (Distribution Network Operator). How can I monitor these effects and reduce impact? Monitoring when your business is using the most energy is the first step to reducing consumption when tariff rates are at their highest. The next step is ensuring that

you have the right data at your fingertips. STC Energy’s profile alerts service helps you to use this data to identify opportunities to reduce consumption. This service uses intuitive software that can automatically detect unusual patterns of energy consumption in half-hourly profile data and issue alerts allowing action to be taken. The system has three stages: 8 Analysing data to produce appropriate profile targets 8 Monitoring consumption against target and detecting exceptions 8 Issuing profile alerts Profile alerts are an intuitive way to combat energy waste and other exceptional consumption. Profile alerts are successful in identifying energy waste directly and in suggesting behavioural changes that can be implemented to reduce wastage. Profile alerts work for both small and large multi-sites that use HH, AMR electricity meters and data loggers, providing great cost saving and efficiency opportunities.

Case study – Superdrug Using our profile alerts service, STC has helped reduce energy waste and save costs for several large multi-site organisations. One customer, Superdrug, saved £230K by successfully rolling out AMR meters estate wide and using half-hourly data to monitor energy consumption. Read the full case study on our website – stcenergy.com STC Energy is part of the Inspired Energy Group – inspiredenergy.co.uk

BATTERY STORAGE

FFR prices to mirror Stor’s fall? The Energyst asked market participants whether they believe battery storage will start to cannibalise high prices currently available for firm frequency response (FFR) provision

reater volumes of fast-responding assets, such as batteries, may start to erode frequency response prices. The question is: by how much and how soon. “Our modelling shows storage has a major role to play – and if battery costs keep coming down then you will have an oversupply of frequency response services,” says Restore’s Louis Burford. “But National Grid’s challenge remains – inertia is continuing to come off the system – and the challenge around rate of change of frequency (RoCoF) will increase as that happens,” he says. “So the demand for frequency response will increase, but [prices] will depend on the volumes of assets able to quickly help control frequency.” However, Burford believes there will have to be a floor price for frequency response. “Otherwise you would start to see the mandatory frequency response providers, large power stations, finding it is not commercially viable for them,” he says. Engie’s head of demand response services Mark Cavill agrees. He says the fact Engie is reinvesting in pumped storage assets illustrates its belief that frequency response offers a long-term revenue stream. “Due to RoCoF, or a lack of inertia in the system, frequency response is inherently required by the market to manage events. So I think frequency response will [continue to] be a high value service,” says Cavill.

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Louis Burford: Supply and demand will affect prices

Source: Baringa Partners

Figure 1: Frequency response prices

Mark Cavill: Faster services will still command premium

Eamonn Boland: STOR prices fell 75%. We see similar falls for frequency response

“What will become more important to Grid is the dynamic nature of that response and also the closeness to real time in terms of managing system frequency.” Cavill therefore thinks static frequency prices will continue to erode as the premium passes to faster responding dynamic frequency. However, Baringa Partner’s Eamonn Boland suggests falls for even the most technically capable frequency response could be significant. “There is a material drop in

frequency response revenues in our projections,” he says. “A public reference point is last summer’s Enhanced Frequency Response prices clearing at an average of £8/MWh for a response within one second and that compares to the similar provision in the commercial market of £18-£22/MWh.” Boland points out that Stor revenues have settled at around a quarter of their peak rates seven years ago (see figure 1). “We forecast in our modelling a similar downward pressure on frequency response pricing.” te

The DSR Event and report Eamonn Boland, Louis Burford and Mark Cavill were among market participants taking part in panel sessions at the DSR Event on 7 September. The conference – sponsored by National Grid, BIU, Enernoc, Engie, Eon, G59 Professional Services, Restore, UK Power Reserve & Total – examined challenges and opportunities for businesses and public sector organisations in unlocking flexibility. Speakers from NHS Scotland, Marks & Spencer, Welsh Water and Unite Group outlined their DSR experiences to date, while battery storage applications, risks and revenue streams were also discussed. The conference marked the launch of The Energyst’s 2017 DSR Report: Shifting the balance of power, which contains a survey of businesses and public sector organisations around DSR and storage, as well as the views of market participants on challenges and opportunities. The report is available as a free download at theenergyst.com/dsr

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BATTERY STORAGE

Positives and negatives The Energyst asked I&C firms and public sector organisations mulling energy storage for their thoughts. Brendan Coyne reports

he threat of rule changes to behind-themeter arrangements, uncertainty in frequency response markets and short-term contracts make storage projects quite hard to value, says Mark Fitchett, who handles energy procurement for Ineos-owned chemicals firm Inovyn. “It looked quite interesting a year ago, with four-year contracts. That was an interesting proposition and bankable,” says Fitchett. “You could build a business case with a degree of certainty.” But the enhance frequency response opportunity has been and gone, and other revenue streams “have got a lot less certain over the last year”, says Fitchett, citing both embedded benefit changes and threat of falling frequency response revenues due to cannibalisation.

22 October/November 2017

“The only plus side is that batteries have got a lot cheaper,” he says, “provided you are not buying in pounds.” However, the firm is openminded about batteries and is considering where they may deliver some benefit. “We don’t have a readymade site at the moment but [batteries] are one of a number of options we are looking at.” At Inovyn’s large sites with import and export capacity, those projects could potentially be up to 50MW, says Fitchett. While ex-solar developers are beating a path to his door, any investment would likely be self-funded, he adds. “But that’s a big ‘if ’,” says Fitchett. While the technology is “relatively simple” to add to a site and “intuitively looks attractive, dig a little deeper and there are a number of concerns

you need to look into”, he says. “You don’t necessarily know the lifetime of these assets and that adds to the uncertainty.” Combined with fluctuating revenue and regulation, that makes it very difficult to take projects to the board for sanction, says Fitchett. “Ofgem’s intention around behind the meter arrangements is not clear. So who knows where you are two years down the line,” says Fitchett. He suggests the regulator is “doing a really good job of creating massive regulatory uncertainty for this whole area”. “So, there is just a lot of compound risk to get a project through,” Fitchett adds. “Intrinsically it should be something that works well [for us]. But there is too much uncertainty. We are keeping an eye on batteries, but it’s not top priority.”

SME storage: food for thought Based in Yorkshire, I’Anson Brothers manufactures animal feeds around the clock. The firm’s annual electricity bill is about £500,000 and managing director Chris I’Anson is considering battery storage as a means to mitigate both peak costs and supply quality issues. “We get brownouts, perhaps half a dozen times a year, which stops the factory, because it is all automated,” he says. A battery would address that issue due to speed of response. I’Anson says he has a “drawer full of quotes” for a battery system and had originally considered a 1-2MW unit, but it now mulling a smaller battery alongside a generator. While the business “tends to fund things ourselves”, I’Anson is considering both self-funded and finance options, due to competing demands

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Manufacturers and heavy industry are facing uncertainty, making energy storage projects hard to value

Battery storage technology is relatively simple to add to a site and ‘ntuitively looks attractive. But dig a little deeper and there are a number of concerns you need to look into’

for capital, with production and sales taking precedence. On a pure battery system, I’Anson says an aggregator has modelled a payback period of 5.5 years. “That looks relatively attractive,” he says. “We have been around 118 years, so we can take a longer view than some.” Meanwhile, business growth has eaten up surplus production capacity and the firm has no flexibility in its processes to avoid peak charges. So will I’Anson go ahead, with either a pure battery or hybrid system in the near term? “I would like to… but there isn’t a vast amount of suppliers with experience. A lot of people say they can [do storage]. They all talk a good story, but the complete package doesn’t appear readily available at the moment,” says I’Anson. “It’s just the same as if you buy a car. You like to go and see the car and kick the tyres – and there isn’t many of these things to go and look at.” Council mulls complexity Surrey County Council is at an early stage of considering battery storage as part of “tentative steps” around demand reduction and response. Energy manager Paul Hasley says the council is mulling two main options: combining storage with the estate’s existing generation, both gensets and solar; or using the estate to generate lease revenues from storage developers. Hasley says the latter option may be its eventual route

Retail value Marks & Spencer is mulling battery storage, potentially to use in tandem with back-up generation and ultimately replace them at the end of asset life. While initially looking at feasibility of frequency response using batteries, storage is part of a longer-term strategy by the retailer to reduce overall peak demand on the power system and to do so with greener sources, according to energy efficiency manager Maria Spyrou (pictured). The company recently updated its ‘Plan A’ targets and now aims to make 50% of its load flexible by 2025. Sage council Devon County Council has considered energy storage to monetise onsite back-up. But investment levels and paybacks are significant hurdles, given revenue and regulatory uncertainty. Corporate energy manager Alastair Mumford (pictured) says “the council doesn’t really have an appetite” for 10-year paybacks based on uncertain revenue streams but may pursue a funded route. “My conclusion is that it is high risk, therefore we don’t want to be the primary investor. So [if anything, we may] go down the Power Purchase Agreement route, make little or no capital investment, and share the revenue with the developer,” says Mumford, though he admits “concerns about the sustainability of that market”. forward, given that much of its back-up generators are relatively small and its solar generation, while collectively totalling around a megawatt, is widely dispersed across council buildings and schools. “What probably has more potential for us, as a countywide landlord, is looking at our property portfolio and trying to map that across the distribution network, to see where the pinchpoints are,” says Hasley. The council’s estate falls across two DNO areas: SSE and UKPN. “If it turns out we have areas of land next to substations with capacity, that might be

of interest to a developer. That is potentially a bigger opportunity for us but is dependent on getting the information from the network.” Hasley says while storage and flexibility are non-core to the council, “we know there are opportunities out there and we are interested in exploring them”. However, while there are a number of different ways of accessing flexibility markets, “they all seem quite complex”, says Hasley. “Trying to work out which is the best fit for an individual site or estate can be quite challenging.” te

Download our free battery storage report The Energyst’s 2017 Battery Storage Report contains a number of other views on storage and outlines some of the potential risks, rewards and business cases for storage applications. Sponsored by Endeco, Eon and National Grid, the report also provides sponsor views on the market outlook and opportunity for businesses to cut costs and generate revenue by using storage to help balance the electricity system. Download your copy, free of charge, at: theenergyst.com/storage

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October/November 2017

BATTERY STORAGE

Solar farm subsidy-free first Anesco opens what it claims is the first solar farm in the UK to operate without a subsidy Solar capacity at the Clayhill site is 10MW, with 6MW of battery capacity

enewable energy developer Anesco has officially opened a collocated solar and battery storage plant in Bedfordshire.

Solar capacity is 10MW at the Clayhill site, with 6MW of battery capacity and the company says it is the first solar farm in the UK to operate without a subsidy.

