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Dead money: use dormant bank accounts to fund clean energy, say MPs

June/July 2018

Merchant model: Anesco chair says storage returns are healthy, not risky

Gas security: drums beat louder for gas storage inquiry

“There is now nothing to stop Ofgem applying charges on behind the meter generation” – p56

FOCUSED ON WHAT YOU NEED Look through to pages 14-15

INSIDE THIS ISSUE

48 Industrial focus

Highview Power says its liquid air energy storage provides large-scale, long duration storage that could prove attractive to large industrials as well as utilities

Heat

What to do with 500GWh of heat? TfL is looking at how to use heat from the Underground while making life a bit cooler for passengers

Renewables

Corporate PPAs will be a critical tool in driving post-subsidy renewables, but the market must become far more liquid and transparent if they are to fully deliver

DSR & Storage

Aggregator Restore has pooled 18MW of Tesla batteries with megawatts of industrial load in Belgium. The firm says it is planning a similar, albeit smaller, hybrid solution in the UK

Viewpoint

The failed Triad legal challenge could have ramifications for behind-the-meter generation, warns Franck Latrémolière

46 Industrial focus

We know we are at a 30% disadvantage to continental steel and aluminium processors

Vehicle to grid

News & Comment

theenergyst.com

Dead money: use dormant bank accounts to fund clean energy, say MPs

Merchant model: Anesco chair says storage returns are healthy, not risky

Gas security: drums beat louder for gas storage inquiry

Look through to pages 14-15

National Grid details plans to open up the balancing mechanism to more sources of flexibility, while simultaneously working to connect with European markets

June/July 2018

“There is now nothing to stop Ofgem applying charges on behind the meter generation” – p56

FOCUSED ON WHAT YOU NEED

News

Nissan quells concerns that using EVs to provide balancing services will leave customers with flat batteries, while Pivot Power reveals ambitious plans to develop a 2GW battery storage-EV charging network

Industry hopes Ofgem’s charging reviews will not leave them less competitive while calls for a gas security inquiry grow louder

14 Cover Story

Total Gas & Power’s Mark Rose talks transparency, trends and transition

Heat

HVAC

Renewables

Industrial focus

Products

DSR & Storage

Certification

Q&A

Vehicle to grid

Viewpoints

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June/July 2018

COMMENT

Money for new rope There is always a balance to be made when assessing the investment of taxpayers money into energy generation. Sometimes it is spent to spur and develop a nascent industry such as FiTs for PV and ROCs, and latterly CfDs, for offshore wind. Money, unlike stupidity†, is finite and so some technologies find that they are considered too expensive to subsidise such as the early CCS projects that were aborted. There have been two more recent public investment cases featuring differing technologies and differing outcomes.

If developing new industries and innovating is the goal, a 70-year-old technology is perhaps not where to put subsidies The Business and Energy Secretary Greg Clark in June quashed hopes for a proposed tidal lagoon in Swansea Bay. “Securing our energy needs into the future has to be done seriously and, when much cheaper alternatives exist, no individual project, and no particular technology, can proceed at any price,” he said. “That is true for all technologies.” The Horizon nuclear power station, Wylfa Newydd in Anglesey, is to receive direct Government investment and underwritten loans. So, in the interests of energy security, taxpayers will take a multi-billion-pound stake in a mature technology. As a technology, nuclear power offers low carbon, reliable baseload generation. However, although Wylfa Newydd may appear significantly cheaper than Hinkley C, it arguably still offers poor value for

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4 June/July 2018

money. If cost is the priority then onshore wind, storage and flexibility might be a better option. If developing new industries and innovating is the goal, a 70-yearold technology is perhaps not where to put subsidies. In recent years, generous subsidies have been applied to renewable generation then scaled back. The subsidies grow industries, their supply chains, and help them to mature. The end result, ought to be subsidy-free generation. New technology, such as tidal lagoons, therefore render direct cost comparisons irrelevant. Tidal lagoons may or may not be the correct technology in which to invest large sums of public money. New nuclear power may or may not be required by the time it is built. But if the government is going to pick winners, then it surely must go the whole hog and invest at scale to deliver multiple projects. Only then can it claim to be delivering value for money by enabling economies of scale and many-of-a-kind benefits that investing in one or two projects cannot achieve. † “Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.” - Einstein

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NEWS & COMMENT

Balancing mechanism: National Grid to open up ‘ultimate flexibility market’ National Grid has outlined plans to opening up the balancing mechanism (BM) to more sources of flexibility, while simultaneously working to connect with European markets. The BM is one of the key tools National Grid uses to balance the supply and demand close to real time. It accepts bids or offers from companies to increase or decrease generation or consumption. Speaking at the Power Responsive conference in June, Cathy McClay, head of commercial, electricity at National Grid, described the BM as “the ultimate flexibility market”. With the system operator’s BM requirements potentially set to double by 2022, that could represent a prize pot for flexibility providers in excess of £500m. Transmission-connected generators and licenced suppliers currently have access to the BM, and National Grid plans to allow access to independents by the end of next year. In the meantime, some

Smaller providers to join transmission connected firms in balancing mechanism

aggregators are acquiring supply licences, believing that the prize is worth the hassle, particularly as contracted ancillary services prices feel the squeeze of greater competition. Project Terre Chris Fox, National Grid’s balancing and settlement code manager, outlined challenges and opportunities in creating wider access both the BM, and the European reserve market, via Project Terre. The aim is to improve access to the domestic balancing mechanism in

Reader’s DSR views sought The Energyst asks readers to give their views on demandside response (DSR) and battery storage for two new reports. If you provide DSR, we want to know what you do, how you do it and whether you are satisfied with the results. If you do not provide flexibility, we would like to know why, and what the market, policymakers or regulators could do to make it more compelling. If you are considering implementing storage, or have done so, we would also like to hear your views on challenges and benefits. Take the survey at the energyst.com or use this short link to go directly to the questionnaire: bit.ly/2IuwXyY So far, it has taken respondents six minutes on average to complete the survey.

6 June/July 2018

parallel with Terre, which stands for trans-European replacement reserve exchange. Terre obliges National Grid and other transmission system operators to collaborate to build a European balancing market that will facilitate balancing in different regions. It requires participants to be able to access the market on an equal footing. So National Grid is working on delivering wider BM and Terre access in tandem, with Terre scheduled to go live by 2019, though many industry participants believe that deadline is challenging.

Flex trading When it goes live, the interplay between the BM and Terre trading strategies could prove interesting, Fox told delegates. He said National Grid is attempting to design rules so that providers can participate in both markets simultaneously. However, Terre will be ‘pay as cleared’ while the BM is ‘pay as bid’. As a result, Fox said “war games” conducted with a number of traders found the pay as cleared system, coupled with cross border competition, created downward pressure on Terre prices as opposed to the BM. Whereas the current set up incentivises participants to pull power out of the wholesale markets and bid it into the BM to take advantage of higher prices, cross-border competition through Terre, which National Grid will use to balance the system at lowest costs, could have a significant dampening effect: if participants bid too high into either market, they run the risk of not being activated.

Ofgem wins Triad cuts case Ofgem has seen off a legal bid to overturn cuts to embedded benefits. The judgment was handed down on 22 June by Mr Justice Lavender, who rejected the application for judicial review. Peak Gen Power had led a challenge to Ofgem’s decision to drastically reduce socalled embedded benefits, a significant source of income for distributed generators. The main element, the TNUoS residual (or Triad

payment), will now be cut from £45/kW to around £3/kW by 2020, which the regulator says could potentially save consumers up to £7bn by 2034. Ofgem said the result was “good news for consumers” and that it would “continue to robustly defend its decisions when challenged”. See Franck Latrémolière’s take on the verdict and its implications on p56

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Utility Warehouse has suggested small independents acquiring customers at a loss will not last long, predicting further insolvencies. Reporting financial results for the year to 31 March 2018, parent firm Telecom Plus posted an adjusted pre-tax profit increase of £54.3m (up 1.8%) and a marginal statutory pre-tax profit increase on 2017 of £100,000 to £41m. Chairman Charles Wigoder offered a bullish outline of the firm’s prospects. He said the looming retail price cap would work in Utility Warehouse’s favour and suggested the proposed Npower-SSE merger could provide an opportunity to revisit its commercial terms with Npower. Wigoder painted a bleaker picture for the firm’s

More small suppliers to go bust?

smaller competitors. Rising forward costs for energy, up about by a fifth since January, and rising non-commodity costs do not appear to be reflected in many challenger brands’ acquisition tariffs, Wigoder suggested. Their strategy “appears to rely upon having a retail price position at (or towards) the top of price comparison site results, irrespective of the impact this

will have on their profitability and/or cashflow”, he stated. “This is clearly not sustainable, as has been demonstrated by the number of smaller independent suppliers who have ceased trading recently,” he continued. “In the absence of strong balance sheets to absorb the losses they will be making, and/or a collapse in commodity prices, further insolvencies seem inevitable.”

Mitie chairman: reset required for FM to remain economically viable Mitie chairman Derek Mapp has urged industry to properly price risk or the economics of facilities management will become unsustainable. Such a situation would see further large providers go out of business, though Mapp suggested a “subtle” shift was already under way. Posting full year results, the firm acknowledged the scale of the challenge facing the business and the broader FM industry. Mitie is one year in to a three-year major structural overhaul. Mapp said “the magnitude of the internal restructuring and the number of things that have needed to be fixed are far more significant than was earlier anticipated”. However, he suggested “much of the heavy lifting is now complete”.

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For the broader market, and its participants, Mapp said Carillion’s collapse underlines that “wholesale sector recalibration is needed for the economics of FM to continue to be sustainable”. He said that required “industry-wide correction in the pricing of risk; contracts need to correctly account for price, quality, certainty and timeliness of delivery.” “We are pleased to see that

Brian Mills/Creative Commons

Utility Warehouse predicts supplier crash

this is already happening,” Mapp suggested. “As we engage with government, prospective customers and existing clients, the focus is moving subtly away from just cost and towards value.” Meanwhile, the firm said its investment in smart technology is continuing to pay dividends. Mitie chief executive, Phil Bentley, said its smart energy platform has helped bring 29 successful contract bids over the line in the past 12 months, with a 44 further ‘connected workspace’ propositions “in the pipeline”. For the year to 31 March 2018, adjusted revenue increased 2.8% to £2.2bn although adjusted operating profit before other items dropped to £77.1m from £82.0m.

Wigoder also welcomed a perceived change in mood music around exemptions for smaller suppliers from some policy costs. Those under 250,000 do not currently have to take responsibility for policies such as the Warm Home Discount or Energy Company Obligation. Large suppliers believe exemptions give smaller suppliers a competitive advantage and Utility Warehouse shares that view. Exemptions “create significant distortions and widespread consumer detriment, and we are encouraged that a consensus seems to be building that these exemptions are no longer serving the purpose for which they were conceived, and ought to be scrapped”, said Wigoder.

Sembcorp snaps up UK Power Reserve Sembcorp Industries has acquired peaking plant operator UK Power Reserve (UKPR) for £216m. The Singapore-based firm operates a collection of generation assets at the Wilton International industrial site in Teesside, totalling about 210MW, and hopes to develop two big gas power stations at the site. Globally Sembcorp has 12GW of power generation assets. UK Power Reserve has a 533MW operational portfolio of gas and diesel engines, with a further 480MW in development, including around 120MW of batteries. Nomi Ahmad, head of Sembcorp’s UK utilities business, said the deal “provides major opportunities for further expansion”.

June/July 2018

NEWS & COMMENT

Dead money: use dormant bank accounts to help councils fund clean energy, say MPs MPs have urged government to help councils finance and deploy local energy projects as European funding avenues close off. They also suggest government taps the estimated £2bn sitting in dormant bank accounts to fund low carbon infrastructure. Cliff edge The Environmental Audit Committee’s report on green investment said changes to government policies in 2015 have led to a dramatic fall in green investment, which will likely mean missing carbon targets. While falling costs of renewable energy technologies has in part mitigated policy changes, the report said fixed price contracts

(CfDs) would be crucial to ongoing investment. Decentralise delivery The committee also called on government to help councils develop and fund local low carbon projects. Many local authority projects do not get off the ground without support from the European Regional Development Fund. When ERDF, and other sources of European finance are closed off post-Brexit, councils will need to find and access other pots of money. Additionally, the report said the sale of the Green Investment Bank to Macquarie may represent a blow to sources of funding for councils. The MPs recommended government create

Time to start looking for replacement funding sources

partnerships with local authorities to provide technical and development expertise to help them access finance – and report back to the Committee on concrete steps it will take. Dead money Dormant assets could be one way of funding green

National Grid launches regional carbon intensity forecast tool National Grid has updated its carbon intensity forecast tool so that people can see when power is cleanest in their region. The system operator launched software that predicts the likely carbon intensity of power on the national system up to 48 hours ahead last September. It has now updated the tools – which include an open API for app developers to use the data to create smart apps for households and EVs – so that users can see carbon intensity by distribution network. The hope is that – when half hourly metering is mandated, enabling widespread time of use tariffs

8 June/July 2018

– people will use power when it is cheapest and cleanest. That will also help National Grid and distribution network operators balance their systems, because it will likely increase demand when there is lots of renewable power generation, and dampen demand when the

system is running tight. The forecast tools use Met Office data and have been developed in conjunction with the Environmental Defence Fund, the Department of Computer Science, The University of Oxford and WWF. See: carbonintensity.org.uk

infrastructure. Some £2bn is sitting in dormant UK banks, funds and insurance, “being managed for no one”, Aviva sustainable investment chief Steve Waygood told the committee’s inquiry. If dormant asset owners can’t be found, the government has powers to take and use their money under the Dormant Bank and Building Society Accounts Act 2008. The committee said where it is not possible to locate owners, “dormant assets could be used to create an environment fund to support investment in low-carbon and sustainable development projects, and to create markets for natural capital, fund climate change adaptation and ecosystem preservation”.