While investors remain keen on acquiring solar farms with guaranteed incomes, support schemes are now closed. But there are still viable projects, particularly

collocated with storage, according to Anesco. The firm plans to bid power generated by the Clayhill development into the T-4 capacity market, which, if successful, would generate additional support payments. The battery will also be used to provide frequency response services and is part of a storage pipeline of some 185MW that Anesco plans to complete by the end of 2018. The company already operates about 480MW of solar from more than 100 farms. “Clayhill is a landmark development and paves the way for a sustainable future, where subsidies are no longer needed or relied upon. Importantly, it proves that the government’s decision to withdraw subsidies doesn’t have to signal the end of solar as a commercially viable technology,” said Anesco executive chairman Steve Shine. “By deciding to collocate the 6MW battery storage unit and by working closely with our supply chain partners, we have been able to achieve a subsidy-free development.” te

Solar and storage farms ‘can still claim Rocs’

t appears large solar farm owners that are planning to install battery storage will be able to charge their batteries with PV and still claim subsidies for all power generated under the Renewables Obligation (RO). Ofgem made the announcement on 13 September via a blog post, rather than a regulatory document. The regulator also stated that changes to installations

24 October/November 2017

would be reviewed when made, and that ‘bespoke’ guidance around how collocated storage will work with installations that qualify for subsidy under the RO and Feed-in Tariff schemes would be published later this year. In the blog, Luke Hargreaves, head of renewables, renewable electricity at the regulator said: “Over the past year or so there has been heightened interest in locating electricity

Ofgem: “Arrangements in place at several commercial scale solar installations allow for ROCs to be claimed on all the renewable electricity generated”

storage systems at renewable installations. Today I’m pleased to say that we have made an important decision concerning some collocated storage facilities. “We have determined that the arrangements in place at several commercial scale solar installations allow for ROCs to be claimed on all the renewable electricity generated, including any that is used to charge the storage devices. te

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BATTERY STORAGE

Heading off a power struggle Car makers become power aggregators as DNOs fear overnight EV boom. Brendan Coyne reports

ar manufacturers are starting to become aggregators of flexibility, helping grid operators balance the power system by using car batteries and smart charging systems. But some power grid operators fear that the uptake of electric vehicles (EVs) could happen much faster than anticipated – and potentially all at once – posing serious network management challenges. EVs remain a fraction of UK car sales, currently about 2% of new registrations. But sales are rising, battery costs are falling, range is improving and manufacturers and governments are making clear their intent. Predictions of cost parity with fossil-fuelled cars put the tipping point somewhere in the mid 2020s. But it is notoriously difficult to gauge the pace of change. Hazard perception “That’s what keeps me awake at night,” said Alan Collinson, engineering specialist at Scottish Power Energy Networks. “It might be all or nothing, suddenly somebody hits the on button and we go from 100,000 [EVs] to millions almost overnight. Are we

The impact of charging electric vehicles during evening peak periods is the primary challenge

going to be ready for that?” The network, along with other distribution network operators (DNOs), is conducting trials under Ofgem’s innovation allowances to try to work out optimal ways of managing increasing demands on local networks. But, said Collinson, “within trials you have a controlled environment, you can fix things. In a live environment, you only have one opportunity to get it right. That is what

keeps me awake at night”. Taking part in a panel session at Western Power Distribution’s Future Networks conference, Collinson said the impact of EVs on evening peak demand was the primary challenge. While other conference speakers dismissed as wide of the mark mainstream press stories around “not being able to charge cars while boiling a kettle”, or “20 new nuclear power stations needed to charge EVs”, Collinson said it was

important to set “principles” around charging from the get go. Controlled stop “What concerns us most is the tea time peak,” he said. “[Failure to manage that] runs the risk of building more network, because copper is copper [with finite capacity],” said Collinson “The practicalities of digging up residential streets to upgrade low-voltage networks on a wide scale is pretty unthinkable. So development of the smart grid

Storage project a ‘blueprint’ for EV charging

airing batteries with EV charging stations can help to align sustainable transport and energy needs for the future. At South Mimms Welcome Break motorway services, Open Energi has installed a 250kW/500kWh Powerpack alongside one of Tesla’s largest and busiest UK

26 October/November 2017

charging locations. The Supercharger site can charge up to 12 cars at one time, and since popular charging periods often coincide with peak periods of grid demand – between 4pm and 7pm, when electricity prices are at their highest – flexible solutions are needed to ease

the strain on local grids and control electricity costs. Integrating a Powerpack at the location has meant that during peak periods vehicles can charge from Powerpack instead of drawing power from the grid. Throughout the remainder of the day, the Powerpack system charges from and discharges to

the grid, providing a Firm Frequency Response (FFR) service to National Grid and earning revenue for balancing grid electricity supply and demand on a second-by-second basis. Open Energi owns and operate the Powerpack, which is part of its portfolio of assets that help maintain

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is essential. But there is spare capacity in the network, so an EV looks ideal if it is being charged after the tea time peak.” Some level of coordination and control of charging is therefore necessary. “Not necessarily direct control and not intrusive; almost imperceptible from a customer’s perspective,” said Collinson. “But you have to set that principle because trying to fix the problem retrospectively will be very difficult,” he added. “As time goes on, we can understand how that will happen. We can learn a lot from trials, but [those lessons are] not necessarily applicable to a wholesale rollout.” Fleet management Western Power Distribution’s Nigel Turvey suggested carmakers or other third parties may be those that engage with EV owners around smart charging as well as other services. He pointed to the recent Nissan-Ovo partnership around home batteries (see story, right) and vehicle-to-grid (V2G) services, which will use EVs to balance the grid and share revenue with owners. Nissan has already made clear it is no longer just a car

company but an energy services company. The company’s trials with Leaf vehicles in Denmark suggest EV owners can earn ¤1,300 per year by using car batteries to balance the grid. “You can see car companies acting effectively as aggregators and being that trusted party that people engage with,” said Turvey, though he added that DNOs, not traditionally customerfacing, must also “step up” engagement with customers. Power slide Speaking at the same panel session, Nick Brooks, head of energy at the Office for Low Emission Vehicles (Olev), said that the Automated and Electric Vehicles Bill, due to be implemented after party conferences, will ensure future EV charge points are smart and therefore controllable. While that will enable network constraint management, Brooks said industry and policymakers “shouldn’t shy away from the fact that EVs require power”. “We can shift charging to off peak, however EVs will require some investment in our electricity system,” he said. “But that is offset by reduction in spend on fossil fuels. So consumers as whole should be making quite a big saving.” te

The practicalities of digging up residential streets to upgrade low-voltage networks on a wide scale is pretty unthinkable

infrastructure globally the frequency of the grid. Combining batteries and electric vehicles makes vehicle charging part of the solution to integrating more renewables without affecting drivers, unlocking vital flexibility to help build a smarter, more sustainable system. The firm says its project at South Mimms provides a

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blueprint for the development of electric vehicle charging infrastructure globally. Moreover, by reducing reliance on fossil fuelled power stations as a means of balancing supply and demand, Open Energi claims the Powerpack helps to reduce UK CO2 emissions by approximately 1,138 tonnes per year. te

Energy supplier and carmaker launch vehicle-to-grid service Nissan and OVO announce new partnership

Carmaker Nissan and energy supplier Ovo are attempting to gain first mover advantage in the UK vehicle to grid (V2G) market. The two are collaborating on home storage and electric vehicles, announcing a deal in October. Should the firms succeed in selling significant volumes of home batteries and smart controls, along with electric vehicles, the outcome could have significant bearing on markets such as frequency response. Distribution network operators will also take a keen interest in the venture’s success or otherwise (see opposite). Nissan said back in June that it was a company “not just talking about electric vehicles (EVs), but energy services”. Eduardo Mascarell, head of vehicle to grid and stationary storage at Nissan Europe, told National Grid’s Power Responsive conference that Nissan “believes that [V2G] is the cheapest solution to balance the grid – and the end user becomes part of the solution. “The automotive and electricity industries are coming together and working together because of EVs,” added Mascarell.

“The link between the car and the grid is extremely useful. The car is not just a car any more. It is a platform providing added value to the end user and to the grid.” The deal with Ovo packages the energy supplier’s intelligent controls and Nissan’s home storage system alongside a vehicle to grid programme for customers buying Nissan Leaf vehicles from January 2018. That will allow householders to sell power back to the grid, and take a revenue share from Ovo, which can trade flexibility across several markets and products. The supplier said it will launch time of use tariffs for participating customers. Announcing the deal, Ovo said if all 20,000 Nissan electric vehicles currently in the UK were connected to the energy network, they would generate the equivalent output of a 200MW power plant with a 10kW charger. The company suggested that if all UK cars were electric and intelligently connected, it could equate to a 200GW virtual power plant. However, whether customers will engage with smart charging and time of use tariffs is a significant unknown factor. te

October/November 2017

DEMAND-SIDE RESPONSE The NHS could be a major DSR player

Shift opinions to shift loads Kathryn Dapré, head of engineering, energy and sustainability, NHS National Services Scotland, tells Brendan Coyne about the challenges in harnessing flexibility within the health sevice.

he NHS could be a major player in demand-side response. Many sites have significant generation assets and it is financially stressed. But for now its participation is limited. Kathryn Dapré, head of engineering, energy and sustainability, NHS National Services Scotland, says that this is not for lack of trying. “The main barrier is cost. You are often told there is no cost [of entry]. But there is a cost associated with updating equipment, particularly switchgear, and also significant costs associated with G59 grid connections,” she says. An aggregator’s survey of its main estate suggests a seven-figure annual revenue sum could be realised via DSR participation. But only one new site (of 40 large acute trusts) is going ahead with the aggregator’s full recommendations. Another site is “unofficially” doing DSR, by

28 October/November 2017

changing maintenance schedules to match red network charge periods. “The cost reductions from peak lopping have been significant,” says Dapré. “But the next step would require necessary switchgear upgrades.” Sceptical engineers Expense can be compounded by inertia and fear of technical risk. Some sites are “categorically not interested”, says Dapré. “The reasoning is that ‘the equipment is too old and it won’t cope’ or, ‘we are

not prepared to change our maintenance schedules. We don’t want that dictated to us’.” That suggests engineers are king. “Yes [they are],” says Dapré. “We are under more financial pressure – all NHS boards and trusts are – but the engineers generally will make the decision [on technical issues].” However, if something is deemed to be detrimental to patient care (such as noise from running generators more frequently) or infection

controls, “it will not go ahead”, says Dapré. “It doesn’t matter how much energy or money it might be saving: we will not compromise on those aspects.” Typically though, she says, “we are not getting to the clinical decision. It is still happening at a local engineering level where they are saying ‘we know this kit, it is not capable of functioning at this level and we are not doing it’. They would need to be told to do it.”

Make public funding easier to access Kathryn Dapré outlined her experiences of attempting to move forward with flexibility at The Energyst’s DSR Event in September. She also asked policymakers to create support packages that recognise the challenges and inertia at the coal-face. “Every so often we get an announcement of a grant scheme or a funding scheme and on paper it looks great. But then the rulebook comes out about how you can apply and who can apply for it. And invariably, government funding schemes never quite do what they are meant to, because of all of the [restrictions] in place,” said Dapré. “So the plea to anybody from government who wants to see [DSR] progress, is: Put funding in place, but make it simple for us to get so that we can push these things through. The caveats I have seen around some schemes are such that it means it just doesn’t happen.”

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Which would require mandate from government? “Yes, it would have to be a mandate from government to say ‘you must do this on every site or you must give documented evidence that you have considered it’.” Cheques and balancing Even if that mandate materialised, cost would remain an issue, given genset and switchgear upgrades can be significant items, particularly at older sites, where costs would “run into six figures”, says Dapré. Energy Performance Contracts (EPCs) could help solve cost and risk issues. Dapré is a fan, having seen “massive savings” from them. But funding is a problem. “We have two EPCs at the moment. One is up and running and one is about to reach practical completion, with a third going through tender,” says Dapré. “I would like to do more, because the EPCs we are doing are fantastic and are leading to improved equipment and massive savings – and allow us to explore opportunities such as DSR much more. But right now we are hamstrung by accountancy rules.”

The figures coming out of the Capacity Market mean it is no longer something that people can ignore and put in the ‘too difficult’ box Kathryn Dapré

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She says changes to accountancy rules ESA10 and IFRS16 “mean we cannot undertake further EPCs unless we fund them ourselves”. As things stand, when IFRS16, comes into effect in 2019, “all leases come on balance sheet” in Scotland at least, says Dapré. “And that is going to have a massive impact on the public sector.” Forcing the issue The Crown Commercial Service has much responsibility for public sector procurement. This summer it appointed six DSR providers to its framework agreement. It has also drawn up a standardised template to try and simplify DSR procurement. Dapré welcomes such moves. But she thinks trust leaders – and policymakers – could take a stronger role in driving change. However, as non-commodity costs continue to rise, “financial reasoning” is starting to kick in. “Whereas a few years ago, we couldn’t see much of a financial benefit [from DSR], now we can actually see it much more. Now we can say, ‘in a few years time we will have £90/ MWh hitting us at peak times, we need to do something’.” Turning tide While engaging the NHS in DSR appears akin to turning the Titanic, Dapré takes the long view. “I think it is changing, because the kind of figures coming out of the Capacity Market mean it is no longer something that people can ignore and put in the ‘too difficult’ box. “And I think when one or two sites implement DSR, then the others will follow suit. Nobody likes to be the first. So the more case studies we can have, the better. “So the positive is that while we are not doing much, we are starting to do something – and if those things pay off, more will follow,” says Dapré. “We just have to keep raising awareness.” te

DEMAND-SIDE RESPONSE

Unlocking frozen assets Restore outlines the journey of cold store firm Partner Logistics from simple demand-side response programmes to maximising its flexibility across frequency response and wholesale markets

artner Logistics provides automated warehousing and frozen storage solutions for leading food producers, retailers and wholesalers. With a combined pallet storage capacity of more than 500,000 and more than 5.5 million annual pallet movements, mitigating the increasing cost of energy is a high priority. In 2013, working closely with Restore, Partner Logistics moved into short term operating reserve (Stor) and took advantage of prices of up to £30,000/MW/ year. Restore worked closely with the incumbent maintenance provider for the site’s compressors and fans, to identify the temperature boundary conditions within which the sites could offer a reduction in power consumption for up to two hours. In 2014, Partner Logistics advanced its energy management strategy and moved to a ‘flexible day ahead cashout contract’ with its energy broker and implemented automated Triad avoidance to maximise the value of site flexibility. Using Restore’s algorithms, Partner Logistics was able to avoid Triads with less than 12 hours of power reduction over the winter period. Follow the money Stor value plummeted in 2014 due to an influx of providers. Determined to continue to drive innovation and take advantage of the evolving market, Partner Logistics started to explore the technical limitations of its

30 October/November 2017

In addition, the new flexible day ahead cashout contract outperformed the previous fixed tariff year by 10%.

cooling systems and worked closely with Restore to ensure it became one of the first organisations to move from Stor to firm frequency response (FFR) in January 2015. The move increased net revenues from demand response by more than 300%, with less impact on processes, as the average activation lasted between three and five minutes, requiring less than six hours of use in 2015. Patented algorithms in Restore technology minimise FFR’s impact by activating only the exact amount of power required to recover frequency. That means reduced impact on site processes compared to the static market, which switches off all assets when frequency reaches a pre-defined frequency set point.

Partner Logistics received a landmark dynamic firm frequency response contract in 2016 where it captured 24 months of fixed FFR revenues at peak market prices

Peak prices Partner Logistics received a landmark dynamic firm frequency response contract in 2016 where it captured 24 months of fixed FFR revenues at peak market prices, due to an advanced trading methodology executed by the Restore trading department, which stakes its reputation on winning auctions at the highest revenues in primary reserves across Europe. The company then began a UK wide sub-metering programme to identify whether it could increase visibility of flexibility on individual assets and advance its trading strategy to buy and sell power closer to day ahead and on imbalance. Partner Logistics has secured a utility contract to capture within-day prices and will actively steer its consumption to further exploit the value of flexibility with FlexTreo, Restore’s proprietary flexibility platform, which uses realtime energy market data to capture real-time savings. te

Using flexibility to fund efficiency Participating in demand-side response and structuring energy contracts to take advantage of flexibility is adding further benefits to operations, says Partner Logistics UK technical manager, Ian Harvey. The DSR revenues cover the cost of its advanced metering programme, “which will give us a better view of what assets are consuming and the variables that affect consumption”, he says. “We would otherwise have faced capital expenditure [for that programme] and because of that, and the DSR programmes we are running, we will start to see more noticeable savings.” Harvey’s advice to other firms considering DSR? “Choose suppliers to compare carefully. Don’t go for the one offering the highest returns, because more often than not, they do not,” he says. “Find a supplier with a programme you can, if not fully understand, get to grips with – and with whom you feel confident enough to draw a line and say ‘no’.”

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DEMAND-SIDE RESPONSE

DSR ‘all about making the right connections’ Mark Thomas and Steven Cook, founders of specialist consultancy G59 Professional Services, outline the challenge of connecting assets to the distribution network and solutions to help firms avoid cost, frustration and delays

istribution network operators (DNOs) must ensure the integrity of their networks. They understandably take a cautious approach to allowing generators to connect and export power onto their infrastructure, which has to work for everybody, not just those looking to earn revenue from demand-side response programmes. However in some areas, generation can help manage network issues and some DNOs are beginning to procure DSR to help balance their networks. That requirement may grow in the coming years, creating an opportunity for businesses with

32 October/November 2017

flexible load or generation assets. But in the meantime, a key challenge for any firm wishing to connect assets and export to the grid is clearing the first hurdle, the G59 paperwork. What’s a G59 agreement? G59 is a standard that governs connections of generators that will run in parallel with the mains. It covers safety and other network issues that could arise from generators exporting to the grid including voltage rises, distortion, faults and other technical issues – and basically whether the network can handle extra load at that given location. Businesses that wish to connect and export to the grid

have to fill in the form and send it to their DNO. If everything is in order, the DNO sends the applicant a connection offer (ie a price) within 65 working days. It sounds straightforward, but the form requires a significant amount of technical information – and all of it must be correct. The level of complexity is such that Mark Thomas and Steven Cook believe there is room for specialist firms concentrating on that aspect of DSR. The two formally launched G59 Professional Services at The Energyst’s DSR Event in September, having already helped companies such as Marks & Spencer through the G59 process.

Sent to back of queue “If you don’t tick every box correctly, the DNO will send you to the back of the queue and stop the clock on your application,” says Thomas. “For a lot of people, because they are unfamiliar with the process, there is a risk that the clock times out, they have to reapply and they just give up.” Cook agrees. “If you are not an engineer, you will have real difficulty.” He says just knowing where to start and who to contact is not straightforward, and that the DNO ‘gatekeepers’ are not always helpful. “So if you are not technically minded and don’t know the

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process, you can spend the first few months just working out what you have to do. You might be looking at 12 months before you know whether you can even go ahead.” The DNO cost “can make or break” a DSR business case, adds Cook. “So it is key for the DNO to come back with the offer as quickly as possible and make that process as simple as possible.” Advice for energy managers? Given there are firms that can manage the G59 process, where should businesses start when it comes to demand-side response? “First, understand what assets you have, what they can do and where their technical information is,” says Thomas. “At the moment, we tend to deal with diesel back-up generators, and are moving into batteries for G59 applications. So understand what you have onsite, whether or not it can only run in island mode, whether it has got short-term parallel capability or if it has long-term capability,” he says. At that point, it is time to submit the application and find out what the DNO plans to charge. “Don’t go any further on the project until you know what the DNO costs will be. Because that can kill it before it starts. It is on the critical path,” says Thomas. “If you get a good price, you know you can do it. Then you have to work out your upgrade costs, what kind of revenues you are going to be able to stack – eg Stor, Triad, Capacity Mechanism, working with the DNO and supplier on imbalance and selling back into the day ahead market, etc.,” says Thomas. “You have to be able to model all of that to work out payback.” Factors to include are revenue versus running costs of generation, whether it will be manned or unmanned, and the cost of any potential disruption to business. “There are manpower costs,

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Don’t go any further on the project until you know what the DNO costs will be. Because that can kill it before it starts Mark Thomas

If you are not an engineer, you will have real difficulty Stephen Cook

operational costs and business impacts that you must fully understand,” says Thomas. “But at the end of the day, the DNO can just stop the scheme if, for example, there is a fault level issue. So you need to know that very quickly.” How could DNOs improve? Thomas believes DNOs have improved “across the board” in recent years, with better feedback and increased use of named individuals to help manage the application process. He says most DNOs now issue a quote within the timetable set by Ofgem, “though some still seem to hang on until the last day”. However, he thinks DNOs could be more consistent around pricing for services, such as system analysis and provision of a protection engineer to witness the G59/3 test. “The range of pricing for the same service is extremely large. We could do with the regulator bringing some consistency to pricing,” says Thomas. Similarly, National Grid Statement of Works pricing is inconsistent, says Thomas. Moreover, the need to complete a Statement of Works (SoW)

across Western Power Distribution’s networks has increased processing time. Thomas believes a solution might be to simply allow WPD to pass applications under 1MW without consultation and not to charge for any SoW for applications under 1MW. A nationwide map of connections capacity and constraints would be a huge help to businesses considering DSR – and save DNOs having to vet applications they are highly unlikely to accept. While WPD has recently produced a capacity map for its regions, Thomas says a red, amber, green system by postcode for G59/3 applications and export capability across GB would save clients time and money. Invest in the networks Although the network operators could make incremental improvements to their processes, Thomas believes there are unavoidable fundamentals that must be addressed around capacity issues. “DNOs and National Grid have to bring forward investment cases to ensure we have a supply system fit for the 21st century and beyond,” he suggests. te

Seek professional help, reduce stress G59 Professional Services was established to make the demand-side response journey as painless as possible for clients with existing and new generation assets. The company specialises in G59/3 applications, financial modelling, technical specifications and project management for blue chip companies, including Marks & Spencer. Its mission is to help organisations clear the first hurdle in providing DSR and ensure optimal returns. The company says interest in battery storage is also increasing exponentially - where many of the same challenges apply. The G59/3 application governs connections and essentially allows businesses to participate in DSR or storage. Many firms have generation assets but are restricted in terms of the power they can push back onto the grid. Obtaining ‘long-term paralleling’ capability for those assets requires permission from the distribution network operator. If permission is granted, that enables businesses to: s Participate in STOR, Capacity Mechanism, Triad management without any outage issues and maximise revenue through exporting any spill s Obtain Power Purchase Agreements (PPAs) to generate further revenue from export spill However, the G59/3 document is highly technical in nature and can be challenging for businesses to successfully navigate, which is why Mark Thomas and Steven Cook, both Chartered Electrical Engineers, founded G59 Professional Services. The company provides all associated technical services and can assist with: Independent financial modelling of projects; location recommendations based on DNO infrastructure databases, available network capacity and extensive contact network; specification writing and tender support; contestable import/export DNO works support and DSR and PPA contract support and recommendations. See www.g59.uk for further details

October/November 2017

DEMAND-SIDE RESPONSE

Better balancing data Energy tech firm Reactive Technologies has measured UK system-wide inertia. The data, verified by National Grid, is believed to be a world first

nertia is essentially what keeps the lights on. National Grid relies on inertia to keep the UK power system at a constant frequency of 50Hz. If frequency drops or rises, for example, if an interconnector trips or a power station unexpectedly goes offline, the company has historically asked power stations to use massive spinning turbines running under capacity to feed in to the system. If there is too much power, it asks businesses to quickly stop exporting to the grid, alongside other measures. With fossil plant, particularly coal, dropping off due to carbon taxes and fuel markets, inertia is diminishing. Meanwhile

inflexible and less predictable generation is increasing and gigawatts of solar, alongside falling demand in summer, compound the issue. With more accurate tools (inertia has always previously been estimated), National Grid can reduce rising balancing costs, which would lower all consumers’ bills. Reactive Technologies says its software takes in live data

to work out inertia levels on the system at any given time. The company, which hired exNokia telco engineers to develop its systems, has previously proven that data can be sent via the UK power system. This latest development could potentially enable grid operators globally to sharpen their tools and cut energy bills. The UK alone spends £1bn a year balancing the system, with costs predicted to double by 2021. These costs are passed on to consumers. Reactive Technologies’ inertia monitoring system is part of a bill-payer funded project under trials conceived by Ofgem in order to encourage smarter systems and reduced costs to consumers. Delivering

breakthrough, exportable, technologies is precisely the aim of the funding. “Being part of this innovative project to continuously measure inertia will improve our understanding of how to monitor grid stability in a changing energy environment,” said Duncan Burt, acting director of system operations at National Grid. Marc Borrett, CEO at Reactive Technologies, said the technology “gives grid operators access to direct data measurements from a national level right down to a granular post code level, so they can operate more leanly and better manage the nation’s supply and demand in line with accurate, real-time information”. te

Grid launches CO2 intensity prediction tools

ational Grid has launched software that predicts the likely carbon intensity of power on the system up to 48 hours ahead. It has also launched an open API and hopes apps developers will take its datasets and create ways for households and businesses to use power when it is cleanest and potentially most cost efficient. The programming software combines National Grid and Met Office data to forecast the share of renewable and nonrenewable energy that will be on the UK electricity grid in the next 48 hours, and the resulting carbon emissions. National Grid’s data has been verified by experts from Oxford University. National Grid director of system operations Duncan Burt, said: “We’re providing our

34 October/November 2017

forecast data in a format that allows technology companies to build innovative apps and software that could make a real difference to how and when people use energy. “Clear and concise information that can tell you in advance when’s best to turn on the washing machine, load the dishwasher or charge your car for example, is a step in the right direction towards a low carbon future. This technology puts people at the heart of it, helping everyone to use power when it’s greenest, and likely, more cost efficient.” Meanwhile, for the three months to 22 September, National Grid said almost 52% of UK electricity generation was met by low carbon sources, compared with about 35% four years ago

The increasing penetration of renewables combined with the corresponding drop off in thermal plant creates a significant challenge for the system operator. It means there is less inertia in the system with which to keep frequency stable, and means National Grid has to work harder and faster to balance the system when frequency deviates. By encouraging more people