Energy innovation award winners Four UK firms won this year’s sustainability-focused Ashden Awards. Upside Energy won the Impax Award for Energy Innovation for its Virtual Energy Store, which aggregates flexible demand from both commercial and domestic sources. Energy Local took the UK Energy Market Disruptors Award for its Energy Local Club model, which allows households to match their power usage to the output of nearby renewables and pay less by doing so. EV charging network Chargemaster won the award for Clean Air in Towns and Cities. Q-Bot, which uses robots to insulate suspended floors, won the UK Sustainable Buildings Award.

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Sponsored column

By creating synthetic pools or portfolios, you reduce the technical requirements on individual assets that otherwise would not be able to participate in certain balancing services portfolios can unlock greater value from batteries by enabling other types of assets or load to deliver flexibility into fast response markets that they could not technically deliver by themselves. That means less granular, or slower responding assets, can earn a share of higher value balancing services revenues by being pooled with batteries. “By creating synthetic pools or portfolios, you reduce the technical requirements on individual assets that otherwise would not be able to participate [in certain balancing services],” said Burford. “By doing so you create value where it does not ordinarily exist. That is only achievable through synthetic portfolios.” Burford added that bringing industrial loads into play also helps system operators,

because load response has an effect on system inertia, which is dwindling as large thermal plant is displaced by smaller distributed generation. The less inertia on transmission systems, the more volatile they become. Hence grid operators designing services that reward faster acting assets such as batteries. By combining industrial loads and generation with batteries, Burford claimed grid operators can react to the symptoms of loss of inertia, as well as help address the cause. He also claimed costs to consumers will be lower, because fewer batteries are required on any given system, and revenues paid to flexibility providers higher, because they can help deliver greater services than the sum of their component parts. te

GridBeyond Academy Recieves Praise at National Grid’s Power Responsive Event GridBeyond, formerly Endeco Technologies, have recently been praised by National Grid’s Power Responsive group for their ‘GridBeyond Academy’. Highlighted as one of the industry’s successes at the Power Responsive Summer Reception in June, GridBeyond have developed a library of resources, ranging from whitepapers, guides and insight blogs, through to live and recorded webinars, seminars and podcasts, as well as reports, briefings and statements on current energy market aﬀairs. Michael Phelan, CEO & co-founder at GridBeyond commented “We believe that education leads to better, more informed business decisions.”

“We need renewable PPAs to supply our customers [with renewable power]. But it is a competitive space. Now we offer to both buy their power and optimise their plant – see what flexibility they have and enhance their revenue,” said Meyrick. “I think that is where we will score over [aggregators], because they are interested in the flexibility rather than the PPA.” Meyrick said trading and forecasting will become more critical as the market

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moves from longer duration products and contracts to shorter duration services and merchant opportunities. “It is no good being great at day ahead forecasting, you need good month ahead forecasting,” he said. “You have to know when to come off the frequency response contract and [take] market opportunities, which is a different kettle of fish.” Meyrick claimed Ecotricity now has about 16,000 business customers, up significantly on last year. te

The academy picks up momentum at a key time, as National Grid starts to put in motion it’s scheme simplification initiatives, following the release of the System Needs and Product Strategy (SNAPS) last year. Whilst in the long term the reformed system will mean better clarity around flexibility opportunities, at this time, businesses are looking for expertise on the the electricity system, the opportunities currently available, and guidance as new opportunities come to fruition. The academy has been designed to break down barriers by simplifying and educating on energy topics, so that areas like demand side response and flexibility are better understood

and therefore more accessible. Resource levels vary from introductory and beginner, through to intermediate and advanced, for every level of understanding. The GridBeyond Academy trains professionals to understand more thoroughly areas such as energy consumption, new technologies, the changing energy landscape, assets for demand side response participation, energy cost saving opportunities, flexibility opportunities and innovative ways of reaching sustainability goals. Phelan continued, “We recognise that energy systems are rapidly changing, which is why our academy simplifies complex energy topics to ensure clarity and accessibility for all. “The GridBeyond Academy is intrinsically linked to our core values, to empower industries and large energy users to take control of their energy consumption and provide instrumental services to the balancing of the electricity network.” For more information on the GridBeyond Academy and available resources, visit www.gridbeyond.com/ gridbeyond-academy

DSR & STORAGE

Are we nearly Terre yet? Sebastian Blake, Open Energi’s head of markets and policy, outlines the challenges flexibility providers have overcome, and the European opportunity on the horizon

emand flexibility is a constantly evolving and rapidly changing marketplace. Regulators and service procurers have a challenging task to keep pace with technology advancements, business model innovations and new disruptive market entrants. National Grid kicked off its Power Responsive campaign in summer 2015 to address these challenges. Three years on, how much progress has been achieved? Back then there were around 30 different ways onsite flexibility could be monetised (as shown in figure one). Much of this complexity

arose because multiple procurement avenues existed for the same products; legacy IT systems at National Grid resulted in some arbitrary duplication (ie FCDM and Static FFR are identical products managed by different systems) and market separation was also the methodology employed to encourage new providers. DSBR, STOR Runway, FFR Bridging and Capacity Market Transitional Arrangements were all attempts to section off some of the market for demand response providers to provide a nurturing ground for growth. However, what flexibility providers really needed was

Sebastian Blake: some progress, but step change looms

2015

market access. The majority of balancing market activity took place in the Balancing Mechanism, a lucrative market only open to power stations bigger than 50MW, which National Grid’s Control Room use as a first port of call to solve network issues. Market access was also a barrier to behind-the-meter flexibility participating in energy trading activity. While rising renewable penetration was causing greater volatility in wholesale markets – which demand response was ideally placed to cost-effectively manage – market access was only possible through a licensed supplier associated to an end-user meter. Given

DEMAND-RESPONSE MARKET Demandresponse services

Price-based Demand-response

Distribution Network

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T-4 Auction Demand Turn-up

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Capacity Market

Transitional Import/ arrangements Export tariff

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Dynamic

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Day/Night supplier tariff Partially Dynamic

Wholesale

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EFCC

Figure 1 Comparing the DSR market in 2015 and 2018. Source: Open Energi

24 June/July 2018

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most suppliers are part of vertically integrated utilities that also own generation assets, the supplier side of the business had little incentive to encourage new forms of competition with the generation side, which had billions of pounds worth of large thermal assets on the balance sheet. This meant the main source of revenue for demand response was not in services but through the avoidance of expensive network charging heavily weighted to peak times. Particularly strong Triad charges designed to prevent consumers from all using the network at once lead to a build out of diesel farms

Market access remains the greatest shackle on a wellfunded flexibility sector bristling with innovative technology and business models

2018

DEMAND-RESPONSE MARKET Demandresponse services

Price-based Demand-response

Distribution Network

Balancing services

Project Terre

changed; Decc has become Beis, Brexit is happening and Elon Musk has driven everyone battery crazy. National Grid’s Product Strategy has set about the much-needed work of market rationalisation; removing many of the failed demandside specific services that providers never wanted in the first place. But market access remains the greatest shackle on a well-funded flexibility sector bristling with innovative technology and business models. Frequency response is the most frustrating example of this; competition has halved prices in the Firm Frequency Response market while »

as opportunists exploited the fact the same cost could be earned as a revenue by exporting to the local network (which looked like the same thing to National Grid). Finally, back in 2015, the first Capacity Market auction prices were clearing at about £20/kW, which would add £1bn per year onto consumer bills (the same as the entire cost of balancing the network over a year). The clearing price was in fact far lower than everyone was expecting and well short of Decc’s stated aim of encouraging new build CCGTs, much to their disappointment. Fast forward to summer 2018 and much has

T-1 Auction

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Balancing Mechanism

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Capacity Market

Import/ Export

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Variable costs

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Flexible

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EFR

Static

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June/July 2018

DSR & STORAGE

demand response is locked out of the Mandatory Frequency Response market, where prices are higher but accessible only to large generators. Similarly, the only route to the Balancing Mechanism remains via a licensed supplier, and being manually dispatched means even distributed generation is at a disadvantage. Project Terre – an EU-wide cross-border balancing project – could provide the panacea given it will be algorithmically dispatched and should redefine regulation to allow a route for aggregators (or virtual lead parties) to enter independently of the supplier (both for this new service and the BM). However, as always, the devil is the detail and with an ambitious timescale (summer 2019 go-live) many questions are yet to be worked through to ensure it does provide independent access and a level playing field. Some have suggested GB could follow France’s example and open wholesale markets for independent access. Ofgem’s Supplier Hub review – which is looking at how consumers can access and manage their supply in new ways – is an important high-level debate that will hopefully lead to concrete policy changes. However, the changing utility business models are

26 June/July 2018

having the biggest impact; most of the Big Six are now vertically disintegrating and selling off upstream assets. Accepting the future of energy lies in decentralisation, suppliers see demand response offerings as vital to customer retention – for example Ørsted’s Renewable Balancing Reserve, which provides access to the Imbalance market. To develop energy services propositions some utilities have acquired or partnered with aggregators (such as Restore’s purchase by Centrica) while some aggregators have become suppliers themselves (such as Flexitricity and Limejump) to take utilities head on. Some of the biggest impact on business models has come as Ofgem has set about reforming network charges; its aim is to prevent energy consumers from avoiding network charges so that those least able to pay do not end up footing the bill for the entire system. Triad charges are expected to be replaced with a new system and a statement from Ofgem is due this summer, which should reveal how much of an incentive will be left for large energy consumers to avoid the system peak (allowing for more efficient network investment). DUoS prices are up for reform next.

Project Terre – an EU-wide cross-border balancing project – should redefine regulation to allow a route for aggregators (or virtual lead parties) to enter independently of the supplier

Capacity Market prices have bombed – clearing at £8/kW in the 2018 auction. Despite government attempts to undermine distributed generation influenced by incumbent utilities, market forces have dominated and further driven down prices. Does this reveal that GB does not in fact need new build CCGT or simply what an ill-conceived policy instrument the Capacity Market was? As we approach the five-year review, there’s no doubt that it has failed to deliver its stated aim. Where does this leave demand flexibility? Undeniably the momentum is building, and few would disagree that distributed flexible resources are the most efficient way to develop a renewablepowered, decentralised power system. While technological advancements continue to overwhelmingly exceed expectations (electric vehicles being the latest star to rise) the policy and regulatory environment fails to keep pace. Market access remains the most fundamental concern for flexibility providers, a message which has been consistent since the start. The importance of new instruments like Project Terre and the Supplier Hub Review to completely change the game can’t be overstated. te

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DSR & STORAGE

Volatility ‘nothing to be scared of’ Anesco’s Steve Shine believes investors shouldn’t fear the merchant models underpinning storage economics and instead take comfort from the GB power system’s fundamental need for flexibility. Brendan Coyne reports

nesco executive chairman Steve Shine has said the developer plans to keep more of its battery assets to fund new projects “because the returns we are seeing are good”. He also suggested the market should stop dwelling on the “merchant risk” that is frightening debt investors and instead get used to a merchant model that can be exploited by smart operators. “The smart investors are investing in storage, like they did with solar. The ones that invested earlier made good money,” Shine told The Energyst. He said while limited long-term visibility on revenues may be limiting investor appetite in the short term, market fundamentals should give comfort. “Battery storage is key to increased renewables penetration and 2030 and 2050 targets, so logic says this has to take off and the smart operators are buying assets off us,” said Shine. “We would like to own more assets ourselves, because the returns are good.” Get used to it Shine contrasted investor perception of risk in storage with a somewhat different approach applied to property speculation. “People talk about ‘merchant risk’, which frustrates me. Banks put a lot of money into new buildings in London, with no guarantee of rent for the next 20 years, never mind Brexit,” he said.

28 June/July 208

The smart investors are investing in storage, like they did with solar. The ones that invested earlier made good money

Steve Shine: Battery storage is key to increased renewables penetration

“Yet we depend on energy every day – and as long as the Balancing Mechanism has been around there has been instability in the market [providing opportunities for flexible assets]. “So it is not ‘merchant risk’, it is just ‘merchant’ and the banks need to get used to it.” Shine said banks are starting to get comfortable and make initial investments and believes “it will snowball … we got to 13GW pretty quickly”. While the company has traditionally developed gridscale, in front of the meter assets, Shine said Anesco is also looking behind the meter (BTM) and was in discussions with industrial and commercial (I&C) firms to install assets that will achieve a two-year payback. The firm has also installed three batteries at a food processor enabling it to harness its own generation from food waste “all day long”, said Shine. However, he said I&C sector BTM projects, due to the number of stakeholders involved, is “quite slow…. It can take over a year to come to fruition”. Charging regime change Shine said businesses should not be put off looking at BTM storage

due to regulatory uncertainty, as Ofgem works to change how businesses pay grid charges. “There has to be some charge”, even for those increasingly off grid, said Shine. “They will still rely on the grid for back-up, so there has to be some charge for it. But it shouldn’t be more than what they are paying now in terms of use of system and they will still get power cheaper. And the industrial and commercial customers can get investors to pay for it, take a smaller benefit and meet carbon targets. “So [charging regime change] is not a reason for I&C companies not to do something.” Return of solar Anesco’s subsidy free storage and solar development at Clayhill Farm was seen by some as a success due to perfect circumstances – not least an adjacent development with spare connection capacity. But Shine is bullish. “We have another three in the pipeline so it is not a one-off,” he said, adding Anesco already has a potential buyer for the three sites, “and the next one will be built on demand.” While Shine says the returns from standalone batteries are better than [unsubsidised] solar alone, he is confident “the government will do something with the CfD, and certainly the Capacity Mechanism – and then we will start to see returns for new solar, for sure”. te

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WPD steps up DSR procurement push

estern Power Distribution is launching a tender for more demand-side response to help balance its networks. The company began a flexibility trial in the Midlands last year. It now seeks expressions of interest from half-hourly metered businesses that can cut consumption or increase generation in Rugeley, Northampton, Beaumont Leys, Exeter and South Hams and Plymouth areas. WPD has said it will further expand the programme next year. What and how much? The network operator will pay firms to provide one or two of three different services. It plans to structure its programme so that, if their

flexibility is not required, firms can bid into other flexibility products and markets. The three services are: • Secure – designed to manage peak demand on the network and pre-emptively reduce network loading • Dynamic – developed to support the network in the event of specific fault conditions, usually during summer maintenance • Restore – designed to help with network restoration following rare fault conditions Secure pays an ‘arming fee’ between £75/MWh and £118/ MWh, depending on location. It also pays a utilisation fee of £150MWh. Dynamic pays a small availability fee but a utilisation fee of £300/MWh. Restore pays £600/MWh. Firms can provide either