52% Electricity from low carbon sources over summer

to think about when they use power, the system operator may help relieve some of the pressure on the system. But trying to change consumer habits will not be easy and may require sufficiently strong price signals. Conservation group WWF, which has implemented the API into a reusable widget that can help people plan their energy use, called for time of use tariffs to be quickly introduced. The Environmental Defense Fund Europe, which is working on policy implications of having the intensity data available and widely understood, urged the energy industry to collectively harness the data to create a cleaner, smarter grid at lowest cost to consumers. See the API at: carbonintensity.org.uk

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DEMAND-SIDE RESPONSE Blockchain technology ‘would enable all organisations involved to access digital data securely and efficiently’

Blockchain to solve EV issues? With record numbers of drivers switching to electric and hybrid cars, battery requirements in the UK are set to soar. Consequently DSR will play a vital role in system balancing and ensuring security of supply. Blockchain could be the missing piece of the puzzle, suggest BIU’s Martyn Gilbert and Lewis Buxton following their attendance at the 2017 DSR Event

ccording to nextgreencar.com, there were 126,000 new registrations of plug-in cars by the end of September, and many of the UK’s top car manufacturers now include EV models in their range. With government grants of up to £4,500 off the list price of eco cars, and £100m being invested in infrastructure to supply adequate charging points by 2021, these figures are set to soar. BIU customer relationship manager Lewis Buxton says: “Increasing demand for car charging means an increasing need for additional supply security. We know that the requirement for car charging is escalating but we can’t predict when or how much that demand is going to be. What we do know is it’s going to be variable, diverse and dynamic, which will place pressure not just on the

36 October/November 2017

National Grid but also on the local networks that are not necessarily kitted out for this. It is imperative that electricity generation meets demand for supply security, therefore DSR could play a vital role in the evolution of EV car usage.” But how can the energy industry record and manage the national data involved in this growing, and potentially problematic, development? “Blockchain technology could be the answer,” says Buxton, “as this would enable all organisations involved to access digital data securely and efficiently. The National Grid, DNOs, aggregators, consultants and end users will all need to share data in a timely

manner, and the complexity of the communication chain could lead to slower response times than are required. The future of electricity is going to be extremely dynamic and any solutions will have to be equally so.” Executive energy manager Martyn Gilbert agrees: “There was a lot of discussion around DSR at the event without touching on blockchain – but we think this could be a missing piece of the jigsaw. As developers of bespoke online systems, we at BIU see the development of blockchain technology as a potential way forward for DSR. “From a general perspective, feedback from DSR Event shows that clients are

becoming more interested in DSR, driven largely by rising non-commodity costs and the financial incentive to reduce or shift electricity at peak times, or increase use to maintain the National Grid frequency. “Clients in the manufacturing sector in particular are sharpening focus on cost control and revenue. There are around a dozen types of DSR schemes and a lot of high end businesses with large electrical loads who can benefit from switching to generators or reducing their load on demand. For smaller companies or industries where generators are not appropriate, for example retail, other technologies such as battery power offer a real alternative.” te

The National Grid, DNOs, aggregators, consultants and end users will all need to share data in a timely manner, and the complexity of the communication chain could lead to slower response times than are required theenergyst.com

Cementing its position Building materials manufacturer Cemex UK capitalises on process flexibility with Engie

ement production is an energyintensive process. Cemex UK, a global manufacturer of building materials, including aggregates, cement and readymixed concrete, operates two cement manufacturing plants at Rugby and South Ferriby, and a grinding plant at Tilbury. Together these three sites account for 75% of the company’s electricity consumption. Avoiding peak prices Since 2008, Engie has supplied electricity and gas to more than 150 Cemex UK sites and works closely with the company’s energy managers to help improve energy efficiency, reduce costs and cut carbon emissions. A significant part of this work has involved the introduction of load-management services at the three major production sites. The grinding mills that are a key element of the cement production process can easily be interrupted with minimal impact on the quality of the end product. That makes them ideal for load management – switching off the mills to avoid high electricity prices. Cemex UK practises voluntary load management every day, monitoring electricity prices and making decisions about when to switch off the mills to reduce costs.

capitalise on this flexibility.” Engie offers a range of demand-side response services, which help National Grid to maintain the balance of supply and demand on the national electricity network. When demand is high, and the system is under strain, National Grid needs to call on energy users (demand-side participants) to switch off certain processes, thereby reducing demand and keeping the network in balance. Rapid-response DSR One of the National Grid services offered by Engie is frequency response. This rapid-response service is used to help National Grid maintain system frequency between 49.5Hz and 50.5Hz. Sudden and dramatic changes on the network can cause system frequency to drop below the desired 49.7Hz. Frequency response providers are contracted to respond automatically in these situations by instantaneously shutting down parts of their processes to help restore system frequency. Cemex chose to participate in frequency response because its grinding mills are perfectly suited to this service, having the capability to provide

an immediate response. Engie devised a contract to suit Cemex and installed low-frequency relays at its three cement plants. These monitor second-by-second changes in system frequency and automatically trip if frequency drops below the agreed threshold, switching off the grinding mills. Valuable extra revenue Cemex decides when to make its plants available for frequency response, according to its production schedules. The company is paid a fee for every half hour that its plants are available. Hills explains: “We constantly review when to make the mills available. If we’re up against a tight production schedule, we may decide not to participate, but generally the plants are available to respond 80% of the time. That means we’re being paid an additional income through frequency response without having to alter our processes at all. We simply have to be aware that our grinding mills could be shut down for short periods without warning.” If the relays are triggered by a low-frequency event,

Frequency response has minimal impact on our operations while earning extra revenue and helping support the UK grid the grinding processes are switched off for a maximum of 30 minutes. In a typical year, the mills will be shut down through this mechanism about eight to 10 times. Full service management Engie handles all contractual arrangements with National Grid. Cemex simply informs Engie when it wishes to make its plants available, and Engie notifies National Grid. Engie also monitors all frequency response communication systems installed at Cemex Hills adds: “Frequency response has been a very successful service for us. It has minimal impact on our operations while earning us additional revenue and supporting the wider stability of the UK National Grid.” te

Maximising flexibility Martin Hills, head of energy and carbon at Cemex UK, says: “We knew that we could load manage very effectively at most of our UK sites and, in particular, our three cement plants and larger quarries, so we were keen to explore other opportunities to

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October/November 2017

CHP

Museum of Liverpool Energy Centre by Ener-G

It pays to integrate Combined heat and power specialist Ener-G outlines best practice guidelines to follow when integrating a CHP with local sites and applications.

here are a number of benefits of integrating combined heat and power (CHP) with existing site systems. Efficiency can be maximised by fully exploiting the waste heat from electricity generation and the payback period is determined by CHP running time and utility rates. CHP capacity must be matched to site demand to be economically viable and to deliver financial returns. Sizing your system CHP is sized to meet base-level demand – the constant demand for heat and electricity when the site is operational. Intermittent excess demand for heat is met by conventional boilers, while excess demand for electricity is met by power from the grid. To size a system accurately, the current energy profile must be calculated to

38 October/November 2017

determine base and peak demand levels. With a Building Energy Management System (BEMS), this is relatively straightforward. Records of heating, cooling and electricity usage over a year will indicate base and peak demand. Without a BEMS, utility bills are a good starting point, but half-hourly meter readings are preferable. Regular reading of meters will provide additional data. A further option is short-term monitoring – installing temporary metering to measure the data over a designated period, from which the load profiles can be estimated. Weather also influences the need for heating. The collected data will show real demand for specific dates but not long-term averages for that day of the year. ‘Degree Days’ are based on mean observations and are used to adjust the data to produce normalised estimates

for consumption for each day. These are used to calculate expected baselevel and peak demand. By having this information to hand, you will be able to correctly size your CHP system and deliver maximum uptime. Establish economic viability The Carbon Trust estimates that “4,500 hours of high and constant heat demand is needed to make CHP economical”. This is an average of 12.3 hours every day or 86.5 hours for a five-day week. In summer, heating may not be required but rejecting heat to the atmosphere wastes money. An absorption chiller connected to the system can use CHP waste heat to produce chilled water for cooling and air conditioning systems (trigeneration). If trigeneration is being considered, normalised data for cooling demand must also be included in the base level calculations.

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For economically marginal cases, other factors can influence the decision to invest in CHP. Excess electricity exported to the grid generates revenue and taxes can be reduced by adopting low-carbon energy sources. CHP can be part of an emergency electricity supply, helping to reduce capital expenditure and high running cost by using dedicated standby generators. CHP can also meet planning requirements for inclusion of renewable and low-carbon energy sources when developing a site.

is required. This is arranged with the CHP supplier and local electricity distribution network operator. To sell electricity requires membership of a Feed-in Tariff (FIT) scheme for renewables or a Power Purchase Agreement (PPA) with an electricity supplier Once the system is specified, physical integration must be considered through a site survey. Equipment housing, access and security requirements will need evaluation alongside environmental factors such as generator noise.

Integration with existing systems To successfully integrate a CHP system Minimise disruption and downtime with your existing on-site equipment, Careful planning reduces disruption. you need to understand how existing For existing heating heating and cooling circuits, and cooling much of the CHP equipment can installation can be work alongside completed without CHP. You should s #BTF MFWFM EFNBOE BOE TJ[JOH interrupting also align this NVTU CF DPOTJEFSFE UP BTTFTT supply. Electrical knowledge with FDPOPNJD WJBCJMJUZ BOE EFDJEF JG connections will also your targets and JOTUBMMJOH $)1 JT BQQSPQSJBUF involve some limited establish why you supply interruption. are connecting s $BSFGVM JOTUBMMBUJPO QMBOOJOH DBO Meanwhile, your CHP with NJOJNJTF UIF EJTSVQUJPO JOWPMWFE support and local sites and s 1SPBDUJWF TVQQPSU NBJOUFOBODF maintenance applications. BOE NBOBHFNFOU NJOJNJTFT services are critical â&#x20AC;˘ For integration VOQMBOOFE EPXOUJNF to maximising with existing CHP efficiency boilers, CHP and reliability. A is connected good supplier proactively minimises in series before the boilers to preheat unplanned downtime through: water. At base-level demand, no â&#x20AC;˘ Automatic monitoring to detect further heating is required potential problems before they occur â&#x20AC;˘ For replacement heating solutions, â&#x20AC;˘ Remote management to CHP is placed in parallel with optimise performance one or more boilers. It is the â&#x20AC;˘ Responsive engineering teams for lead source for the system and maintenance and fault resolution meets base-level demand â&#x20AC;˘ For integration with existing Integrating CHP with your existing chilled-water cooling, an on-site applications does not need absorption chiller is connected to be difficult. By following best into the chilled water circuit practice guidelines, you will be â&#x20AC;˘ For electricity, CHP is integrated able to maximise energy efficiency with existing supplies as the and create a greater return on primary source. Excess demand is investment. Once the CHP plant has met by the grid connection. The been integrated, you should monitor electricity supply required (eg usage and measure consumption, three-phase low voltage) must be as well as reevaluate the base load included in the CHP specification requirement from time-to-time. This â&#x20AC;˘ To export surplus electricity, a will help to deliver best value. te Distributed Generation Connection

Key points

The Carbon Trust estimates that 4,500 hours of high and constant heat demand is needed to make CHP economical theenergyst.com

VIEWPOINT

Raising the standard? The long awaited ISO50001:2018 will be with us in less than a year but is it any better than the 2011 version, asks Jes Rutter

SO 50001 is in the process of being revised to bring it into line with the other ISO standards. The consultation has generated a lot of different opinions. On the face of it the new version appears to be more effective, explicit and in some cases demanding in achieving real benefits in energy performance although others may view the drive for continual improvement to be somewhat challenging. While I understand this view, I struggle to agree with it, as surely it is continuous improvement that drives organisations forward, providing the impetus for the development of new products and services helping them to meet the ever-changing needs of their customers? Moreover, continuous improvement ensures a focus upon better ways of doing things, helping to make organisations more efficient and cost effective and therefore more sustainable. The current standard is less prescriptive and, to an extent, open to interpretation,

40 October/November 2017

whereas I believe that the new ISO 50001:2018 standard provides a much clearer steer with less ambiguity making it easier to apply and therefore is more likely to deliver the environmental and cost benefits that a properly implemented ISO 50001 Environmental Management System (EnMs) is designed to do. In addition, a by-product is that the changes also bring the numbering in line with ISO 140001:2015 and ISO 9001:2015. Annex A and B are particularly useful. Some may consider that it demands greater involvement by management but that can only be a good thing as

Surely it is continuous improvement that drives organisations forward ?