Secure or Dynamic in most areas, and make themselves available for Restore services. However, there are penalties for under delivery. After a 5% tolerance, each 1% of under delivery results in 3% payment reduction. Once provision drops below 63% of contracted delivery, firms therefore effectively get nothing. WPD project lead Matt Watson said the firm hoped not to get to that position, but had structured the regime to

emphasise the importance of reliable delivery. When? Providers declare their availability a week ahead and must then be ready to deliver services for at least two hours on 15 minutes’ notice. The expression of interest call closes at 5pm on 11 July. WPD will publish results and begin procurement on 25 July with the service to go live on 31 October. See details at flexiblepower.co.uk

VEHICLE TO GRID

Pivot thinks bigger Start-up outlines plans for 2GW of storage connected to transmission network and believes it can commission up to 10 sites – about 500MW – within 18 months. Brendan Coyne reports

ivot Power has unveiled highly ambitious plans to build 2GW of battery storage connected directly to the transmission network. The start-up aims to use dozens of 49.9MW batteries to balance the grid and simultaneously charge entire car parks of electric vehicles within minutes. The company has backing for the initial phase of its plan from Downing. The investment firm plans to bring in both institutional and retail investors to fund a programme that could top £1.6bn, subject to sufficient backing and planning consents. The company thinks EV owners will also crowdfund the buildout. Think big Pivot Power aims to commission the first 10 grid scale batteries within 18 months, the first a £25m project on the south coast. Chief technology officer Michael Clark told The Energyst the firm is currently working

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through permissions for the rest, a potential portfolio of 45 sites. But, while connecting to the transmission system is “more arduous” than distribution, Clark is quietly confident Pivot can deliver. While other developers have been “nervous” about connecting to the extra high voltage network, Clark said doing so gives the firm “access

Downing plans to attract both institutional and retail investors to fund programme that could top £1.6bn

to a much bigger connection”. It also cuts out distribution charges, which means cheaper power – both for EV charging and, potentially, to sell to large industrial users, according to Clark. “Access to transmission electricity gives us options that haven’t been used before,” he said. “So we can unload electricity to energy intensive users at a very competitive price.” Plans for 50MW batteries are not unheard of, and developers such as Anesco have stated they will build 300MW of storage by 2020. But delivering 2GW would represent step change. Given lack of long-term revenue predictability, how confident is Pivot Power that investors will back such ambition? “We will engage with institutional and strategic investors over the next few months,” said CEO Matt Allen. “But in terms of the

value stack [grid balancing, arbitrage, EV charging, plus potentially retail] it will be a very compelling investment.” Clark added that investors have had “a lot of time to get under the skin” of storage economics. Financiers “are far more mature than they were a year ago, when they were looking [predominantly] at firm frequency response price [visibility] over two years,” he said. “They are past that and are comfortable with it.” “We will have access to much higher volumes of connections going directly into the transmission system – and access directly into the Balancing Mechanism and all the trading benefits that come with that,” added Clark. “We expect quite a lot [of revenue] to come from trading, but certainly where available we will look for frequency and ancillary services revenues. So it is a case of picking and choosing, but we anticipate arbitrage –

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intraday, day ahead or within the Balancing Mechanism – to be a large part of the stack.” Clark said the size of the batteries and connecting them direct to the transmission network also brings mandatory frequency response contracts into play, as well as constraint management for the system operator. Then there is the EV aspect. EVs and retail? Pivot’s plan is to locate batteries strategically around the UK road network and use them to feed rapid charging stations capable of charging 100 EVs simultaneously (100 x 150kW rapid chargers, equating to some 15MW of dedicated EV charging per site). The company says that capacity could also be used to cater for electric bus depots or transport fleets. Meanwhile, its planning activity also includes lease agreements and options for land rights, which could create opportunities to build retail parks around its infrastructure, and associated revenues. “Access to flexible and abundant power and being able to get that power to locations where we see large demand for electrification of transport … starts to become a very compelling piece to the value stack,” said Allen. Accelerating EV uptake? But EV volumes are not there yet. Six months ago there were about 120,000 plug in cars in the UK. That figure is expected to rise to 200,000 by the end of 2018. Pivot Power plans to commission 10 large-scale batteries by the end of 2019, “with the EV piece there or just after that”, according to Clark. While Clark said achieving a substantial EV revenue stream is a “medium-term” proposition, Allen suggested there is an element of chicken and egg: range anxiety and distribution network constraints may be holding

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Connecting to the transmission system is more arduous but gives us a much bigger connection and a lot of benefits

National Grid appears to agree, with its project director for EVs, Graeme Cooper, adding a quote to Pivot’s press launch materials. “We expect the use of electric vehicles to grow rapidly. This innovative solution will help accelerate adoption by providing a network of rapid charging stations across the country enabling cars to charge quickly, efficiently and as cost-effectively as possible,” stated Cooper. “It will also give the system operator more choice and flexibility for managing the demands in the day to day

Michael Clark

We have invested over £500m in renewables to date. This is the next big opportunity Julia Groves

Access to flexible, abundant power at high demand locations is a very compelling proposition Matt Allen

back EV uptake. He thinks the infrastructure has to come first. “The reality is there is a constraint, so we are focused on addressing the power problem,” he said. “Being transmission connected and having the power at volume allows us to address that bottleneck.”

running of the network, and also help mass EV charging”. EV owners as investors? While Downing aims to bring other large investors into play, the firm also believes small individual investors – and in particular EV owners – will help fund Pivot’s grand plan. Julia Groves is a partner and head of crowdfunding at Downing. She said the firm has invested £500m into renewables to date and believes “this is the next big opportunity”. She admitted 2GW “is huge”, but thinks taking a site-by-site approach, at around £25m a

pop for each 49.9MW battery, makes it manageable. Groves also believes EV drivers will have appetite to fund the charging infrastructure. Downing has been active in crowdfunding for around two and a half years, raising £58m to date, with renewables “by far the most popular” funding category, according to Groves. Downing will set the minimum investment low, potentially as little as £100, she added, and it may be that ISAs can be used to invest in the Pivot projects. “We have to wait until all the planning is though [to provide details of investments and anticipated returns], because it has to be simple and robust,” said Groves. “We do need institutional partners. But we believe it is entirely appropriate that this opportunity is opened up to the general public.” Allen said Pivot is “optimistic and curious” to understand retail investor appetite. He suggested giving “those joining the EV revolution the ability to also own the critical charging infrastructure is emotionally a very compelling proposition”. Walking the walk Now the start-up has broken cover, can it realistically hope to deliver hundreds of megawatts of storage, from scratch, within 18 months? There is a precedent of sorts in South Australia, where Tesla installed 100MW in under 100 days. But that was Tesla, with a mature supply chain, and with Elon Musk’s word, and company cash, at stake. CTO Michael Clark is sanguine. “There are always obstacles that may cause some friction in getting all the way to 10 [commissioned batteries] in 18 months – planning, supply, equipment etc. But we have a strong planning approach in place, are a long way down supply chain talks and the vendors are bullish,” he said. “Hopefully we will do all of those 10 and more.” te

June/July 2018

VEHICLE TO GRID

olar and storage could play a key role in easing electric vehicle-related network constraints but a competition for feasible sites is heating up. Nottingham City Council is working on what will be “Europe’s largest vehicle-togrid project”, according to Luke Raddon Jackson, energy projects manager within the council’s Energy Projects Service business unit. The project, at the council’s Eastcroft depot, which houses the incinerator that feeds its district heat network, will help power “hundreds of electric commercial vehicles that we will roll out over the next couple of years”, Jackson told delegates at the recent Energyst Event. The Energy Projects Service, which develops and owns onsite generation and energy projects for the council as well as other public and private clients, is “having a big push on solar car ports” more broadly in a bid to create income for frontline services. “We own a lot of car parks that generate a lot of revenue,” said Jackson. “Solar car parks are going to generate a whole new revenue stream and help push us even closer to breaking even as a council.” Constraint concerns While a “significant opportunity”, Jackson said working with DNOs to manage constraint challenges and share benefits “is absolutely key”. The conference also heard from Rob Brown, sales and marketing director at Ecova, who said the Engie-owned consultancy is undertaking connection work for a hotel chain, deploying eight Tesla super chargers at four hotels. The chargers, which enable a 170-mile charge in 30 minutes, are 250kW each. Eight chargers in each hotel therefore creates a 2MW load. “That is a challenge in constrained areas,” said Brown. “Destination chargers [that

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‘Land grab’ for electric vehicle car parks and revenue Retailers, hoteliers and local authorities are stepping up efforts to develop revenue-generating electric vehicle car parks – and secure grid rights in what may become an increasingly congested system. Brendan Coyne reports enable rapid charging of multiple types of EV] also use a similar amount of power. That is something coming down the wire at quite a pace.” Land grab Retailers are also eyeing EV car park infrastructure. According to Maria Connolly, head of energy and renewables at law firm TLT, there is “a bit of a land grab going on” to secure options. Speaking at an Electricity Storage Networks conference in London, Connolly said: “We think we will see [growth] in EV-solar-storage developments. We are hearing [from clients] that it looks to be attractive, with revenue from the charging

Clients say EV solar storage developments look attractive, with revenue from charging stations, plus ancillary services and generation

stations, plus ancillary services and generation as well.” Meanwhile, other councils are trying to use EVs themselves – or rather second-hand EV batteries – as part of the solution. Dundee County Council plans to use second life Renault batteries from Connected Energy, alongside solar canopies, as part of the city’s charging network. Connected Energy CEO Matthew Lumsden told The Energyst the firm was receiving “a huge volume of enquiries” around rapid charging solutions and is having “detailed conversations” with potential project partners. “But the key is to pick the right ones,” he said. te

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Nissan: ‘Vehicle to grid services will not drain EV batteries’ Vehicle manufacturer moves to quell concerns that using electric vehicles to provide balancing services will leave customers with flat batteries. Brendan Coyne reports

issan has countered suggestions that providing vehicle to grid services (V2G) using electric vehicles will leave customers with empty batteries. Some prominent EV owners, such as Energy Managers Association CEO Lord Redesdale, have suggested that the idea of using EV batteries as energy storage is likely to be a non-starter, because owners will be reluctant to lose power after spending hours charging their car. The issue resurfaced as car manufacturers gave evidence to the Beis committee on electric vehicles in May. Pointing to its experience of V2G services in Denmark, Gareth Dunsmore, electric vehicle director at Nissan Europe, explained that V2G services are more nuanced. “It is not draining the battery, it is using the battery to balance the grid,” he said. “It uses the battery but it also puts energy into the battery; it is going up and down rather than draining,” he continued. “Draining

the battery is not where the value is for the energy company or the customer.” Nissan’s V2G services in Denmark have initially been fleet-driven, said Dunsmore. In the UK, the firm is involved in Innovate UK funded trials to examine potential for V2G services in both fleet and privately used EVs. That trial hopes to determine value propositions for car manufacturers, energy companies “and for private customer, to see if they would take [that proposition], which we absolutely believe they would do”, said Dunsmore. Money talks Ian Robertson, member of the board of management at BMW AG, said uptake of V2G services “is all about experience”. “The technology is more than capable of deciding when the battery can be part of a network, and deciding when the customer is going to be likely to use it, because generally, most of us sleep at night. Therefore, there is a period when it can be used as a

V2G services use the battery but also put energy into the battery. Draining the battery is valuable neither for the energy company nor the customer

storage facility for wider use.” He added: “Any area that people can make money out of generally gets people’s attention.” EV batteries as a service Speaking about the heavy commercial vehicle sector, Mike Kerslake, UK technical manager for Chinese battery firm BYD, said V2G services for those customers may require a change of service model in terms of battery ownership and management. “Perhaps the vehicle owner doesn’t own the battery, but it is [instead] leased from an energy resources company, who also gets value from the vehicle to grid capability,” said Kerslake. “So there is quite a potential change in the way it works.” The manufacturers also told MPs that second life batteries – repurposing batteries from used electric vehicles to co-locate with renewables, or for standalone storage – will represent a sizeable commercial opportunity as EV volumes grow. te

Nissan powers up its UK-based European RD hub with vehicleto-grid technology

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June/July 2018

VEHICLE TO GRID

An open network should make charging ‘hassle free’

Swedish utility plans open charging infrastructure push Vattenfall outlines charging infrastructure intent, targets industrial and commerical firms and local authorities. Brendan Coyne reports

wedish utility Vattenfall has started rolling out electric vehicle charging infrastructure in the UK and has said all drivers will be able to use its charge points on a pay-as-you-go basis. The firm’s head of E-mobility, Tomas Björnsson, said an open network of chargers, available to all drivers, should enable faster adoption of EVs by alleviating range anxiety and making charging “hassle free”. Meanwhile, he said an open model unlocks higher utilisation and returns for those that invest in charging infrastructure. As well as installing its own chargers, the company said it will also strike roaming agreements with other charge point operators or driver service providers, a model common in northern Europe. Vattenfall added that it is now targeting commercial developers, real-estate

34 June/July 2018

companies, industries, fleet owners and local authorities to install charging infrastructure. The company has an independent DNO licence, significant wind generation and supplies energy to both domestic and business customers, having entered the UK market a year ago. It is now scaling its EV team in the UK and Danielle Lane has just been appointed UK country manager to oversee operations. Vehicle-to-grid? Björnsson told The Energyst that the company would develop vehicle-to-grid services – but when the market is ready. He said a vehicle-to-grid strategy “is something everybody needs to have in their longer-term plan”. “EVs are not only an integration of the transport and electricity industry, but also an integration between the electricity and real estate industries. So having those integration capabilities over

time is a pre-requisite to making it work,” he said. In the meantime, he said there is more value in managing network constraints, with the firm planning to draw on its experience with dynamic EV charging tariffs in Amsterdam to help distribution network operators reduce peaks. Björnsson called for industry to push towards common communications standards and protocols to drive EV uptake through better interoperability. “It won’t be an industry where [one player dominates], there

A vehicle-to-grid stragegy ‘is something everybody needs to have in their longer-term plan’

will be many infrastructure and hardware providers involved,” said Björnsson, “so the more standardisation of protocols, the better it is for everyone.” Accelerator That said, Vattenfall has set it sights on being a market leader within EV charging across northern Europe, including the UK, “which means we want to grow significantly faster than the market in the next couple of years”, added Björnsson. Key to that ambition is partnering with real estate owners in the public and private sector, where Björnsson believes its experience across northern Europe will be a key advantage in an increasingly competitive sector. “Understanding pain points, how to commercially set up an offer and commercial partnerships is one big learning we can apply,” he suggested. te

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Electrifying heat will require lots of new renewable generation to meet peak demand

Electrifying heat: too expensive, or too little ambition? Is electrification of heat the answer to its decarbonisation or are alternatives better placed to economically achieve this? Brendan Coyne reports

lectrification of heat was seen as a key policy objective in the early part of this decade but appears to have receded in recent years, largely on grounds of cost of meeting winter peak demand. The government and much of industry now talk about a ‘whole systems approach’ that involves greener gases, such as hydrogen and biogas. Given the relatively low uptake of electric heating systems to date, this could be viewed as pragmatic. However, others believe it will result in the UK failing to meet carbon reduction targets. Zero emissions or bust Richard Lowes focuses on heat policy research at the Exeter Energy Policy Group. Prior to that, he spent seven years working for a gas network company, where part of his

36 June/July 2018

remit was to determine the future of the gas grid in a decarbonised economy. “I couldn’t make it work,” he says, “and that was my job.” Lowes says a hydrogen route, as pursued by some gas companies, will not sufficiently decarbonise heat. “My concern is that if you take the hydrogen route, you end up in a worst case scenario, because you have spent time and money yet still end up with residual emissions,” he says. “To meet Climate Change Act and Paris targets, emissions from heat need to be absolutely zero by 2050. That is non-negotiable, because it is possible to get to zero emissions from space heating, whereas other sectors cannot get to those levels.” Energy efficiency first Lowes believes electrification of heat and heat networks

I’m not saying there will not be a big winter peak but it is a lot smaller than some will have you believe

Richard Lowes, Exeter Energy Policy Group

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HEAT Figure 1: Annual residential electricity demand

Reversible heat pump boost According to latest government data (Dukes), heat pumps contributed 2.1TWh of renewable heat in 2016, roughly 4.6% of all renewable heat, which is dominated by biomass. Overall, Dukes’ data suggests the UK met 6.2% (46TWh) of overall heat demand (740TWh) in 2016 with heat from renewable sources. However, only heat from dedicated heat pumps is included in the statistics, making reversible airto-air heat pumps (RAAHPs), which can provide both heating and cooling, an unknown quantity. To date, the majority of RAAHPs have been assumed to provide mainly cooling for businesses. However, a recent study for Beis by energy consultancy Delta-ee suggests the majority also provide heating. Delta-ee’s surveys of large and small companies, plus installers, gave a mean figure of 73% of all RAAHPs being used to provide part or all of the heat load in the buildings in which they are installed. It suggested in 2016 a total of 8.2 TWh of renewable heat was produced by reversible air-to-air heat pumps, almost four times that contributed by hydronic heat pumps. Taking Delta-ee’s findings into account, government now believes the percentage of renewable heat in the UK in 2016 was 7%, which may prove useful should EU 2020 targets be enforced postBrexit. deployed in urban areas is therefore a better pathway. But he says energy efficiency must be a policy priority. “We should focus on reducing demand above anything. The UK still has some of the most inefficient buildings in Europe and high levels of fuel poverty,” says Lowes. “If we can reduce demand significantly, and the government choses to support that approach, it will be a much bigger driver for carbon reduction. Once you have lower demand, the non-gas solutions become more obvious,” he adds. Lowes believes heat pumps, storage and smart technologies can then manage peak demand. “The peak heat aspect is a

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big thing at the moment but in 35 years time, if we have done everything we can do to prepare the building stock for decarbonisation, the peak will be much lower,” he says. “I’m not saying there will not be a big winter peak but it is a lot smaller than some people will have you believe.” An electrification pathway would require more low carbon generation as well as major investment in distribution networks. “More electricity will be needed but I don’t think we should be scared about that; it will just displace gas investment,” says Lowes, who suggests that would also reduce energy security concerns.

“It is not easy – but every way you look it is challenging and I think we have to meet it head on.” Network investment Ofgem frowns on speculative investment in network capacity but does incentivise distribution network operators (DNOs) to make ‘smarter’ investments. It has also sanctioned trials around electrification of heat. Northern Powergrid has relatively few constraint issues on its network, due to its industrial legacy, but it has started to build a smart grid ‘backbone’ to better manage higher demand or changes to load patterns should transport

and heat start to factor. The £83m ‘Smart Grid Enablers’ project will add communications technology to about 8,000 substations so Northern Powergrid can better monitor and control them, with controls upgrades or replacements planned for 1,900 substations over the five-year project. Jim Cardwell, head of trading and innovation, says while heat policy “is very much at a crossroads”, networks must prepare for all outcomes, hence beginning to digitise its grid. “There are a wide range of scenarios on how decarbonisation may proceed, but our job is to understand all of them and ensure we are prepared to support electrification of heat if it goes that way,” says Cardwell, “but we will ultimately be led by the consumer.” Heat pump challenges Northern Powergrid completed one of the UK’s largest heat pump trials in 2014 as part of an innovation project. About 380 air source heat pumps were installed to understand customer behaviour, economics and network effects. “We gained an understanding of the impact of electrification of heat load, and trialled tariffs that incentivised customers to stay off peak,” says Cardwell. “Although [tariffs] successfully reduced peak load, the project did identify barriers – particularly retrofitting,” he continues. “Some of the equipment is quite bulky and requires intrusive internal modifications in people’s homes,” adds Cardwell. “So that is a barrier to acceptability.” Moreover, he says, “the operating mode is different; people have to change behaviour and the operation of the heating system is quite a dramatic change”. Cost aside, Cardwell says that presents “some barriers” to electrification of heat, “but we do have investment »

June/July 2018

HEAT plans in place to ensure we can support that scenario”.

Consumers will decide which path we take

Jim Cardwell, Northern Powergrid

Nervous energy However, other DNO projects indicate that even low heat pump penetration could create challenges. Western Power Distribution conducted an innovation trial with gas network Wales & West Utilities that suggested hybrid heat pump and gas systems might be more manageable and would enable ‘fuel arbitrage’ to avoid peak power costs. The DNO claimed even a 6% penetration of traditional heat pumps would lead to a 16% increase in peak demand. At present rates of installs, however, most DNOs have little to fear. Northern Powergrid said current levels of installation are about a third of its assumption for the regulatory period;

just 809 were fitted in its region in the lpast year. Across the UK, approximatelty 200,000 dedicated heat pumps have been installed to date (excluding reversible air-to-air heat pumps, see boxout below), with numbers relatively static at about 20,000 installs a year. Prepare for pick up? However, changes to the Renewable Heat Incentive may start to take affect over the next couple of years, particularly for ground source heat pumps: if two homes or more share ground loops, they can qualify as district heating and receive 20 year non-domestic subsidies versus seven year domestic RHI payments. Moreover, payments will be based on deemed heat taken from Energy Performance

Certificates, removing the need for metering equipment and its associated costs. Whether businesses start to look more closely at electrification of their heat load remains to be seen. To date, the lion’s share of nondomestic RHI payments have been made to biomass systems. However, according to the sample of firms surveyed by The Energyst for its 2018 Heat Report, heat pumps figure in their plans more prominently than any other technology. te

Published 2018

The Heat Report

Heat peak: Over the top? The 350GW-plus winter peak heat load for space and hot water heating often referred to by industry and government came from a 2014 PhD project by Dr Robert Sansom, based on 2010 data Exeter Energy Policy Group’s Richard Lowes points out that 2010 was the coldest in 25 years, and while systems must be designed for peaks, he believes increased energy efficiency, smarter controls and storage would significantly smooth those peaks. National Grid appears to agree. While its most recent Future Energy Scenarios document outlines annual demand rather than winter peak, it’s ‘greenest’ scenario, Two Degrees, shows the highest uptake of heat pumps and the lowest overall annual electricity demand (from the residential sector). However, that assumes a 30% increase in energy efficiency. National Grid said that scenario would require incentives for energy efficiency, support for heat pump adoption and to quickly retire gas boilers. Similarly, National Grid’s Two Degrees scenario does not predict a huge increase in total electricity generation, from roughly 340TWh to 420TWh, with the mix dominated by wind and nuclear power.

Produced by

Supported by

This feature is taken from The Energyst’s 2018 Heat Report, sponsored by Baxi Heating. The report contains expert views on decarbonising heat and a survey of readers on their attitudes to heat and the technologies they are considering. Download it at thenergyst.com

Heat as a service: Ørsted signs 18-year deal

rstead has signed an 18-year deal with Milton Abbey School in Dorset, to become its energy as a service provider. The arrangement encompasses all aspects of energy management but has a particular focus on heat. The energy company will take over all management and maintenance of the school’s heating system, including three biomass boilers.

38 June/July 2018

It has promised to optimise performance of the heating system by 35% and will manage purchasing of biomass pellets. Acting as the school’s energy management function, Ørsted said it will also continually investigate future opportunities for further energy saving and generation on site. “We’re delighted to be taking over the school’s

energy management,” said UK sales managing director Jeff Whittingham (pictured). “For busy, successful organisations such as Milton Abbey, it can often feel like there’s not enough hours in the day to really get to grips with energy use and performance. By stepping in as energy as a service provider, we can optimise this, leaving the school free to get on with what it does best.”

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ENERGY IS CONVERGING 1-2 MAY 2019

The integration of energy disciplines is accelerating. On 1-2 MAY 2019, National Motorcycle Museum, Birmingham, The Energyst Event will highlight developing trends and solutions from the ongoing fusion of procurement, efficiency and flexibility

HEAT into the existing gas grid for household and business use, says Cadent. The company also plans to covert 10 large industrial sites to run on up to 100% hydrogen, which it will pipe to directly. Cadent would also take and store carbon dioxide already separated by local industry via pipeline. As well as helping to decarbonise heavy industry, it says creating hydrogen infrastructure may also drive uptake of hydrogen vehicles by facilitating fuelling stations along the network route.

Cadent makes big play for hydrogen plus CCS Gas network operator unveils plans for end-to-end hydrogen and emissions capture network but says government will have to step in with some form of support. Brendan Coyne reports

adent has published plans to inject hydrogen into its distribution network in the North West while capturing and storing carbon in depleted gas fields in Liverpool Bay. The UK’s largest gas distribution network operator, formerly owned by National Grid, says the £900m HyNet project, if given support by the government and allowed by the regulator, could be operational by the mid 2020s. The plan is to produce hydrogen from natural gas via a process called autothermal reforming (ATR). This separates hydrogen from methane, with carbon dioxide the bi-product. The carbon dioxide requires permanent capture and storage (CCS) if hydrogen

40 June/July 2018

from natural gas is to be considered low carbon. Cadent claims 93% of the CO2 can be captured from a hydrogen conversion plant in Cheshire and transported via repurposed gas pipelines to depleted gas fields in Liverpool Bay. The firm believes about 1.5m tonnes of CO2 a year could be stored in this way, with the ENI-owned Liverpool Bay site able to contain about 150 million tonnes of CO2. Homes, industry and transport Cadent thinks some of the CO2 can also be used for other purposes, although neither the report nor associated website spells out how, CO2 is used around the world for enhanced oil recovery. A blend of up to 20% hydrogen would be injected

Cadent claims the £920m project would deliver CO2 abatement for £114 per tonne, although it says this has the potential to fall

Costs and funding Cadent claims the £920m project would deliver CO2 abatement for £114 per tonne, although it says this has the potential to fall. Cadent, now mostly owned by a consortium that includes Macquarie and the Qatar Investment Authority, says it will need appropriate funding mechanisms or subsidies to undertake the project. This could be via a levy on gas bills. Whereas electricity customers pay levies on bills to pay for decarbonisation, gas customers have not yet contributed to meeting the UK’s emission, Cadent notes. The report moots a hybrid funding structure, whereby gas customers pay for the hydrogen and CO2 capture elements of the project, and taxpayers, potentially through Industrial Strategy funding, foot some of the cost of the transport, storage and industrial conversion elements. Cadent points out that if it goes ahead, the HyNet project would be the world’s first CCUS project at commercial scale. It notes that if government did not provide funding support, “it will need to take on the key risks for CCUS chain failure, as this cannot be borne by the private sector”. te