they are responsible for the formulation and delivery of the organisations’ strategy and therefore need to have a greater involvement. They are also the ones that approve, or otherwise, capital investments. It should be remembered that having an EnMs that includes the key elements of ISO 50001 is more important than the certificate itself. In other words, an holistic approach to energy that really engages all parts of an organisation and focuses upon how energy is managed as a whole will produce the same results as a fully certified system. ISO 50001 EnMs moves organisations away from a traditional ad hoc approach to energy management and recognises the value of behavioural change at all levels throughout an organisation. In our experience, the implementation of an effective EnMs can produce fantastic results with a return on investment far greater than a more traditional and disjointed approach with

simple paybacks of 12 months or even less being achieved. I for one very much welcome the revised standard and would encourage any organisation wishing to reduce their energy consumption and costs to seriously consider adopting it. In addition, for those who will also be caught in continuous reporting schemes (eg Esos) it provides a more structured approach than compliance-based audits. te Jes Rutter is chairman of the Independent Energy Consultants’ group (IECg), ESTA and managing director of JRP Solutions To find out more about the ISO50001 update or to understand how Esta’s Independent Energy Consultants can benefit your business as well as the wider industry role it has, come along as a guest to Esta’s next Members’ Meeting on 30 November in Birmingham. estaenergy.org.uk/events/ esta-members-meetings

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LIGHTING

Wireless controls lower costs Wireless lighting controls from CP Electronics enabled a 25% labour cost reduction in Liverpool Heart and Chest hospital’s refurbishment

ocated in the Liverpool suburb of Broadgreen, Liverpool Heart and Chest hospital is a medical facility that specialises in the treatment of heart and lung disease. CP Electronics says it is playing an important part in reducing the energy expenditure during a refurbishment of the hospital’s outpatient unit. Moreover, the wireless design of the solutions helped to make the installation process easier, saving valuable time and money on the project. One of the main challenges of the project focused around the design of the outpatient’s department which features three separate hallways intersecting to form a crossroads leading to the hospital waiting room. The difficulty here was that the lighting in each of the hallways was run on individual circuits.

The consultant on the project wanted to address this by running them on the same circuit, since this would allow them to be switched on and off simultaneously, whichever entrance was used. Ordinarily, the contractor would need to re-wire the lighting back to the distribution board before installing the PIR-activated contactors used to operate the light fittings on and off. However, on this occasion an approach like this would have

added additional complexity, cost and time to the project. Following a discussion with Nick Booth, the CP Electronics sales manager involved in the project, wireless PIR presence detectors from CP Electronics were recommended as a means of reducing the amount of wiring needed on the project. Given that labour accounts for a sizeable portion of the cost on any project, any measure which enables a faster and easier installation

can have a real impact. Only power supplies for the wireless PIR presence detectors were needed, resulting in a reduced installation time. Using wireless PIRs saved a minimum of 25% on total labour costs, making them a worthwhile investment. From the perspective of the end user, in this case an NHS trust with limited financial resources, presence detectors help to avoid unnecessary energy consumption by activating the luminaires only as and when required. In addition, DALI dimmer switches and Vitesse Modular are also being used in the reception to control the linear light fittings in the waiting area, which can be activated manually or configured to a specific pre-set scene. This means that users can activate the chosen scene without having to dim up and down. te

distributed over the factory floor. The new Goodlight LED lighting is flicker free, therefore reducing eye strain, has low UV emissions and promotes performance among our staff, greatly improving the working environment. In addition, we are making substantial energy savings and have eliminated maintenance costs.” Goodlight says its LED

lighting technology reaches full brightness with no warm-up required, the lights are designed for retrofit applications and can be easily installed into existing fixtures. The company claims they provide immediate energy savings and are virtually maintenance free. Goodlight LED products are guaranteed for five years and rated at 50,000 hours. te

Middlesex Aerospace engineers savings

oodlight claims that Middlesex Aerospace, a manufacturer of aerospace engineering components, has made between 50-80% energy savings following the replacement of its old fluorescent lighting with energy efficient, low maintenance LED tube lighting. Payback on the installation is on target and expected to be achieved within 18 months. The company adopted Goodlight LED lighting to meet its commitment towards ISO14001. Installation of the LED lights was carried out over

42 October/November 2017

the weekends to limit the impact on production times and reduce disruption for staff. Middlesex Aerospace specified Goodlight GX1 Plus (150W) LED High Bays, G5 LED Battens, T8 LED Tubes and LED Ceiling Panels for their main production factory and inspection area at the 50,000sq ft manufacturing site in Hampshire, replacing energy hungry fluorescent lighting. Commenting, John Masey, senior buyer at Middlesex Aerospace said, “Since the installation, we have been very impressed with the light quality which is evenly

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VIEWPOINT

Dead man walking? Are these the final days of the fixed price power purchase agreement? Aditi Tulpule discusses how increasing price volatility could mean the end for the fixed price PPA

he GB power market is in a period of transition. The ongoing retirement of large baseload generation and the increase in intermittent generation is creating unique challenges for National Grid and transforming the electricity market. National Grid, as the GB system operator responsible for ensuring security of supply and for balancing the electricity network on a second by second basis, faces some complex challenges with the proliferation of renewables capacity. The Renewables Obligation (RO) and the Feed-in Tariffs (FITs) have led to swift deployment of renewable generation assets, in particular wind and solar. The RO regime under the Renewables Obligation Closure Order 2014 is now closed for all but a few projects in the final grace periods. The reduction of FIT tariffs and introduction of FIT caps under the Feed-in Tariffs (Amendment) (No. 3)

44 October/November 2017

Figure 1: Comparison of the FTSE index with an index of the UK wholesale electricity price (source EDF Energy)

Order 2015, is cumulatively often referred to as the “end of the subsidy regime”. In spite of the dwindling support for renewables, the substantial increase in the deployment of intermittent renewable generation together with the decommissioning of large coal-fired power stations providing baseload power has made National Grid’s task of predicting the availability of power on the network more difficult and tightened reserve capacity available to it. This combined effect has also put stress on network

This could fundamentally recast the dynamics of the relationship between suppliers and renewable generators

stability causing National Grid to increasingly rely on flexible generation assets to balance out the grid and to ensure security of supplyleading to unprecedented levels of price volatility in the wholesale power market. The extent of the price volatility can be seen in the graph (see figure 1), which charts wholesale electricity prices since the deployment of the RO in 2002 and the FITs in 2010, against the FTSE 100 until 2007. More recent price data shows that the problem has in fact become ever more acute over the years, with intermittent generation claiming an ever larger share of the overall generation mix in the UK. Until recently, the established route to market for non-licensed generators (including most small renewable generators) has been through power purchase agreements (PPAs) offered by large licensed suppliers. The PPAs would typically be offered on a fixed price

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Anniversary event January 2018 marks the UK Association of Energy Engineerâ&#x20AC;&#x2122;s five-year anniversary. To celebrate, the UKEE invites you to an Energy Talks event on Wednesday 24 January 2018 at WeWork Moorgate, London between 5.30pm and 8.30pm. New disruptive models of decentralised energy will be presented and will include talks given by key players on the legal, financial and infrastructural implications of decentralised energy. There will also be drinks and nibbles to toast the growth of this field and UKAEE. For more information please visit ukaee.org.uk per kilowatt hour basis with the majority of the embedded benefits and the price arbitrage risks and rewards associated with trading in the wholesale electricity market and balancing mechanism retained by the supplier. However, the end of the subsidy regime has caused generators investing in new assets to place a greater importance on exploring alternative revenue streams and new routes to market for the generated electricity. Helpfully, although perhaps only serendipitously, alongside the end of subsidies there has been a reduction in regulatory barriers to entry of non-licensed entities into the various electricity markets. Arguably, Balancing Services and Capacity Market contracts offered by National Grid have been available to renewable generators prior to the end of the subsidy regime. However, the eligibility criteria and costs associated with installation of the kit necessary to comply with the contractual requirements under the relevant contracts has often meant that smaller renewable generators have been unable to benefit from the opportunity. The growth of aggregators (providing demand-side response services) has also provided an option to smaller renewable generators to participate in the Balancing Services market and Capacity Market without entering

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into direct contracts with National Grid. Aggregators can provide access to sophisticated control systems which can help to prioritise dispatch, enabling generators to maximise their revenues in the various power markets through revenue stacking services; often offered under the terms of a flexible PPA. For the first time, changes are afoot to open up the balancing mechanism and the wholesale electricity market to participation by non-BSC parties, which includes the majority of the aggregators currently active in the GB electricity market. This could fundamentally recast the dynamics of the relationship between suppliers and renewable generators, with aggregators increasingly competing in markets traditionally the exclusive preserve of suppliers. On the other hand, with smaller markets in which to spread risk and price volatility increasing, suppliers could well shy away from offering fixed price offtakes and may instead also opt to offer flexible PPAs to smaller renewable generators. It looks likely that in the world of subsidy free renewables, the fixed price PPA is in its final hoursâ&#x20AC;Ś Long live the fexible PPA. te Aditi Tulpule is an associate in Cameron McKenna Nabarro Olswang LLP and UKAEE member

COMMERCIAL HEATING The Royal Academy of Arts sought to future-proof its heating systems

An art to everything A bespoke, prefabricated heating solution is providing more reliable, more secure and highly efficient heating and hot water for London’s Royal Academy of Arts, according to Remeha sales director Chris Meir

he Royal Academy of Arts is preparing for its 250th anniversary next year. To mark the milestone, it is transforming and linking its buildings on Piccadilly and Burlington Gardens in a £50m project led by the architect David Chipperfield. Running alongside the works is a major infrastructure programme to ensure its services are fit for future needs. The RA is looking to reduce its energy consumption yet, at the same time, maintain strictly controlled internal environments to protect and preserve the collections on display. This is reinforced by the close-controlled conditions required by the Government Indemnity Scheme to enable

46 October/November 2017

institutions such as the RA to loan objects for display. Part of the RA refurbishment programme includes replacing the ageing boilers serving Burlington House. RA senior project manager Kyle Peters explains: “Our key requirement was to develop a long-term, future-proofed solution to more efficient and reliable heating while ensuring the close-controlled conditions demanded by government indemnified standards.” Working with the RA’s head of engineering, Steve Watson, he considered relocating the boiler plant to a newly designed plantroom on the rooftop above the Sackler Wing of Galleries. This location would accommodate

the new boilers serving Burlington House while also providing enough space for the Burlington Gardens boiler plant. Moving the boiler plant to the rooftop would enable easier maintenance and asset management but would free up valuable space in the basement for the RA. The RA appointed Arup to design the services on the heating system. Vasilis Maroulas, associate at Arup, summarises the thinking and the wider benefits of the project for the RA: “The new boiler plantroom consolidates the heating generation across the RA estate. It centralises the maintenance regimes, liberating space for use as back of house storage and RA staff offices, and enabling the implementation

of the critical electrical infrastructure upgrades.” Maximising turndown ratio The RA’s new rooftop plantroom is a light, compact space with floor-to-ceiling glazing at both ends. Its long, narrow dimensions presented an additional design challenge for Arup and CBRE, the main contractor on the project. “Given the shape of the Sackler plantroom, the only viable solution was to use modular wall-mounted boilers,” says Antaeus Wheatley, Arup’s senior mechanical engineer. “The Quinta Pro boilers were selected due to Remeha’s reputation for quality and reliability across their products and service.” »

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COMMERCIAL HEATING To meet the building’s flexible heating load, Arup specified that the load should be met using 16 Remeha Quinta Pro 115 boilers. The boilers can provide a total heat output of up to 1.8MW to meet peak demand with the ability to be turned automatically down as low as 17kW when required for more efficient energy use. The design called for a large DN200 diameter primary boiler loop pipe to connect to the existing distribution system. Bespoke solution Working with Arup and CBRE, Remeha designed and built a bespoke, off-site fabricated rig solution that would meet the requirements of the project. To overcome the constraints of the plantroom, the boilers were arranged in an in-line format. Arup and CBRE specified designing the rig in four separate modules to facilitate positioning within the rooftop plantroom. Each module comprised four Quinta Pro 115 units, shunt pumps, isolation valves, control valves and safety valves plus flow and return header pipework. The rig was designed to accommodate the specified additional orifice plates, test points, expansion vessels and increased shunt pump sizes for each boiler on the frame. “Great care was taken to provide all the required mechanical and control functionality to ensure a smooth, efficient installation. This included specific considerations for maximum turndown ratio, interaction with the building management

Sixteen Remeha Quinta Pro 115 boilers line the plantroom at the Royal Academy of Arts

The new boiler plantroom consolidates the heating generation across the RA estate

system and pipework design,” explains Nick Stevenson, Remeha’s prefabrication expert. As access to the plantroom was through a limited opening in the roof structure, this was given consideration at the design stage. The boilers needed to be crane-lifted and manoeuvred in during the night, enabling the galleries to remain fully operational. The four modules incorporate crane-lifting lifting eyes and wheels for smoother access and easier manoeuvrability. The packaging was also designed to be retained during the lifting process to suit CBRE’s plantroom build programme and minimise disturbance. The power of prefab For James Buchan, head of projects at CBRE, a major advantage of using the Remeha off-site prefabricated solution

Strict temperature controls The RA specifies that environmental conditions are controlled to 20°C +_2°C. To help achieve this, each boiler module incorporates Remeha iSense Pro controls, pre-wired within control panels with the requisite safety interlocks and shut off switches as specified by Arup. The controls wiring was bespoke to this project to accommodate the specific requirements for additional pump control, monitoring and water treatment functions. To meet Arup’s requirement, the control panels were provided with interconnection boxes to add flexibility for future repositioning if required.