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HEAT

London’s tunnel vision It carries five million passengers a day and is integral to the smooth running of the capital – but could the Tube also allow developers to tap a huge secondary heat source? Andy Pearson investigates

hat would you do with 500GWh of heat a year? Transport for London (TfL) is looking to building services engineers and developers to provide it with some answers to this very question, because that is the quantity of heat produced in the tunnels and stations of the London Underground each year. And it is the amount of heat that TfL would like removed from the Tube to prevent it from getting any warmer and to make journeys more comfortable for the five million passengers a day that use the system. Making use of this secondary heat will also help TfL to meet the London mayor’s objective, outlined in the draft Environment Strategy, to ‘develop clean and smart integrated energy systems utilising local and renewable energy resources’. One way of achieving this is for building services engineers to come up with schemes to redirect this heat to nearby buildings and developments. “TfL has been evaluating waste-heat utilisation at a number of locations; however, the next step is to engage with external stakeholders,” says Sharon Duffy, head of transport infrastructure engineering at TfL. To understand how and where this heat is available, it is first necessary to know how it is created. Keeping the London Underground cool in summer is a growing challenge, particularly on its deep tunnels serving the Piccadilly, Central, Northern and Jubilee lines. Many of these tunnels were constructed more than 150 years ago, through the thick layer of London Clay present beneath the city. There are two types of tunnel on the Underground – ‘deep Tube tunnels’ and older ‘sub-surface lines’, which run just below street level in ‘cut and cover’ tunnels. Keeping sub-surface lines cool is less of a challenge; steam trains originally ran on some of these, so they are larger than the

deep Tube tunnels and constructed with plenty of openings, through which smoke could escape. As a result, London Underground has been able to fit air conditioning units in its new S-stock trains on the sub-surface lines, because the openings allow waste heat to be vented away. On deep Tube tunnels, however, London Underground is having to search for more creative cooling solutions. “The kinematic envelope is so tight that there is not much space to put air conditioning on the train,” says Duffy. There are also very few openings through which to vent heat. When the deep tunnels were first dug, cooling was not an issue; tunnel temperatures were a very temperate 14°C, the same as the surrounding ground. This fact was exploited by London Underground’s marketing team in a 1926 poster, which had the banner ‘It’s cooler below’ and the caption ‘The Underground’s the only spot for comfort when the days are hot’. These days, the reality is strikingly different, with some sections of the Central and Bakerloo line tunnels recording temperatures of more than 30°C . ‘The clay has acted as an effective heat sink, absorbing a lot of the heat generated by trains running year on year,’ explains Duffy. About 21% of the heat generated by the trains is aerodynamic drag and friction; a further 21% comes from the electric motors, drive and auxiliary systems, with about 2% generated by passengers. By far the largest proportion of heat, 50%, comes from the trains slowing down – the process of converting kinetic energy into heat simply by applying the brakes. “A Tube train pulling into a station will give out about 350kW of heat,” says Duffy (see thermal photos). The problem is only likely to get worse as London Underground upgrades the service. “The

Tube trains pulling into stations account for 50% of the heat generated on the London Underground, producing about 350kW each time

42 June/July 2018

theenergyst.com

Heat emitted from trains

79% Proportion absorbed by tunnel walls

11% Amount pushed out of tunnels via draught relief shafts by piston effect

10% Share removed by mechanical ventilation

more trains per hour we run, the more heat is generated – and the faster we run the trains, the more heat we generate,” explains Duffy. London Underground uses regenerative braking to transfer about half of the energy back into electricity; however, this can only work where trains are braking and accelerating at the same time, on the same electricity substation loop. “Regenerative braking has been enabled to minimise the heat generated in the tunnels, but the residual primary heat source remains the braking of trains,” says Duffy. “With increasing service levels on all lines in recent years – and the ambition of TfL for this to continue – the amount of heat in the tunnels is expected to rise.” Of the heat emitted by the trains, 79% is absorbed by the tunnel walls; 11% is pushed out of the tunnels through draught relief shafts by the train piston effect in the cylindrical tunnel; and the remaining 10% is removed by mechanical ventilation through dedicated ventilation shafts. “We face a quandary between delivering the right passenger service and mitigating the increase in heat we generate,” Duffy says. TfL is taking steps to investigate how heat can be extracted from its tunnels and stations using a range of technologies. One solution is enhanced tunnel ventilation. In addition to draught relief shafts, deep Tube lines – such as the Victoria and Jubilee – have tunnel-ventilation systems. Generally, these comprise a large fan installed in a

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vertical, circular shaft connecting the tunnel to the surface. They were primarily installed as smoke vents, but on the Jubilee Line, in warm weather, the mid-tunnel vent fans are run at half speed to draw cool air into the tunnels through stations. During the recent upgrade of the Victoria Line, the throughput of fresh air in stations has been doubled by upgrading the tunnel ventilation fans. “Where we’ve got the facility for ventilation, we use it,” says Duffy. On older lines, with very few ventilation shafts, it is virtually impossible to thread more shafts down through the capital’s congested streets. “Because parts of the system are 155 years old, some of our network is not served by ventilation, which is why we need to look at station cooling systems,” explains Duffy. At Oxford Circus, TfL has installed a simple chiller solution, using a roof-mounted air-cooled chiller to remove heat from an above-platform cooling coil. “We’re having to put in cooling systems at stations to enable line upgrades,” says Duffy. At Green Park, TfL is using borehole water to remove heat from the station. Water is extracted at a temperature of about 13°C and passed through two heat exchangers before being re-injected into the ground. The first heat exchanger is used to remove heat from the station’s cooling water circuit, which serves above-platform air handling units, raising the temperature of the borehole water by 8°C, to »

June/July 2018

Warm summer air pulled in Head house

Hot water pumped to homes

HEAT 21°C. “There is an opportunity for someone to tap into the second heat exchanger to take this heat from the borehole water and return it to the aquifer at, say, 6°C,” says Duffy. At the City Road and Bunhill demonstrator scheme, in north London, TfL is working in partnership with the Greater London Authority and Islington Borough Council on an EU Celsius Smart Cities-funded project. Currently under construction, it involves the installation of a heat exchanger to a Northern Line, mid-tunnel ventilation shaft. The shaft discharges 70m3/s of hot tunnel air straight into the atmosphere at approximately 25°C. In winter, the heat exchanger will recover heat from the discharged air, and this will then be piped through a primary water loop to a 1MW heat pump, where its temperature is increased. A secondary water loop will then transfer this heat to Islington council’s existing Bunhill Heat and Power Network, which supplies 700 homes on an adjacent social housing development with low carbon heat and hot water. The heat recovered from the tunnel vent extension will supply an additional 450 homes with heat and hot water, saving up to 500 tonnes of carbon a year. In summer, the heat exchanger and heat pump will also be used to blow cool air into the tunnels. “The fan is bi-directional, so in the hotter summer months – when the air temperature outside exceeds the temperature in the tunnel – we can cool the warm summer air using the heat exchanger and heat pump while generating hot water for the homes,” says Duffy. The scheme aims to show that extracting airborne heat from the tunnels is feasible and worthwhile, and that it could help tackle fuel

Running tunnel

Heat exchanger absorbs heat Fan

CHP creates heat and electricity

The heat exchanger and heat pump will be used to blow cool air into the tunnels at London’s City Road and Bunhill demonstrator scheme

By far the largest proportion of heat, 50%, comes from the trains slowing down – the process of converting kinetic energy into heat simply by applying the brakes poverty, as well as reduce the cost of cooling for TfL and heating for the borough of Islington. At Holborn, TfL is investigating the possibility of using a trigeneration system to supply cooling to the station, power to its traction substation, and heat, generated by the engine, to local commercial and residential developments. TfL is also involved with London South Bank University and University College London in the Luster project, to map where subterranean heat energy is potentially available in the capital. In addition to London Underground, the project is investigating heat resource from sewers and cable tunnels. “The map will enable people

Cool crossing Crossrail is a new east-west railway line under construction beneath London. All of its subterranean stations have giant ventilation shafts at either end of the platforms, the primary purpose of which is smoke control. These shafts incorporate 3 reversible fans that can move up to 300m /s of air; however, they have been designed to operate at half speed to provide ventilation, and to cool the platforms by supplying air at one end and removing it from the other. There are also numerous mid-tunnel ventilation shafts for smoke control, which can be used to enhance tunnel and station cooling when required. To limit the amount of brake-energy emitted as heat, trains approach stations up a gentle incline, to help slow them down. When the train pulls into the platform, under-platform extract removes heat from the brakes and drive motors. Air conditioned carriages ensure passengers remain comfortable during their journey. In addition, some Crossrail stations are surrounded by geothermal piles. ‘By enabling heat to be removed from the geothermal piles to supply new over-station developments, we are future-proofing our infrastructure,’ says TfL’s Sharon Duffy. Some of these geothermal piles are close to existing London Underground infrastructure, so will help cool the ground around these too.

44 June/July 2018

Heat pump boost temperature

who are heat users to identify opportunities where the heat is available,” says Duffy. These examples show that it is technically feasible to use London Underground’s secondary heat sources – and, as far as TfL is concerned, these initiatives are just the start. “We’re interested to hear about all sorts of potentially disruptive technologies that could use TfL’s secondary heat sources,” says Duffy. “Tunnel temperatures don’t drop in the winter so – year round – there is an opportunity to take heat from the ground.” Wherever you are developing in central London, you are close to the Underground. Research by TfL has shown that heatextraction rates are higher up to 24m from a Tube tunnel – which may result in developers viewing a scheme’s proximity to a line as a potential opportunity for free heat rather than an inconvenience, restricting what they can place in the ground, and where. “The key is for London Underground to be involved early in a development, so we can discuss the possibility of using heat,” says Duffy. TfL regards this as an opportunity and, potentially, a revenue source, and is keen to work in partnership with engineers and developers. “There are many technical, legal and commercial challenges to be faced with this pioneering new strategy and TfL recognises these,” says Duffy. “But if the right partnerships can be developed, the prize of carbon savings, economic benefit and increased efficiency of systems is there to be won.” te This feature was first published in the CIBSE Journal

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INDUSTRIAL FOCUS

Energy intensive firms: key concerns The Energyst asked the metals and ceramic industries what is keeping them up at night. Andrew McDermott, technical director at the British Ceramic Confederation, flags gas insecurity, while Liberty House Group’s head of flex, Steve Edwards, believes incoming network charging changes could hit hard. Brendan Coyne reports

rom an energy perspective, gas security is top of mind, says British Ceramic Confederation technical director, Andrew McDermott, followed by the cumulative costs of decarbonisation and their impact on industrial competitiveness. The ceramics industry is

highly gas intensive. “About 85% of our energy mix is gas, mainly for drying and firing ceramics at temperatures of up to 1,700°C,” says McDermott. The sector is therefore concerned about the ‘just-intime’ nature of gas imports and the increasing potential for supply disruption post the

planned closure of Centrica’s Rough gas storage facility. Storage inquiry The closure of the UK’s largest gas storage site leaves the UK far too exposed to supply disruption, says McDermott, and the confederation wants government to reassess both the physical

and price risks to gas security. The ‘Beast from the East’ at the end of winter, where day-ahead gas prices more than quadrupled and withinday prices soared even higher, served as a warning, he says. “The Beast’ hit towards the end of the week and temperatures were rising. Had

Network charging: Ofgem must consider big picture Steve Edwards, head of flex and embedded generation at metals manufacturer Liberty House Group, says “the cost of energy in the UK” is the group’s “first and foremost concern”. “We benchmark our cost of energy via academic institutions and we also have operations in France. While we are very grateful for exemptions from government, we know we are at a 30%

46 June/July 2018

disadvantage to continental steel and aluminium processors.” Edwards says while gas prices are subject to global market forces, and so affect competitors evenly, changes to the way UK electricity grid charges are applied “could multiply the impact of rising costs” and impact UK producers disproportionally. Ofgem is working on several reviews of grid charging and

access in a bid to ensure sunk costs are allocated more fairly and that forward looking charges incentivise behavior that is beneficial to the system as a whole. The hope from industry is that these reviews will coalesce and that the outcome will be a more transparent system that distributes grid charges fairly – but also rewards flexibility. Edwards is concerned that, at present, the process

is piecemeal and that the Significant Code Review is out of sync with broader regulatory change. “We understand what Ofgem is trying to achieve but we are very concerned about the short-term impact, the next 20 months or so, he says. “RIIO [the regulatory price control under which Ofgem sets the rules for energy networks and their spending] is clearly winding up to

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Insurance premium He adds that confederation members see “a small increment on gas bills” to pay for new gas storage as a “better outcome” than being forced off the system or at the mercy of massive price spikes. But first, security needs to be investigated and properly costed. “The UK had inadequate storage to start with and now we are closing the lion’s share. That leaves us vulnerable,” says McDermott, explaining that it is not just the risk of short-term price spikes but damage to equipment if the pipes are turned off. “If we get to a supply emergency, we are the first off the system to protect domestic consumers. But it’s not just the cost of lost production and orders, there is a risk of major physical damage from cooling the kilns too quickly if you receive the dreaded call with just a few hours notice,” he says. “So we, along with other major energy users, are pressing Beis to launch a fresh inquiry into gas supply security.” The confederation has aligned with others such as the Confederation of Paper

confederation is meantime, says McDermott. Industries, Major urging members to “At the moment the Energy Energy Users engage with gas Technologies List doesn’t Council and the transporters to do much in terms of highGMB union try and receive temperature heat, so we are to form the earlier warnings pressing to make the existing Gas Security of potential scheme more effective for Group (GSG). shortages to heat intensive businesses.” Altogether, the minimise risk major private and of damage. Carbon prices and public-sector energy network charging users represented UK industrials have long railed by the GSG account McDermott: the UK is Electricity Electricity makes against the UK’s Carbon Price for 40% of all vulnerable to supply up about 15% of Floor, which McDermott says UK industrial disruption the confederation has “huge costs implications” for and commercial members’ energy mix but UK EIIs in terms of where they gas demand and 35% of UK is a disproportionately high chose to invest and maintain industrial and commercial cost because UK power their presence. “It should be electricity demand. prices for large industrials repealed or phased out as soon Last November, the GSG are “amongst the top two in as possible,” he suggests. wrote to secretary of state Greg Europe,” says McDermott. McDermott agrees with Clark warning of the threat While Energy Intensive Liberty House’s Steve Edwards of gas supply disruptions Industry (EII) exemptions that Beis “needs to be involved” to industrial output and employment. Under some political and media pressure since March, Beis has agreed If we get to a supply emergency, to undertake an internal we are the first off the system to investigation but McDermott protect domestic consumers fears that, with no formal terms of reference or deadline, there is a danger of the issue being in the network charging reviews are intended to safeguard kicked into the long grass. being undertaken by Ofgem. competitiveness, only seven The confederation, plus “The element Ofgem is of the confederation’s 90 aligned parties, is therefore missing is reviewing the members are compensated, pressing the Beis Select implications for industrial energy says McDermott, because the Committee to launch its own users versus their European UK’s criteria are more stringent inquiry, which would force the competitors, because that is than schemes implemented debate into the public domain not in Ofgem’s remit,” he says. elsewhere in the EU. – and hopefully produce some “So we are urging Beis to be While government may adjust tangible recommendations on involved and keep that wider the EII compensation threshold, improving gas security before perspective, because if you load it adjustments to existing policies, the start of next winter. onto industrials, that is the death such as Enhanced Capital In the meantime, the knell for UK manufacturing.” te Allowances, could help in the

challenge how the Distribution Networks and National Grid engineer and run their systems. “That should come hand in hand with a need for more flexibility from consumers. But it seems to us that you cannot do them in isolation, otherwise you are likely to worsen things before you make them better,” he adds. Edwards believes Ofgem “should be pushed to look

at the whole picture, not just try and bandage things up”. He is also concerned about “broad brush” consumer profiles used within Ofgem’s economic modeling, and that the carbon impact of CHP

it been earlier in the week and more prolonged, even by a day or two, LNG in the system would have been depleted. And it wasn’t replenished until two weeks after the event,” McDermott says.