48 October/November 2017

was the time saved on site. The single delivery of boiler plant and increased ease of installation offered by the rig meant minimal disruption for the contractors and visitors to the Royal Academy. Quality control was an additional benefit, with production carried out in a quality-controlled environment and the whole system factory-tested for function and quality assurance. Future-proofed heating The multiple-boiler, weathercompensating system maximises condensing operation and efficiencies. Space heating and hot water provision is more reliable, secure and efficient due to the increased modulation. The boilers interface with the existing heating system, providing a flexible system that meets current demand while designed for future needs. The heating system is already saving the Royal Academy energy and reducing bills, according to initial analysis from Arup. At the same time, it is ensuring a comfortable environment for its visitors and staff. te

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COMMERCIAL HEATING

Off-grid compliance If youâ&#x20AC;&#x2122;re off the gas grid it may be time to protect your boiler investment and meet your legal obligations with the upcoming Medium Combustion Plant Directive, says Calor Switching to LNG or LPG can enable operators to futureproof their installation

he Medium Combustion Plant Directive (MCPD) passes into UK law on 19 December 2017, with the aim of reducing harmful sulphur dioxide (SO2) nitrogen oxides (NOX) and particulates in exhaust gases from all combustion plant rated between 1MW and 50MW thermal input. Operators of existing plants still have a while to comply (registering by 1 January 2024 for plant over 5MW and by 1 January 2029 for plant between 1MW and 5MW). However, with the long lifespan of much of the existing boiler plant already installed in the UK, many businesses will want to take steps to upgrade an existing installation, rather than replacing with a new, already compliant model, as the existing boiler plant may well be performing efficiently and reliably. For off-grid applications in particular, heavy fuel oil is often specified to provide power for processes and steam generation. Yet, with the MCPD specifying a reduction in sulphur content of HFO

50 October/November 2017

from 1700mg/Nm3 to just 350 mg/Nm3 in most cases, it is highly likely that such plant will become obsolete, unless it is retrofitted with new burners and an alternative fuel supply. Kevin Houlden, industrial and commercial specialist at Calor, supplier of gas (LPG and LNG) to off-grid businesses, advises on the steps that operators can take to upgrade their existing boiler plant. The change is expected to affect about 150,000 medium combustion plants across Europe, of which 17,000 are located in the UK, using systems such as boilers, turbines and electricity generators. With approximately 250,000 businesses located off the mains gas network in the UK, a significant number of operators will face the additional challenge of choosing the cleanest, most economically viable fuel when their boiler needs upgrading or replacing. Unfortunately, heavy-fuel

oil installations will not meet the new ELVs for SO2 or particulates without abatement. This is not to suggest that oil-fired boilers have no future at all. Clean burner technology does exist and is being refined continually, but it can come with significantly higher cost implications. A switch to LNG or LPG? Switching to LNG or LPG can enable operators to futureproof their installation in line with the demands of the MCPD. Both fuels meet standards for SO2 and NOX and particulate emissions as well as offering reduced CO2 output, with margin to handle some tightening of ELVs in the future. Burning gas emits less CO2 in comparison with some oil types, with LNG being the cleanest burning of all fossil fuels available off-grid. These clean burning properties also enable improved boiler efficiencies, which

Premium dry pet food manufacturer C&D Foods has saved in excess of ÂŁ50,000 and more than halved its CO2 emissions since converting its boiler fuel from oil to LPG

can exceed 90% as well as reduced maintenance. Boiler upgrade While burner replacement is a relatively standard process, there are some key factors to consider. For example, when converting a boiler system from oil to gas, the calorific value of LNG or LPG should be factored in to the overall combustion parameters. In addition, it is important to maintain the correct number of burners within the boiler system to ensure optimal heat and functionality. Too little or too many burners can result in eventual damage to the boiler system, resulting in inefficient heating and higher costs. Most energy suppliers will work with the major boiler and burner manufacturers to ensure the conversion to gas is seamless ut it is also advisable to select an energy management consultant to assist with planning the conversion project and the implementation of further energy savings measures; such as insulating boiler room pipes, to more complex initiatives involving the installation of building-wide energy management systems. Calor packages a project design and management service for larger or more complex applications switching to LNG, including installation of the LNG tank, vaporisers, stage regulation and trenchless directional drilling to minimise disruption.It has produced a guide for large energy users eplaining the benefits of installing gas on site. To find out more visit: calor.co.uk/ business/large-energy-user. te

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COMMERCIAL HEATING

It’s panning out well Following a factory fire, Fulton supplied a skid-mounted horizontal boiler solution to American Pan UK, meaning that the plant room could be built around it.

merican Pan UK, supplier of industrial bakeware and pan maintenance services to Europe’s bakery market, has cleaning methods and coatings to prolong baking pan life and restore optimal performance. Baking pans are refurbished by supermarket bakeries and industrial bakeries but, over a period of use, they become caked in carbon and flour residue and the release qualities of the non-stick coating starts to diminish. The American Pan UK process starts by soaking the pans for 12/24 hours in heated low volatility organic solvent. From here, the soaked pans go through a series a hot and cold rinses and conditioning tanks, before a new nonstick is applied and the pans returned to the bakeries. Following a heating mechanism fault within a single unit in American Pan UK’s original plant process line; solvent used for the cleaning process overheated and ignited, with the subsequent fire spreading throughout the facility. While initially devastating for the company, it provided an opportunity for American Pan and its consultants, RE Architects, to re-think its operations. Commenting for RE Architects, Richard Every says: “Because the unit was devastated by the fire, we couldn’t have easily brought American Pan UK’s processes back into line and, rather than wait and lose business from new and existing customers, we took the decision to reappoint an existing warehousing

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facility to a new process line. And, because this was a new line with new equipment, we were able to design an optimum layout with facilities and processes that would future-proof the company and enhance the cleaning process.” While a decision on a new boiler system was considered, on advice from Fulton, a temporary, diesel-powered boiler was hired to provide steam for the new process line, which features a dedicated solvent cleaning tank line featuring two, three-cell tanks containing 45,000 litres of solution each. Additional 5,000 litre tanks are also used for supplementary cleaning and contain detergent and/or conditioning solutions and hot or cold water for the rinsing. Because they had reconfigured and relocated the entire line, American Pan UK also had to consider how they were going to heat the

process and, additionally, consider provisions for downtime, maintenance, etc. However, with the new process line using most of the available space within the new facility, American Pan took the decision to site the plant room for Fulton’s new steam boiler system outside. Skid-mounted solution Fulton’s skid-mounted heat transfer solution features a horizontal, gas-fired RBC1500 boiler with Nu-way gas burner and fully-modulating burner controls to provide a steam output of 2,393kg/h and maximum working pressure of 10.34barg. The skid also features ancillaries including automatic boiler controls, blowdown vessel, condensate return and feed tank and water treatment including water softener, chemical dosage sets and sample cooler. The skid-mounted system

was delivered to site and craned into position from a neighbouring car park and, once the Fulton solution was sited and installed, the plant room was built around it. Following commissioning of the Fulton system, the temporary hire boiler was removed with its connecting pipework left in-situ should a requirement for additional steam be required in the future. “Fulton’s heat transfer solution was chosen for a number reasons, with one main factor being the monitoring of the system, which doesn’t require 24/7 supervision.” says Richard. “This means the boiler can, at weekends for example, be left un-attended but operational for periods of time. This is vital for American Pan UK’s processes as it can take a long time from a cold start to heat the solvent and fluids in the various cleaning tanks.” Steam from Fulton’s RBC1500 boiler system is now being used to heat water to 50°C for the pre-wash facility, for heating the solvent to 106°C for the deep clean cycle and for heating water for one of the two final cleaning cycles. Thanks to the efficiency of the Fulton system, with the process heating the solvent to 106°C (approximately 10% hotter than the previous system), American Pan UK has been able to reduce the acidity content of their cleaning solution to make best use of the increase in cleaning performance from the solvent. The benefit for customers is that the pans enjoy a deeper clean with quicker turnaround times. te

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BUILDING CONTROLS

egal & General’s iconic Gresham Street building in London is the first in its estate to benefit from the implementation of Synapsys Solutions’ SIP Billing solution. SIP Billing has been developed as a system that is cost effective, complies with regulations and provides a framework that encourages engagement with tenants. Legal and General’s main challenge was to introduce a simplified and automated billing solution that included a fair measurement of each tenant’s heating and cooling energy costs rather than apportionment based on the square metre footage. Although the process of apportioning energy based on square metre footage has been common in the past, most tenant leases state that energy costs should be invoiced on a fair and reasonable basis. The fairest way is to measure actual consumption for each tenant. However, apportionment of energy costs based on actual consumption has previously only been possible by manually reading lots of meters, processing data on spreadsheets and producing calculations that are used to manually produce invoices – a process which is both time consuming and costly. The introduction of the Heat Network (Metering & Billing) Regulations 2014 cemented the requirement for an accurate billing process, as they require commercial and domestic property landlords

SIP it and see Automated billing solution from Synapsys Solutions enables Legal & General to correctly apportion tenants’ energy consumption

VISTA delivers savings beyond controllable load

arbon reduction specialist BG Energy Solutions (BGES) has launched VISTA, which it claims adds an additional layer of intelligence to a building management system. The result is, according to the company, a step-

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change improvement in energy visibility, optimised building control – and guaranteed energy savings, while improving comfort levels in the building. VISTA is much more than a ‘box within a BMS’ or a data analytics tool, says BGES. Available in two versions

– VISTA Pro and VISTA Lite – the firm says it integrates into an existing BMS, HVAC plant, lighting control and other smart interfaces, in order to save energy by operating both intelligently and efficiently. This is achieved by taking onboard live weather forecasts,

energy tariff data and building operation trends. A user-friendly front end and real-time information means building and energy management professionals can quickly identify issues, says BGES. VISTA Pro uses the power of EcoPilot technology to

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of multi-let properties where heating, cooling or hot water is supplied to tenants through a district or communal heating network, to provide detailed information about those networks to a central body. The regulations take into account the fact that the largest share of CO2 emissions from UK buildings comes from space and water heating. The main aim therefore is to allow users of heating, cooling and hot water supplies, to be fully aware of their level of consumption and be incentivised to reduce that consumption. But the requirements of the regulations can only be met if landlords are able to not only monitor the energy usage cost effectively, and do so in a manner which allows for accurate billing of each utility, on a tenant by tenant basis. Working alongside consultant Hoare Lee, Synapsys Solutions provided SIPe data loggers to acquire data from a variety of tenant area sources within the Gresham Street building which included heat meters; lighting; FCU and small power tenant sub meters; chiller meters and other incoming meters. For the apportionment of heating, the data loggers acquire half hourly meter readings from all of the tenant area heat meters before feeding the information into the SIP Billing solution for the calculation of total consumption on a tenant by tenant basis. This is then applied as a percentage to the half hourly total consumption which is acquired from the deliver a complete picture of energy use. Using the thermal mass signature of a building, EcoPilot improves a building’s comfort conditions, while automatically optimising energy usage from HVAC systems. What’s more, claims the company, it achieves maximum estatewide efficiency and balance by enabling various systems

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The data loggers can be configured to share data with the BMS and export information to data analytics partners... introducing total visibility of energy consumption, anomalies and trends

to work in harmony – rather than against – each other. Because VISTA goes beyond controllable load, the result is significantly reduced energy bills, says BGES. Alongside this, carbon reduction targets can be more easily achieved. Commenting on the launch, BGES managing director Gareth Barber said: “VISTA is the formal productisation of our energy optimisation

main gas or bulk meter. The same principle is applied to the cooling demand at Gresham Street, with SIPe thermal loggers acquiring usage data at the tenant level before feeding the information into the SIP Billing solution to calculate tenant demand based on a percentage of the overall chiller usage. Matt Gardner of Synapsys Solutions says: “The ability to acquire accurate half hourly meter readings from each tenant at Gresham Street and then apportion this figure as a percentage of the total energy consumed by the building ensures that each tenant only pays for their actual usage, rather than their expected usage based on the area which they let. As well as meeting the requirement for a fair and reasonable billing process, it also provides greater clarity of energy consumption to each tenant, thus meeting the requirements of the Heat Network (Metering & Billing) Regulations. “The additional benefit of the solution is that the SIPe data loggers can be configured to share data with the BMS and export information to data analytics partners. This effectively provides a means to introduce energy monitoring dashboards which provide both the building operator and the tenant with total visibility of energy consumption, anomalies and trends.” SIP Billing provides a cost effective and flexible solution for Legal and General, which includes

the ability to automatically apportion air handling costs and landlord/common area electrical consumption based on the tenant’s access to shared services. The system can also be configured to generate tenant billing reports for direct electrical sub-meters and provides an easy way for the landlord to view, administer and make adjustments to the system, run comparisons and set up dual tariffs for tenants where there is a requirement. It also provides greater visibility for tenants, allowing them to access their own dashboard in order to view and compare their energy usage on an ongoing basis. Debbie Hobbs, head of sustainability for LGIM Real Assets, says: “Gresham Street is the first building in our portfolio to benefit from the installation of SIP Billing and it has revolutionised the way in which we approach tenant billing. The ability to automatically apportion and invoice energy costs, based on actual demand, ensures that occupiers only pay for the energy which they consume. This not only meets the requirements of the Heat Network (Metering & Billing) Regulations but it also provides greater visibility for our occupiers, which will help us have more meaningful dialogues with our occupiers.” The success of the Gresham Street project means that Legal & General now plans to roll out the SIP Billing solution to other buildings in its portfolio. te

solution. We have refined our offering and have placed end users firmly in mind during this process. “The result is a powerful energy management tool. Energy savings are typically 20% and ROI is expected in under two years,” claims Barber. “We cannot wait to take VISTA to an even wider audience.” te

October/November 2017

FINANCE APS Metal Pressings had an onsite energy assessment, paid for by the Green Business Fund. It found improvements in energy management, installing an automated metering, M&T system and LEDs with controls could save about £12,000 a year with a payback period of 2.7 years

Why leave money on the table? Use incentives to improve energy efficiency, urges Carbon Trust director Laura Timlin

here are a number of barriers that hold companies back from improving their energy efficiency. Foremost among these is that many companies simply fail to properly understand the opportunities available to them. However, even when they do have projects in mind there are other obstacles that get in the way, such as securing finance to get them implemented. Fortunately there is a range of subsidised or free support available to businesses that can help incentivise action, outlined below: Green business fund The Carbon Trust Green Business Fund is an energy efficiency support service for SMEs. It provides direct funded support at no cost to businesses through offering energy assessments, advice on how to implement good energy management practices, training workshops and webinars, equipment procurement support and up to £5,000 capital contribution per company towards the purchase of energy saving equipment. Companies with up to 1,000 employees can also access implementation advice and equipment procurement support at no cost. Designed for businesses that already

56 October/November 2017

have a specific project in mind, organisations can receive up to five days of support from a Carbon Trust consultant. For more information on the Green Business Fund visit: carbontrust. com/greenbusinessfund Green Business Directory Finding a reputable, reliable supplier to supply and install equipment is one of the more significant barriers to getting projects implemented. The Carbon Trust Accredited Supplier scheme provides independent validation and recognition of a supplier’s skills and services, ensuring that they meet or exceed criteria designed to examine their capability to deliver welldesigned energy efficient and renewable energy systems. Carbon Trust Accredited Suppliers can be found on the Green Business Directory at: www.carbontrust. com/greenbusinessdirectory Green Businesses Loans in Wales and Northern Ireland The Carbon Trust manages interest free loans schemes in Northern Ireland and Wales, where companies can access 0% APR finance for investments in energy efficiency and renewable energy. In most cases these loans are designed so that monthly energy savings should exceed monthly repayments. Unsecured loans are available

where the project replaces existing equipment, and makes on-site fossil fuel savings. Loans are repaid over one to four years in line with project payback periods. In Wales loans of between £3,000 and £200,000 are available to SMEs. And in Northern Ireland businesses of any size are able to access loans between £3,000 and £400,000. See: carbontrust.com/loans Industrial Energy Efficiency Accelerator The Carbon Trust recently launched the new £9.2m Industrial Energy Efficiency Accelerator (IEEA) to help strengthen the global competitiveness of British industry. Funded by BEIS, the IEEA aims to lower the cost of near-market energy efficient technologies for a range of industrial sectors, through demonstration projects. Open to all UK manufacturing sectors, the IEEA provides industrial companies with an opportunity to implement pioneering energy efficiency technologies at reduced risk and capital cost. Co-funding of between 40-60% of total project cost is available for demonstrating innovative technologies in an operational environment. IEEA contributions will typically be between £150,000 and £750,000 per

project, although more could be made available for a small number of exceptional projects. The competition will be open from October 2017 to September 2018, or until funding is exhausted. See: carbontrust.com/ieea The ETL and ECAs To assist businesses with identifying and purchasing plant and machinery with high energy efficiency performance, the UK government created the Energy Technology List. Buying equipment off the Energy Technology List means firms are purchasing high performing equipment to help save money on their energy bills. It also means they are eligible for Enhanced Capital Allowances (ECAs) that allow them to write off the whole cost of the equipment against taxable profits in the year of purchase, boosting cash flow. The process for claiming ECAs is straightforward and done as part of a business tax return. For tax purposes, businesses need to keep records of the purchase of qualifying equipment. Accountants or finance teams can then use this as evidence to claim capital allowances at enhanced rates. For more information, visit: www.gov.uk/guidance/ energy-technology-list te

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FINANCE

Demand for public sector CHP funding heats up Salix Finance funded a recorded number of combined heat and power projects last year. It urges the public sector to find out how interest-free loans can help get projects over the line

In 2014, the University of Liverpool completed the largest Salix funded CHP project to date, using a £6.1m interest-free loan

ore than £38m of Salix Finance interest-free loans have been used for the installation of combined heat and power (CHP) in UK public sector buildings, bringing estimated annual savings of more than £10m on energy bills. Last year saw a record number of these Salix-funded CHP projects completing, with a total of £14m of funding used throughout the public sector. CHP can generate heat and power across one or more buildings and can reduce energy use by up to 30%. Funding for CHP has been particularly well received for projects in hospital and higher education estates, as their year-round electrical and heating base load allows for CHP running hours, which can maximise the return on investment. Poole Hospital NHS Foundation Trust identified

58 October/November 2017

the opportunity to make significant financial and carbon savings by replacing two smaller, ageing CHP units with a 850kWe CHP located in a new energy centre. Using £1.2m of Salix funding, the project completed in March 2017 and it is estimated to save more than £262,000 per year on energy bills as well as 1,100 tonnes of CO2. Steven Fall, estates officer at Poole Hospital NHS Foundation Trust, says: “Working with Salix has been a smooth and efficient process. This funding has significantly contributed towards our overall trust carbon reduction target and sustainability plan.” In 2014, the University of Liverpool completed the largest CHP project to date supported by Salix funding. Using an interest free loan of £6.1m, it installed two 2MWe CHP engines into a disused Grade II-listed boiler house.

Our CHP engines have delivered fantastic financial and carbon savings for the University of Liverpool. Without Salix Finance support, we would not have been able to implement such a large-scale project

The engines generate 22GWH of electricity each year, with a net reduction to energy bills of more than £1.5m. Peter Birch, engineering services manager at the University of Liverpool, says: “Our CHP engines have delivered fantastic financial and carbon savings for the university. Without the support and funding from Salix Finance we would have been unable to implement such a large-scale project.” In addition to the projects already completed, Salix has committed a further £7.7m of funding to CHP projects in hospitals and universities that are now in the process of being implemented. Further funding for CHP and other energy efficiency projects is available now, and details can be found at salixfinance.co.uk/loans. Salix can provide part or full funding for projects, with funding allocated based on value for money both in terms of financial payback on funding requested and estimated carbon savings. te Salix will be running workshops on CHP for the public sector later this year. These will be an opportunity to learn more about best practise for the design and operation of CHP systems, as well as how Salix funding can be utilised to help with the upfront costs of installation. If you work for a public sector organisation and are interested in attending, contact: emma.lawes@salixfinance.co.uk

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THE ENERGYST EVENT

The fusion of energy procurement, management and flexibility The Energyst Event invites the energy industry to better understand the benefits to be gained from the integration of energy management disciplines, writes Tim McManan-Smith

here are no longer simple supply and demand-only silos. Both have to be balanced to profit from a truly integrated energy management system - which in itself is a reflection of the evolving GB energy system. The Energyst Event has been launched to reflect this profound change and to further the discussion on effective energy management in the modern world. The core areas of efficiency, procurement and flexibility linked by data will form the backbone of the event, which takes place at the Birmingham Motorcycle Museum on 17/18 April 2018. At a time of unprecedented change in the energy market, The Energyst Event brings a much-needed focus on energy - as opposed to broader environmental concerns. The comprehensive content programme spans procurement, efficiency, cost avoidance, revenue opportunities and their interrelationship to equip energy professionals with the tools to combat rising costs. The exhibition and conference is designed to equip non-domestic energy users with fit-for-purpose knowledge, insight and solutions to their most demanding challenges. Promoting dialogue, discussion and interaction; the event will be a two-day forum for energy users and service providers to engage and create better energy outcomes.

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Conference Energy procurement, management and flexibility are now intrinsically linked. The conference aims to explore the relationship between disciplines and offer solutions to help businesses drive down costs and consumption while maximising revenue that, in an ideal world, can be reinvested in energy. Conference streams are therefore set up to discuss opportunities to implement emerging best practise. Energy Fusion The Energy Fusion theatre will cover: Flexibility in consumption and procurement, Battery storage and DSR, Blockchain, AI, big data and developments such as energy-as-a-service. Delegates will hear not just

from solutions providers, but end users in the industrial and commercial sectors, as well as the public sector. The key rationale is to arm delegates with insight into how cutting edge technologies and market developments are cutting a path towards a smarter energy system and how to best exploit the opportunities being presented. Integrated Solutions The Integrated Solutions theatre will tackle individual market challenges and barriers but within the context of a broader, integrated energy system. Elements such as heat, hybrid and integrated technology and service solutions, finance, and crucially, people and the skills needed to ensure optimal

outcomes will be covered by market experts over two days. This stream engages visitors with case studies and practical discussions and provides the opportunity for delegates to put their questions and concerns directly to expert speakers. The Energyst will launch new market intelligence reports around heat, mission critical sites and intelligent energy systems and data. The event also provides an opportunity for both end users and solutions providers to strike new partnerships and create new business opportunities. The Energyst Event takes place 17-18 April 2018 at the Birmingham Motorcycle Museum. Register for your free ticket at: theenergyevent.com/register te

October/November 2017

ENERGY MANAGEMENT

Invest or blow carbon targets Businesses must start investing in energy managers or risk blowing carbon targets, according to a report by third party intermediary, Inenco

nenco partnered with DJS Research to commission primary research among UK businesses, interviewing energy managers across a range of sectors. The firm then worked with Ricardo Energy & Environment to combine the findings with industry, digital and environmental trends to determine how the role of the energy manager will change in the future. The research suggests that by 2030, today’s energy manager will have evolved into the ‘future utilities manager’, a senior-level, digitally savvy data scientist responsible for making key strategic business decisions. With non-domestic energy still making up around 75% of the UK’s energy consumption, the utilities

managers of the future will play a pivotal role in delivering the UK’s low carbon agenda. While predicting a significant expansion in the scope of the energy manager’s responsibilities, Inenco’s report also highlights a skills and technology gap that must be addressed in order for businesses to futureproof their operations and support the UK’s transition to a low carbon economy. Jon Bauer, chief technology officer of Inenco, said: “The future utilities manager will be responsible for ensuring that the business they work for is aiding the UK’s transition to a low carbon economy. However, our research has highlighted a significant risk in terms of developing this key role; to deliver the utility manager of