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may not be fully taken into account. “For us, it is not about keeping or losing Triad, because it is pretty clear the whole picture is changing. But we are concerned Edwards: that very large Get Beis involved sites are not

within Ofgem’s bandwidth or thinking, which could lead to us being hit massively by a policy that it not designed with operations like ours in mind”. Edwards says some of the UK’s most energy intensive firms are keen to bring government into the discussion to ensure their competiveness is not unintentionally hindered – and will do so once the regulator starts to show its hand.

June/July 2018

INDUSTRIAL FOCUS

Flexibility challenge Aggregate Industries has been helping to balance the grid for more than a decade. Now the firm is working to adapt to rapid change. Brendan Coyne reports

ggregate Industries has been involved in demand-side response since 2004, providing Frequency Control by Demand Management (FCDM) at a cement plant, providing roughly 4.3MW of flexibility. Since then, the firm has brought numerous sites, assets and multiple megawatts into flexibility programmes and is currently working to increase flexibility in both mainland UK and Northern Ireland. But ongoing market and regulatory changes are creating both challenges and opportunities in the firm’s bid to cut costs and generate revenue by helping to stabilise the power system. Frequency changes National Grid is no longer actively procuring FCDM, and is instead planning to roll FCDM and Firm Frequency Response (FFR) into a tiered frequency product, under a working title of Faster Acting

Frequency Response. Triads. So for a Capacity Aggregate Market test period, Industries’ energy or during a stress manager, event, they are Richard Eaton, geared up says the firm to do that,” aims to bid the says Eaton. cement plant’s But its flexibility into quarries are a the new National different story. Grid frequency “We have to prove product and also to National Grid Richard Eaton: quarries are into the Capacity that we can unlikely to continue under Market, effectively curtail demand the Capacity Market ‘stacking’ revenues. in line with our nominated Flux capacity megawatt per site. That’s one However, after National Grid’s summer test and three tests per megawatt prices fell markedly over winter. The problem for the below its viability threshold, quarries is that the kit involved, and well below the £45k/MW for example large crushers, outturn of the 2016 Transitional cannot be crash stopped. Arrangement auction, held They also involve secondary specifically to encourage demandprocesses such as conveyors side response, the company is and they can’t be crash stopped considering if it will continue either,” Eaton explains. bidding five of its quarries “So even though the test into the Capacity Market, is only half an hour, the site “The cement plants are very managers were having to much used to responding to unload all the kit for half an

hour to an hour pre-test. Then it takes time to bring everything back online after the test. “The feedback from the quarry managers was that it is two hours out of their day. So even at £45k/MW (the outturn of the TA Auction), for some sites it was a borderline case, the downtime versus the tonnage of aggregate they could have produced in a two to two and a half hour window,” he continues. “It was marginal in some

£6k/MW

The T-1 Capacity Market price means Aggregate Industries is unlikely to keep bidding in quarries

Long duration storage for large industrials Highview Power opened a 5MW/15MWh liquid air energy storage plant in Bury in June. Now it plans bigger units, with utilities and large industrials in its sights. Brendan Coyne reports

48 June/July 2018

ighview Power, the firm pioneering liquid air energy storage (LAES), hopes to announce a 50MW/200MWh unit in the UK later this year and plans to bid it into the Capacity Market auction in January. CEO Gareth Brett told The Energyst that larger units are much more cost effective to build than the new 5MW/15MWh plant in Bury, Greater Manchester, that officially opened in June. That is because key pieces of kit required for the plant are more readily

available at large scale. “At 50MW scale, the refrigeration plant and turbo expander are at a size that suits all of the big machinery manufacturers. There is an existing large supply chain and plenty of competition, which provides a good opportunity to keep costs competitive,” he said. Bringing the Bury development down to 5MW scale was more challenging. “[5MW] is a little small for the main turbo machinery manufacturers, so there is a smaller pool to fish in, making it more expensive,” said Brett.

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Aggregate Industries is working out how to shift loads across markets

cases. When the [latest] auction cleared at £6k/MW, that made us rethink our position; the quarries are unlikely to be continuing under the Capacity Market.” However, the company plans to keep bidding the cement plant into the CM. “The assumption is that it will continue, even at £6k/ MW, because we already do frequency response, so it is essentially stacking revenue.” Moving targets Frequency response prices have fallen markedly in the past two years as more sources of flexibility, particularly batteries, have come to market. With the Bury site now up and running, “the next step is a 50MW/200MWh” plant. “It is absolutely our plan to announce one unit in the UK this year, at least one, hopefully we are not too far away from that,” said Brett, adding he would be “disappointed if we do not announce another [large] unit in the US early next year”. If the UK deal comes through, Brett said the firm “hopes to bid into the Capacity Market auction in January”, as well as eyeing other short-term capacity and balancing opportunities. If it does bid into the Capacity Market, a four-hour duration capability qualifies for 96% of

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Downward pressure on FFR “is a concern”, says Eaton, but the firm is working with aggregator Open Energi and energy supplier Ørsted to sell its flexibility at the best price, or at least mitigate risk of missing out on one contract by providing a ‘merchant’ service to another buyer. Ørsted pays companies to help it balance its within-day position via its Renewable Balancing Reserve (RBR) product. Because the electricity balancing and settlements system works on half-hourly periods, it has to do this 48 times a day. Too much or too little power going into the system means suppliers and the outturn, following derating of storage within the CM last year. Short duration batteries receive only a fraction of the headline rate. Large industrials While plant at such large scale is primarily aimed at utilities, Brett said economies of scale also work at around 20MW upwards, making large industrial companies potential customers. Such firms would be able to avoid “a lot of capacity cost embedded in their electricity contracts,” said Brett, as well as provide balancing services. “[Liquid air energy storage] is not as quick as lithium-ion,

generators are out of balance, and have to pay penalties. To avoid those penalties, Ørsted allows companies to name their price for flexibility, and if that price is cheaper than imbalance penalties, it will pay the company their nominated strike price. Eaton says Aggregate Industries is now working with Open Energi on hitting a strike price “sweet spot”. “Not to price it so low that we receive dozens of calls a day, which would be disruptive to operations, but not so high that we never get called,” he explains. “Because we are flexing assets under both schemes, we want to find the

right strike price so that in total, we can take 10-20 calls a day.” Eaton believes stacking revenues in this way will be increasingly important for Aggregate Industries as the market moves to shorter-term contracted products, higher competition and more opportunistic ‘merchant’ approaches. “By at least having the ability to stack revenues under different programmes for the same assets, it helps mitigate the risk of moving towards auctioning and uncertainties and risks in price signals,” he says. “I think that will be key for us.” te

Liquid air storage takes air, stores it as a liquid, then converts it back to gas. The expansion process releases stored energy, which is used to drive a turbine to generate electricity. The LAES plant at Bury, co-developed with waste to energy firm Viridor, also converts waste heat to power using heat from the on-site landfill gas engines. Highview said no harmful chemicals are used in the process and the asset, mostly made of steel, has a lifespan of 30-40 years, versus around 10-15 for a lithium-ion battery.

but it can do anything pumped hydro can do in roughly the same timescale … it can load up in around 10 seconds, which is reasonable for the frequency response market,” said Brett. He added the technology can also provide Black Start services (which National Grid is planning to open up to more types of generation), as well as bulk time shifting of energy. “The way the wholesale markets look at the moment [time shifting] doesn’t look super attractive,” admitted Brett. “But the general opinion is that as you get more intermittent generation on the system, that will gradually change.” te

June/July 2018

INDUSTRIAL FOCUS

Tackling rising energy costs and increased use of data Mitigating rising energy costs and developing the skills required to manage energy consumption and measurement in the future need to be key focuses for the industrial sector. Jon Bauer, chief executive office at energy consultancy Inenco, explains more

Appropriate procurement Having an appropriate procurement strategy in place to manage and mitigate the risk of rising commodity energy costs can help organisations to save significant amounts of money. Taking action now and fixing energy prices can help, but it is important to have some flexibility. It is preferable to have the opportunity to purchase in advance if necessary, yet still be able to re-expose (unlock) volume back to the market to repurchase at a lower price should the outlook change at a later date. While the majority of indicators suggest the curve

50 June/July 2018

2.8m

Induction Reduce overall consumption by 10% Shift 20% of consumption from Red bands and distribute across Amber bands

2.6m

Cost (£)

or the industrial sector, energy presents many challenges – including how to mitigate rising commodity and noncommodity costs, and how to best prepare for the increased use of data and technology that the future will bring. Commodity energy costs are affected by many unpredictable factors, and the recent spike in the price of oil, and the knock-on effect it had, served as another reminder of just how volatile, and difficult to manage, they can be. In May this year, when oil prices spiked at more than $80 a barrel for the first time in almost four years – largely a result of President Trump withdrawing the US from the Iran nuclear deal and reintroducing sanctions against Iranian oil exports – we subsequently saw winter 2018 gas and electricity prices reaching 60.65pptherm and £58.40/MW respectively.

2.4m 2.2m Shift 50% of consumption from Red bands and distribute across Amber bands Implement an energy efficiency programme over a three-year period (5% reduction year-on-year)

2.6m

2016

2017

2018

2019

51%

£950,057

36%

£668,347

44%

£827,131

34%

£640,161

29%

£548,057

Manufacturing Hampshire, 50GWh annual consumption, HV, in a CCA so exempt from CRC will continue to rise during the short to medium term, the opposite could always happen. While commodity costs are difficult to forecast, it is far more certain that non-commodity costs will rise. Indeed, we have calculated that in 2017/2018 alone, various levies, including the Renewables Obligation (RO) Levy, the Contracts for Difference (CfD) Levy and the Climate Change Levy (CCL), coupled with carbon floor costs, will add around £41/MWh (4.1p/KWh) to a business energy bill*. If businesses fail to take action, we predict that over a three-year period (2017-19), the rises will equal £7.42bn by 2019, and manufacturers’ bills** could potentially rise by 51 per cent, or £950,057. There are various actions that businesses can take – such as reducing and shifting

consumption – but we have calculated that in the case of manufacturing, implementing an energy efficiency programme (aiming for a five per cent reduction year-on-year) has the most impact, with energy costs rising by 29%, or £548,057. Using a combination of strategies would, of course, increase the savings. Prepare for the future It is not just rising costs that are presenting challenges. Energy managers working in the industrial sector need to prepare for the future – in particular, the impact that the increased use of data and technology like AI will have. Technology is going to rapidly evolve in the next 12 years, and it will increasingly change the way we all operate, use resources and make decisions. By 2030, this will

be particularly noticeable in the manufacturing sector, which is set to become more data-driven, with all resource use being scrutinised using sensors, the IoT, AI and advanced visualisation. There is a need for today’s energy managers to develop and learn new skills, and industry must be effectively supported in order to embrace best practice and innovation – and ultimately increase energy efficiency and lower carbon emissions. To reduce costs and mitigate risks, energy managers in the industrial sector must have effective procurement and energy management strategies in place, and should be preparing now for a future that will involve data and AI to a much larger extent. *Excluding businesses in energy intensive industries **Based in Hampshire, 50GWh annual consumption, HV, in a CCA (so exempt from CRC)

theenergyst.com

ENERGY MANAGEMENT

Continually improving energy management The International Standard for Energy Management Systems, ISO 50001, first published in July 2011, is being updated this year. AEE ADMID* Rajvant Nijjhar provides an overview of what to expect when the new version is published in August

hanges to ISO50001 were necessary to ensure that all management systems standards (MSS) adhere to the same common structure, terminology and approach. After all, ISO is a standards making body, so there should be standardised approaches to all MSS, whether it is ISO 50001, ISO 140001 for environmental systems, or ISO 9001 on quality management. This is called the high level structure (HLS). This update has hence come sooner than usual for most updates to standards. As one can self-declare to adhere to ISO 50001, as well as become externally certified, by a suitably qualified certifying body, the actual numbers in global implementation of the standard appear to be unknown. Unless the certifiying body provides information to ISO, this data is not tracked. However, from the information provided to ISO in their surveys, it is clear that compared with other MSSâ&#x20AC;&#x2122; that ISO 50001 is indeed on an exponential growth curve. What energy management system? An energy management system (EnMS) is a structured approach to the management of energy to enable energy improvement opportunities to be assessed and appropriate measures to be instigated and monitored on an ongoing basis. It makes you analyse your energy uses, set targets to achieve reductions in consumption or make improvements in efficiency, implement such actions or measures, then review if they have been a success. In other words, to plan, do, check, act. Key to success, and rather underrated, is top management or leadership commitment to provide the resources to enable this to happen. This backing and support is crucial and may mean plucking up the courage to ask your board level executive for support. Their name on a policy does carry weight in an organisation and therefore is seen to have equal importance to health