2030: THE FUTURE Utilities Manager The business leaders responsible for driving the UK’s energy transition

the future there is a need for advancements in technology and training. Unless businesses are effectively supported and are able to embrace best practice and innovation, meeting the UK’s energy targets could be under threat.” As such, Inenco has launched an ‘Innovation Hub’, an online platform where energy professionals can

upload the challenges they face today, and where people from various academic institutes and industries can collaborate on developing solutions through a series of ‘hackathons’. Inenco will then aim to commercialise some of the best ideas, after giving prize money to those that came up with them. te See: inenco.com/innovation

New research finds £184 billion of wasted space in office buildings

usinesses in Europe could realise savings of up to £184 billion in reduced rental costs alone if their office buildings were refurbished to the most efficient standards of today, according to new analysis from Philips Lighting. The findings, released during World Green Building Week, show the impact that could be made on rents across the world’s offices if business owners replicated the efficient usage of space achieved in a leading green building. Deloitte accomplished a 50% reduction in the space required per employee in The Edge building in Amsterdam compared to its

60 October/November 2017

previous premises The Chrystal Tower, through effective use of smart technology. This was achieved while improving employee well-being. Philips Lighting is calling for a doubling of the renovation rate of offices in developed countries to reach 3% per year, which it says will be a key factor in reducing emissions and offsetting increased global demand for energy from population growth and urbanisation. The research highlights that in addition to reducing their carbon footprint, office tenants could see vast financial savings if their buildings were renovated in a way that

uses space more effectively, particularly in buildings with a high number of empty workspaces and meeting rooms at any given time. The Edge uses smart technology such as a connected lighting system from Philips Lighting that enables employees to personalise their lighting and temperature at their workspaces via a smartphone app, but also provides building managers with real-time data on how the office is being used to help maximize operational efficiency. But the potential rent reduction from optimising offices is just a small proportion of the total financial

benefit to businesses, which also include lower utility bills and significant gains in the productivity of employees, the largest cost to most businesses. The JLL 3-30-300 rule of real estate shows that a company’s typical costs per square foot per year are $3 for utilities, $30 for rent and $300 for payroll, highlighting that gains in employee productivity are worth far more to a company in financial terms than rent reductions or increases in energy efficiency of the same percentage. Globally, businesses could theoretically realise savings of up to £1.14 trillion if offices were optimised in this way. te

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PRODUCTS

Behind the meter battery storage unit Behind the meter storage offers businesses the opportunity to cut power bills and earn revenue from various grid balancing services. To quantify the opportunity, Socomec worked with partners to analyse half-hourly data from a London hospital. With the system cost for a 250kW-250kWh unit approximately £150,000, the total revenue opportunity outlined in year one is £38,700 with a four-year return on investment, based on average minimum consumption of 300kWh and average maximum consumption of 700kWh for half hour periods. To enable that opportunity, the engineering teams at Socomec developed modular energy storage converters –

SUNSYS – with a capacity of 33kW to megawatt scale. The firm says its SUNSYS PCS2 smart storage solution maximises the energy selfconsumption at building or community level. Any surplus is stored in the battery system – and used later to supply the load. When the electricity retail cost is low, the batteries are charged and used to supply the loads during peak demand, when prices are high. For solar parks, SUNSYS can be used to balance the production profile of an intermittent renewable energy by limiting the actual load demand. Socomec managing director Colin Dean explains: “These dual-function storage

There’s a new ring main in town Western Power Distribution is deploying RN2d, the next generation ring main unit from Schneider Electric. Designed for medium voltage networks up to 13.8kV, WPD worked closely with Schneider Electric during the development of RN2d. The company orders hundreds of units per month, installing them daily on its network to support the delivery of electricity to end-users. Western Power Distribution policy manager Paul Jewell said: “We have been closely involved in the development of the RN2d from the beginning and as such understand how valuable it is to service our 7.8 million customers. Not only is RN2d one of the most trusted 11kV specification ring main units available, it also has various configurations that allow us to tailor it to our different substation applications and remotely manage our networks.” The improved RN2d has been designed for indoor and

62 October/November 2017

outdoor use with reliability, safety, longevity and smart integration in mind. The accessories and new design offer greater flexibility with multiple applications and configurations. Its compact and flexible design makes it easy to operate and maintain, while minimising the installation footprint. The RN2d serves multiple industries and can be used anywhere, delivering optimal performance in harsh climatic and environmental conditions.

converters enable the renewable energy available during the day to be stored, then converted and fed back into the network as required. We call this bi-directional conversion – the capability to manage energy supply to meet demand. Furthermore, these bi-directional storage converters can be programmed to operate according to a charging and discharging profile, set in advance by the energy utility provider.” Socomec’s SUNSYS PCS2 power conversion and storage system will feed the public low-voltage network by maintaining the two key parameters, voltage and frequency, without rotating machinery. The latest addition to the

range is the new, modular, Integrated Energy Storage Solution (IESS) with simplified logistics and a wide range of configurations for power and storage.

Energy metering made easy Sontay says its new smart power and energy meter is flexible, easy to install and use and helps deliver improved energy monitoring to commercial buildings. The new C-PM-E23C5 Smart Energy Meter allows building owners and operators to conduct energy monitoring and sub metering in both new and existing commercial buildings. Its universal inputs allow utilisation of existing Sontay Current Transformers (PM-

CT range) as well as the new low-profile Rogowski Rope Transducer PM-CTRUO18 up to 5000A. “Providing effective energy management, the Smart Power and Energy Meter will also provide useful information for cost allocation for building owners and tenants within a building,” said Sandy Damm, managing director at Sontay. “It can communicate seamlessly with the majority of building managements systems.”

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Dual fuel hybrid heating PassivSystems has installed more than half of the planned 75 hybrid heating systems in private and social housing properties in Bridgend, South Wales. The trial is part of a £5.2m innovation project funded principally by Western Power Distribution and Wales & West Utilities designed to prove the economic benefits of providing a flexible choice between fuels for heating. Designing heating systems that combine gas boilers with air source heat pumps (ASHP), while employing smart switching between the gas and electric load, enables the choice of fuels to match consumer demand for heat. This approach allows the heating system to take advantage of time-of-use price differences between the two fuels – so-called ‘fuel arbitrage’. This hybrid approach has

Water meter sensor boost

the potential to make the best use of the hot water delivery appliances currently installed in most UK housing stock,” said PassivSystems chief executive Colin Calder. “Using gas boilers alongside air source heat pumps, with some intelligent switching between the two, gives us a pragmatic pathway to

decarbonising heat. In the future, we will have options to use green gases to deploy ‘hybrid green’ systems.” PassivSystems will monitor the performance of the hybrid systems during the 2017/18 heating ‘season’ to evaluate the potential for energy savings and reducing carbon emissions.

Significant strides in thermal stability have enabled CeramTec to optimise the performance of its range of 1MHz stainless steel water metering sensors, boosting signal strength by 30%. Sensors are known to perform differently at various temperature ranges, affecting the overall quality of the meter reading. In applications such as water metering, an accurate reading is critical as this ensures that meters give the fairest possible reflection of water use. The improved thermal stability of CeramTec’s range of sensors means that the change in signal and frequency is of a more linear nature, allowing sensors to be calibrated by for maximum accuracy.

Energy efficiency methodology validated Virtus Consult has completed a two-year Knowledge Transfer Partnership (KTP) with Oxford Brookes University to refine and promote a holistic methodology for enhancing energy performance in existing buildings. The partnership followed a major energy efficiency improvement and carbon reduction project undertaken for an NHS trust, which saved 18% of its energy costs through guaranteed savings (equivalent to £900k pa) with a payback of less than five years. Virtus Consult developed a five-stage process for the project, which it believes would offer similar savings for other NHS Trusts. Oxford Brookes University

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supported Virtus Consult’s ambition to validate, refine and package its methodology for energy management, which can now be promoted as a consultancy product. “Developing an innovative approach to energy management for one NHS trust is one thing, proving the results can be replicated with others is something

else altogether,” said Jan Ponsford, director at Virtus Consult (pictured). “The Associate we recruited as part of the KTP programme, first undertook a huge amount of market research to establish the key drivers for trusts to hit their carbon emissions targets and 5% cost reduction targets, as mandated by the NHS. “Our associate soon discovered that an impediment to the successful implementation of our consultancy product was the method by which public bodies could engage our services, with accepted frameworks very much the preferred route.” As a result of the work undertaken on the KTP project, Virtus Consult was appointed to three different

frameworks: LHC Energy Efficiency and Refurbishment Framework; LGSS Construction Consultancy Services Framework; and the Bloom Framework (formerly NEPRO). “The impact of our position on these frameworks was almost immediate, with Virtus Consult securing energy sustainability projects for three new NHS organisations, expected to deliver total annual savings in the region of £640k,” said Ponsford. “We now have a validated methodology that can help public and private sector organisations reduce energy consumption and carbon emissions through demand and supply side improvements.”

October/November 2017

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October/November 2017

Q&A

Lee Gannon Flogas Britain’s managing director on the Wild West, the rivalry between Aston villa and Birmingham City fans and the Lord Lucan mystery Who would you least like to share a lift with? A Birmingham City fan. As a lifelong Aston Villa fan, the thought of being in a confined space with a Bluenose is just too much to bear!

Jaws. Not only was it at the cutting edge of film-making in its day, but the plot is clever and gripping, too. It beautifully portrays the animalistic battle of wills between predator and prey in the natural world.

You’re God for the day. What’s the first thing you do? Facilitate world peace. Why can’t everyone just get along? Although I have a feeling that only one day as God may not be enough to achieve this.

If you could perpetuate a myth about yourself, what would it be? Contrary to popular belief, I’m actually quite a nice fella

If you could travel back in time to a period in history, what would it be and why? The Wild West – life was much simpler then. Plain talking and direct action. Which is also the way I like to do business. Who or what are you enjoying listening to? Talk Sport. I’m a big fan of the Alan Brazil Sports Breakfast, and Adrian Durham and Darren Gough are the only people to listen to driving home. What unsolved mystery would you like the answers to? Where Lord Lucan, the peer suspected of murder who’s been missing since 1974, disappeared to! I’d also like to know who really shot John F. Kennedy.

What would your super power be and why? I’d love to be able to fly – to think how many wasted hours sitting in traffic jams it would save me! What would you do with a million pounds? I’d spend it wisely rather than splurging it in the first instance. I’d take care of a few financial commitments, make sure my family had everything they need and then if there was anything leftover I’d let myself enjoy it. What’s your greatest extravagance? I have a real love for classic cars,

66 October/November 2017

almost greater than my love for Villa! My favourite is my 1999 Jag XJR. What is the best piece of advice you’ve ever been given? To be honest, I am in my dream job. Working with amazing people who have enabled me to achieve my dream job (and keep it). I work with a committed team and am extremely proud to be doing it. What is the best piece of advice you’ve ever been given? You have two ears but only one mouth for a reason.

What would you take to a desert island and why? This is quite a practical one but it’d have to be sun cream… Let’s just say I don’t tan well! What’s your favourite film (or book) and why? Definitely

As a lifelong Aston Villa fan, the thought of being in a confined space with a Bluenose is just too much to bear!

What irritates you the most in life? Laziness. There’s no excuse for it.

Unsolved mystery: the disappearance of Lord Lucan

What should energy users be doing to help themselves in the current climate? They should be focusing on efficiency,

to help keep their bills as low as possible. This could include everything from ensuring their homes are well insulated, to switching their business energy from oil to LPG. I’d also encourage them to engage with energy companies around overall service and the products they offer. People forget that we’re here to help and we want to resolve their issues. What’s the best thing – work wise – that you did recently? There are two things really. Firstly, we’ve recently reintroduced mains gas to the Flogas offering after a 20 year absence, which I’m very proud of; and secondly, we recently showed our public support for the government’s Clean Growth Strategy. The strategy is a massive step in the right direction for this country and will be very good for the LPG industry. te

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17-18 APRIL 2018 â&#x20AC;&#x201C; National Motorcycle Museum, Birmingham The integration of energy disciplines is accelerating. The Energyst Event discusses the fusion of procurement, efficiency and flexibility linked by the explosion in cost effective data management.

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