52 June/July 2018

Figure 1: Number of ISO50001 certifications per country

Country

No of certificates

% of total

Germany

9,024

44.6

2,829

14.0

Italy

1,415

7.0

China

1,015

5.0

France

759

3.8

India

570

2.8

Hungary

546

2.7

Spain

465

2.3

Czech Republic

369

1.8

Tapei +87 countries

298

1.5

2,926

14.5

Figure 2: Growth of ISO50001 in comparison to other management system standards

ISO

2015

2016

% change

ISO 9001

1,034,180

1,106,356

ISO 14001

319,496

346,189

ISO 50001

11,985

20,216

+69

and safety, environment and quality. Implementation of an EnMS takes between nine and 18 months realistically following a typical process: 1. Gap Assessment â&#x20AC;&#x201C; where are we when we compare ourselves to the Clauses in ISO 50001 2. Planning to implement the EnMS â&#x20AC;&#x201C; getting your teams and key people together, understanding all of your significant or large energy uses across different energy types, setting targets and looking for opportunities 3. Implementing the EnMS, installing the measures, training key personnel, measuring the impact 4. Putting the EnMS into operational practices, measuring the effectiveness of the energy performance improvement, identifying areas of general improvement

and having a management review for feedback It is a systemic approach, hence why top management does need to be involved. Clarifications of fundamentals When producing the updated version of ISO 50001, the standards team were mindful of a number of key features, namely, that it was written to appeal to SMEs, and therefore the ability to self-declare, and that the EnMS was all about delivering continual energy performance improvement. The difference between continual and continuous is that the latter is considered to be step-wise regular change whereas continual allows for some flexibility in terms of the time taken between improvement stages. The document has grown from 22 core

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pages to 34, but so did the clarity on surprisingly some fundamental issues that were noted in the short five-year time frame the standard has been in use. These fundamentals included defining more clearly what is meant by energy performance improvement, given ISO 50001 defines energy as being ‘manner or kind of application’ (eg lighting, heating or ventilation) and energy performance as being ‘energy use, energy efficiency and energy consumption’. As there was difficulty in explaining how one can have an improvement in use without leading to either a reduction in consumption or a change in efficiency, the definition of energy performance improvement was created to be: 3.4.6 Energy performance improvement – improvement in measurable results of energy efficiency (3.5.3), or energy consumption (3.5.2) related to energy use (3.5.4), compared with the energy baseline (3.4.7) Other such clarifications included the use of renewables, which are not considered to be an energy performance improvement, as you are replacing one source of energy with another. There has also been the introduction of the concept of normalisation and using relevant variables if significant. Therefore, energy performance indicators that are developed to evaluate performance against an energy baseline, can be adjusted to differences in weather, occupancy, or production to name a few driving factors. Bearing in mind, use of the standard by SMEs – some flexibility was allowed for in this area, for example in using simplified adjustments as opposed to regression analysis, that might be a bit off-putting to a small organisation of say 15 staff. For measurement and verification purists, this might be upsetting. There was even greater and stronger emphasis placed on the role of top management – partly also because of text that was compulsory to use from the HLS. Another welcome move was consideration to the overall business process so that energy management is not seen as out on a wing on its own, but part of the bottom line profits of an organisation. So, actions to address risks and opportunities are introduced. For M&V purists, the section on monitoring and evaluation has been superseded with a bigger and better section on performance evaluation. This

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does include actions necessary to collect data, the type and frequency of data, including for relevant variables and static factors. And, we cannot only evaluate energy performance but the performance of the EnMS (how good the management reviews are), even though intrinsically you cannot have one without the other. Energy performance improvement will result from an effective EnMS. There was also a bit of debate on what is meant by continual improvement. Although this has always been in ISO 50001 (in the scope and in section 4 of the July 2011 version), with the HLS, there is a separate clause on this subject. Annex material draws various examples of improvement, recognising that in fact at some point in time, there could be a plateau. Once you have extended your scope and boundary and literally done all you can, it could be a case of simply maintaining processes, systems and equipment in order not to deteriorate performance. All in all, the new ISO, although lengthier, will provide more guidance and clarification and was needed. It has taken into account, user feedback despite the shorter than usual renewal timeframe and is a more precise document. It will enable users of other MSS to pick up common themes and therefore improve understanding and implementation. For those in the midst of ISO 50001:2011, there is a three-year transition to understand theses changes and be prepared. But that’s the purpose of all MSS – to plan ahead and be prepared. te * Associate Director Membership International Devlopment. A longer version of this article was first reproduced in M&V focus, EVO Newsletter June 2018 UKAEE is the UK chapter of the Association of Energy Engineers (AEE), with its HQ in the US. It covers energy management and energy efficiency sectors and delivers a range of technically focussed seminars and networking opportunities. The UKAEE offers CPD opportunities for AEE certifications such as Certified Energy Manager, Certified Measurement and Verification Professional and Certified Energy Auditor. Membership to the UKAEE is currently free. For more information or how to join, visit ukaee.org.uk

VIEWPOINT

The trouble with ISO50001… Ahead of the standard’s update in August, Vilnis Vesma assesses the latest guidance book – ‘ISO50001:2018 Energy management systems — requirements with guidance for use’ – and sees trouble brewing

SO50001, the international standard for energy management, has been revised and the 2018 version is due for publication in August. This has been done not because there was much fundamentally wrong with the 2011 version but as a matter of standards policy: other management-system standards such as ISO9001 (quality) and ISO14001 (environment) have a lot in common and are all being rewritten to match a new common High Level Structure with identical core text and harmonised definitions. ISO50001’s requirements, with one exception, will remain broadly the same as they were in 2011. It is just a pity that ISO50001:2018 fails in some respects to meet its own stated objective of clarity, and there is evidence of muddled thinking on the part of the authors.

Continuous improvement And finally the new version adds an explicit requirement to ‘demonstrate continual energy performance improvement’. You cannot even be certified in the first place if you don’t meet this requirement*. There was a lot of debate on this during consultation but my view is that this will have unintended consequences as follows: • High achievers could eventually reach the point where further marginal savings are uneconomic to pursue, effectively locking them out of recertification As the potential for improvement tails off through time, the savings achieved become comparable to the margin

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•

for error. This effect, which the standard fails to account for, makes it a lottery At best, rational players have an incentive to postpone planned projects so as to ‘bank’ savings for later recertification cycles At worst there is an incentive for users to cheat so as to conjure savings out of thin air. Auditors have an incentive to collude with this practice Organisations that fail to gain recertification may well then reduce their energy management efforts New users, and in particular those just starting to take energy management seriously, could be put off adopting ISO50001

As any energy manager knows, just maintaining the savings you have previously achieved can be a hard trick to pull off and should in itself be recognised as a result. There is no explicit requirement for energy performance improvement in the 2011 version, nor indeed in the much-vaunted High Level Structure, which the 2018 revision was supposed to follow. Muddled thinking I see, for example, that it refers to relevant variables (ie, driving factors such as degree days etc) affecting energy ‘performance’ whereas what they really affect is energy consumption. To take a trivial example, if you drive twice as many miles one week as another, your fuel consumption will be double but your fuel performance (expressed as miles per gallon) might well be the same. Mileage in this

case is the relevant variable but it is the consumption, not the performance, that it affects. This wrong-headed view of ‘performance’ pervades the document and looking in the definitions section you can see why: to most of us, energy performance means the effectiveness with which energy is converted into useful output or service. ISO50001:2018, however, defines it as ‘measurable result(s) related to energy efficiency, energy use, and energy consumption’. I struggle to find practical meaning in that and I suspect the drafting committee members themselves got confused by it. The committee have ignored warnings about ambiguity in the way they use the term Energy Performance Indicator (EnPI). There are always two aspects to an EnPI: • The method by which it is calculated – what we might call the EnPI formulation • Its numerical value at a given time. Where the new standard means the latter, it says so, and uses the phrase ‘EnPI value’ in such cases

The absence of the word ‘values’ means that you should be determining and updating what EnPIs you use and how they are derived. Failure to explicitly label EnPI formulations as such has also led to an error in the text: section 9.1.1 bullet (a) (2) says that EnPIs need to be monitored and measured. That should obviously have said EnPI values. On a positive note, the new version retains the requirement to compare actual and expected energy consumption, and to investigate significant deviations in energy performance. All in all, a pity. ISO50001 has been helpful to many organisations but its 2018 revision is underwhelming. te * This is not stated in the text but thanks to a stipulation in ISO50003, which governs them, auditors and assessors are forbidden to recommend initial certification if continual improvement cannot be demonstrated

Vilnis Vesma is a former energy manager who publishes a regular newsletter on energy saving products and techniques

However, when referring to the EnPI formulation, it unwisely expresses this merely as ‘EnPI’, which is open to misinterpretation by the unwary. For example, section 6.4, Energy Performance Indicators, says that the method for determining and updating the EnPI(s) shall be maintained as documented information. I bet a fair proportion of people will take the phrase ‘determining and updating the EnPI(s)’ to mean calculating their values. It does not.

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Extend RHI to meet UK offgrid and industrial heat targets Clean energy business AMP is calling for the Renewable Heat Incentive to be refocused and extended to avoid the potential collapse of the renewable heat industry. Richard Burrell, chief executive of AMP, explains

he Renewable Heat Incentive (RHI) has been a successful, worldleading scheme, with recent changes further enhancing its credibility and costeffectiveness. It is therefore essential for the government to build on the success of the scheme into the 2020s, and to use the expertise that has been developed to further decarbonise heat. In our submission to Beis’ A Future Framework for Heat in Buildings Call for Evidence, we have asked government to send out a clear and early message that a consistent, reliable, predictable support mechanism will continue after the RHI ends in 2021. Decarbonised vision The government has a vision to decarbonise off-gas heating customers but there are energy affordability implications associated with achieving this. Consumers and businesses off the gas grid currently pay significantly more for their heat energy than those on-grid but, without incentives, there is not an attractive financial business case for renewable heat to compete with cheaper off-gas fossil fuels. If the decarbonisation of off-gas heat leads to increased energy costs and widens the heat affordability gap even further, there will be major political and energy challenges to overcome. The only pragmatic way to

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decarbonise the off-gas heat sector without exacerbating the affordability gap is to provide sufficient incentives to encourage people to switch to renewables or green fuels. We therefore strongly recommend that, when the current RHI ends in 2021, the scheme is refocused and extended – else we will face a cliff edge reduction in the uptake of renewable heat. Alongside traditional funding mechanisms, we have suggested two innovative ways the government could extend the RHI: by introducing either tradable carbon heat credits; or an incentive scheme with a ‘floating tie’ to fossil fuel prices. Incentives should be targeted at existing buildings and existing heat energy users off the gas grid but also at industrial on-gas users. The changes to the RHI have stimulated the adoption of industrial renewable solutions for large-scale heat users, and while we agree that it is pragmatic to prioritise some of the available financial support towards the decarbonisation of off-gas grid areas, we would also emphasise that the decarbonisation of large-scale industrial energy users on the gas grid offers a deliverable and affordable route to meeting heat decarbonisation objectives. Currently, Beis’ Call for Evidence does not give a clear message that the renewable

The renewable heat subsidy regime has been substantially suppressed by the Treasury and, according to the NAO, the UK is meeting less than 50% of its target

heat industry will be sustainable post-RHI, and we therefore require confirmation that support will be in place to avoid losing all the progress that has been made. Degressions and other changes to the RHI scheme have already seen many smaller biomass installation companies go into administration and jobs lost. This has resulted in knock-on implications for customer confidence, with customers needing to find alternative companies to service and maintain their equipment. This situation can only get worse if the scheme is not extended. The low carbon heat industry, and consumers and businesses, need a clear RHI policy and defined timelines to work within. Ideally, this policy clarity needs to be provided at least 24 months in advance of the end of the current RHI, and any required legislation passed within 12 months. The renewable heat subsidy regime has been substantially suppressed by the Treasury and, according to the NAO, the UK is meeting less than 50% of its target. Without the reassurance of an extended RHI, we are in danger of creating a cliff edge; risking the collapse of the renewable heating industry at the exact point in time when it is needed most to meet the UK’s decarbonisation targets. te

June/July 2018

VIEWPOINT

Triad case may have significant implications for BTM generation

n November 2017, I predicted that Ofgem would be defeated in the application for judicial review of its decision to reduced embedded benefits for distributed generation. By January 2018, my confidence in that prediction was shaken by information that had emerged during a hearing about an interim injunction. I predicted that the claim on grounds of discrimination would fail. But I was expecting a complaint based on Ofgem’s alleged failure to take proper account of other relevant factors to succeed – provided that the claimants expressed it in terms of an argument that Ofgem had ignored the way in which their decision would have the effect of introducing a charge on use of distribution systems through the transmission charging regime. In fact, Ofgem won. The full text of the judgment was released on Saturday morning. A claim on grounds of discrimination between distributed generation and behind-the-meter generation or demand-side response did indeed fail. Another discrimination ground was raised and rejected; that ground looks completely misconceived to me, as the

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Franck Latrémolière outlines the key arguments in the embedded benefits legal challenge, why they failed and what may now rear its head as a result claimants seemed to be alleging that more equal treatment (between transmissionconnected and distributionconnected generation) would be a discriminatory thing. The complaint about Ofgem’s alleged failure to take proper account of other relevant factors was described by the judge as amounting to a criticism of the basis on which Ofgem’s rejected the arguments in a Nera report for the ADE. But since Ofgem staff seemed to have read and understood that report, there was nothing to complain about. The judgment (rightly) avoids getting into a detailed discussion by pointing out that the claimants did not allege that Ofgem’s rejection of the Nera arguments was irrational. Even if they had, this would probably not have gone anywhere since the Nera report does not seem to propose a better charging method or a good reason for keeping the old one. In fact, even with the best possible report on this topic, with wellevidenced positive conclusions, I expect that this line of argument would have failed, because I believe that only a small amount of transmission system capacity would be avoided as a result of distributed generation displacing even a large proportion of the large transmissionconnected generation. Provided that the judgment

gives a fair description of the claimants’ arguments, the claimants’ failure was well deserved and no successful appeal is likely. The claimants framed the question in terms of: “Is it fair for distributed generators to lose the big competitive advantage that they currently get through triad benefits?” To which the answer is: “Yes, that does sound fair enough.” I had hoped they would have framed the question as: “Is it permissible to apply transmission charges to power flows that do not use the transmission system?” To which the court would have said: “No, the aim of removing the competitive advantage of distributed generation over similar transmission-connected generation might be fair enough but the vehicle is wrong, as transmission charges must always be based on uses of the transmission system.” At which point Ofgem and its allies would have had to work out a more legitimate charging basis for transmission charges. My guess is this would have included both charges to distributors for individual GSP capacity (and charges for exporting GSPs), and charges for transmission capacity used to provide system security against in-feed loss (payable only by interconnectors and large

gensets). Such changes could have had significant beneficial effects by allocating transmission costs on the CCGTs, nuclear and interconnectors which make a big transmission system necessary, thus focusing competitive advantages on generation technologies that truly deserve them because of their flexibility or locality, irrespective of the voltage of their grid connection. But enough of my dreams. In reality, now that Ofgem has won the right to levy transmission charges on the use of distribution systems, there is nothing to stop the next stage, which is to apply distribution charges on

You could be made to pay for anything and everything that the licensed sector does volumes of electricity generated behind the meter that never use any licensed distribution or transmission system. In this brave new world, as soon as you use any service from any licensed network, you could be made to pay for anything and everything that the licensed sector does. If you don’t want to risk being charged excessive amounts towards whichever costs Ofgem might decide to socialise next, you really have to move abroad or cut the cord altogether. Franck Latrémolière is an economist and consultant. He runs the dcmf.co.uk website

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Why is energy regulation so glacially slow?

gave a presentation recently on the future of the Energy market to 2050. During the presentation, I heard myself say “change has happened in the market far faster than anyone expected” and “what hasn’t changed since market opening is how regulatory change is implemented”. The question that has been niggling me ever since is: why in an increasingly fast changing energy world, is the process for regulatory, policy and industry change so glacially slow? My comment on the speed of change was with reference to the speed that the costs of renewables and storage have been falling. Beis’ own 2013 predictions of the cost of onshore, offshore wind and solar by 2016 were over inflated by some 25-30%. Lithium-ion battery costs have fallen by about 80% in the past five years, with the trajectory anticipated to continue. These changes have had massive impacts on the market, hugely accelerating the growth of renewables but also causing the subsequent ‘hatchets’ of policy change, given with little or no warning and fundamentally shaking investor and developer confidence. Many businesses have been seriously burnt, and the appetite to invest ‘big’ has been significantly reduced. ‘Faster’ switching The example of tortuous regulatory change that I get really cross about is the faster switching programme being implemented in the retail

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The energy market is changing far more quickly than the rules, stifling innovation and creating mounting problems. Jo Butlin urges rule makers to keep up space. Ofgem announced its ambition to implement faster switching four years ago, in June 2014. Now, years later and more importantly, tens of millions of pounds poorer, we are edging towards delivery. The questions here: do we really believe that customers are not switching because it takes two weeks for it to happen? Why are we spending time, resource and effort on this programme while there are far bigger issues to deal with? If so important, why on earth has it taken more than four years to deliver? The irony of the name of the programme is not lost on many. Agility required Analogies can and should be drawn with the IT industry, where the pace of market change has resulted in a fundamentally different way of implementing IT change. Gone are the days of ‘waterfall’ project management where monumental programmes were designed and delivered at a controlled pace. Instead, we are now used to using agile methodologies – with short sprints of activity, a

test and learn approach and little-and-often system drops delivered. Core to the ‘agile’ world is the ability to change direction if the fundamentals change. Change by stealth The result of such a slow pace of change is that we see change happening by stealth. Examples include the changes to embedded benefits and now potential changes to the supplier hub model. Since Ofgem launched its call for evidence on market design in November 2017, Elexon has pushed

The example of ‘faster switching’: If so important, why on earth has it taken more than four years to deliver? The irony of the name of the programme is not lost on many

forward modifications and launched its own white paper, effectively providing solutions for ‘getting around’ the limitations of the supplier hub white elephant, which will no doubt be implemented long before we get to a conclusion on market design. For embedded benefits, we saw multiple modifications being proposed, assessed and addressed during the time that Ofgem came up with its ‘minded to’ position. Keep up This behaviour happens time and again, and is slowing the industry down as it reviews all the options, counter options and variations on a theme of such in line with the standard protocols. Very few businesses now have the bandwidth to keep up with, let alone actively participate in, the endless consultations, modifications and working groups that characterise market design – hence making a mockery of the anticipated democratisation of industry change. There are enormous industry opportunities and challenges as we move through the transformation of our energy system. It is vital that the process for enabling the underpinning regulatory framework and industry design keeps pace, and keeps relevant to the accelerating market. te Jo Butlin is director of Energy Bridge, a specialist energy consultancy. This piece was first published at energybridge.co.uk

June/July 2018

HVAC

Talking ’bout tri-generation Implementation of tri-generation at King’s Cross is completed as district cooling network goes live

The new cooling network operates alongside Metropolitan’s district heat network

tility contractor Metropolitan Infrastructure’s district cooling network in London’s King’s Cross is now live. Serving the area north of the Regent’s Canal, the network will provide carbonefficient cooling ultimately to four commercial and three residential buildings, and has been designed to enable later expansion to further buildings and customers. The new district cooling network completes the implementation of trigeneration – the harnessing together of heat, power and cooling – at King’s Cross. Tri-generation achieves significant carbon-emission savings, delivering on the project’s sustainability targets. The new cooling network operates alongside Metropolitan’s district heat network, which has been providing heat and power for King’s Cross since 2013.

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District cooling offers important benefits to the residents and commercial management companies at King’s Cross. The centralised cooling system, consisting of the ‘Cooling Pod’ and pipe network, removes the need to install and manage separate systems for each building, lowering running costs and assisting buildings to achieve higher BREEAM ratings. The location for the cooling pod at King’s Cross presented a number of design, engineering and building challenges. It occupies a narrow strip of land next to the HS1 Channel Tunnel Rail Link. Maximising the limited space available to accommodate the cooling plant and towers was the first challenge, and required an innovative design with a cantilevered first floor. The second challenge was to eliminate any risk of pluming drifting across the

rail line and affecting train operation. The use of three different types of chillers – absorption, water-cooled and air-cooled – together with a sophisticated building management system resolved these issues and optimised the cost- and carbon-efficient running of the network. While an essentially functional building, the facade next to the railway was a key focus for architect Allies & Morrison, which wanted it to engage with the movement of the trains as they pass the 120m length of the building. A number of folded metal

The advantages extend beyond the expected reduction in running costs and capital savings

‘fins’ give the building a dynamic profile, while still providing a largely open area for air intake for the cooling towers. The result is a unique and striking building, which passengers travelling in and out of St Pancras can admire. Dave Elwood, senior project manager at developer Argent, welcoming the delivery of cooling at King’s Cross, commented: “One of the pillars of the King’s Cross development is a commitment to build sustainably and for the long term. Working with a single provider, Metropolitan, to deliver all the energy and utilities infrastructure has enabled the implementation of flexible, future-proof solutions for the community; the new district cooling network is an important next step in the process.” John Marsh, managing director of Metropolitan Infrastructure, noted that the district cooling network would have real benefits for customers: “The advantages extend beyond the expected reduction in running costs and capital savings. Customers of the district heating network are protected by the scheme’s membership of the Heat Trust, a self-regulatory initiative which recognises best practice, and we are confident that district cooling systems will also be covered under the scheme in the near future.” The district cooling network at King’s Cross is just one part of the complete utility infrastructure delivered by Metropolitan there, which includes district heating, electricity, ultrafast Fibreto-the-Home (FTTH), gas, water and wastewater. te

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CHP meets university challenge Remeha combined heat and power unit to deliver heat and carbon reduction savings at student accommodation

usion Students has installed a Remeha R-Gen 50/100 Combined Heat and Power (CHP) unit at its Cardiff student accommodation development to deliver low carbon heat and power. The Eclipse complex has 686 bedrooms for students across two buildings, plus a library, gym and cinema. M&E consultant Alan Howell of Amber Management said:

“Student accommodation buildings like Eclipse have high demands for heat and electricity. So it’s essential to select the appropriate equipment that will comply with Part L of Building Regulations and achieve excellent energy performance for lower running costs. “Our value engineering exercise revealed that CHP brings the greatest benefits in terms of reduced energy requirements for projects like Eclipse. They deliver day and night, 365 days a year and, as the calculations show, offer a very short payback on capital costs. The Remeha CHP provided the required output in a compact unit that overcame space constraints in a small plantroom.” The design identified a

40% Energy savings anticipated at the Eclipse complex Remeha R-Gen 50/100 Natural Gas CHP, three 2,000-litre Remeha indirect hot water cylinders and three Andrews Water Heaters ECOflo 380/1900 fully condensing direct-fired water heaters. The condensing Remeha CHP unit provides pre-heat via the high-performance hot water cylinders to the fully-

condensing water heaters. The solution is easily capable of satisfying the constant demand for hot water at Eclipse, while reducing energy requirements and producing electricity at lower gas prices. Three Remeha Gas 310 Eco Pro 7-section gas condensing boilers were selected to provide energysaving space heating throughout the complex. As part of the installation process, the Remeha CHP team helped with the G59 application to connect the Remeha R-Gen 50/100 NG unit to the electrical distribution network. Fusion anticipates primary energy savings of up to 40% and emissions reductions of about 60% compared with traditional generation. te

PRODUCTS

More air for half the energy After experiencing pressure drops that limited applications within its production facility, Quartztec Europe installed an Atlas Copco GA VSD+ compressor that has increased output, halved annual energy costs and exceeded initial savings estimates by a factor of 19%

uartztec Europe is the largest fabricator of quartz glass in the UK and one of the top five in Europe. It undertakes manufacturing for market sectors, such as semiconductors, solar and fibre optics, within its 50,000sq ft purpose-built facility in Kelvin South Business Park, East Kilbride. In addition to quartz glass production, the company’s current workforce of 41 employees is involved with the manufacture and supply of silicon carbide-coated products, thermocouples and an extensive product range made from advanced ceramic materials produced for the defence, aerospace and automotive industries. Quartztec Europe is undergoing a significant expansion period involving state-of-the-art equipment and the implementation of new working practices to enable the business to grow. Looking to upgrade its compressed air system to meet the demands of new production machinery being installed, it was evident that the existing air supply was inadequate. If both main air applications – the feed to

Power factor up, carbon and costs down Power Quality Improvement Sevices (PQIS) recently used its Chauvin Arnoux UK power quality analyser to reduce electricity costs and eliminate reactive charges incurred on a customer’s electricity bill. Saco, a specialist anodising company in Lancashire, manufactures aluminium caps and shrouds for the cosmetic industry. The firm had recently invested more than £2m in expanding its manufacturing and warehouse facility in Burnley, which included the installation of a new transformer, and relocation of switchgear to a new site. The old power factor correction equipment had failed

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beyond cost-effective repair and was under-rated for the new additional load. PQIS provides power quality products and services to industrial and commercial companies looking to reduce their carbon footprint and electricity costs, and specifically electrical engineering solutions to improve efficiency of businesses. Using a Chauvin Arnoux Qualistar+ power quality analyser, PQIS set about monitoring the supply over a period of days. Following analysis of the recorded data, the firm then recommended and designed replacement power factor correction equipment to improve the power factor from 0.74 to better than 0.98. This subsequently reduced the maximum demand of the supply by 130KVA with a current reduction of over 200A. As a result, Saco benefits

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CNC machining operations or the purpose built sandblast booth – were running simultaneously, the pressure drop was such that it became a question of proceeding in an either/or situation, resulting in unwarranted downtime. As Quartztec operations manager Mark King explains: “Initially, we requested prices for 37kW variable speed drive compressors from three different companies and Atlas Copco provided a cost for a compressor with over 15% greater output than the other two. Further to this, it explored a number of options to ensure the correct solution was put in place by fitting data loggers free of charge to better understand the requirements of the site.” King continued: “Eventually, it was found that a 22kW GA22VSD+ compressor would suffice, as well as saving us over £3,000 (50%) on energy every year. This meant that the compressor system could be paid off within five years, while providing 100% redundancy to ensure our production is never compromised.” The enhanced performance of a GA compressor can, in many instances, allow a lower kW-rated machine to be installed at a correspondingly smaller purchase price and reduced running cost in comparison to a higher rated machine, as was the case with Quarztec. Atlas Copco’s GA Variable Speed Drive+ (VSD+) technology automatically adjusts the motor speed to match the compressed air supply to the air demand, thanks to the integral Atlas Copco in-house designed Neos lightweight and compact inverter unit. When combined with the innovative design of the iPM permanent magnet motor, corresponding to IE4 efficiency levels, and a close-coupled drive train, the result produces average energy savings of up to 50 per cent. Having data logged the new compressors with the new production equipment installed, Atlas Copco reported that the savings would exceed the expected figure by a factor of 19%, proving the efficiency of the solution. King further comments: “Atlas Copco saved us not only in capital and service costs by identifying the correct size of compressor but also massive energy savings against our old fixed speed compressor. The installed compressor is exceeding all of our expectations.” te

from significantly reduced electricity costs and has eliminated any reactive charges incurred on their electricity bill – while fulfilling its mission to cut carbon wherever possible. Designed for test and maintenance teams working in industrial or administrative buildings, the Qualistar+ range can be used to obtain a snapshot of the main features characterising the quality of the electrical network. This function makes it well suited to preventive or corrective maintenance and it can also be used to perform a complete energy survey of an installation. The measurements obtained with the Qualistar models can be processed using two software tools: PAT, delivered as standard; and Dataview, available as an option. They allow configuration, transfers, processing and analysis. In addition, Dataview enables user to generate reports according to the voltage quality standards.

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PRODUCTS Service tracks the carbon content of heat

Calculator shows impact of rising non-commodity costs Inprova Energy has launched an online third-party cost calculator to help business energy buyers estimate how rising non-commodity charges may affect their electricity bills in the next four to five years. These third-party charges apply to the non-energy costs of distributing and transmitting energy to the customer and incentivising lower carbon supplies. Non-commodity charges are rising sharply. Six years ago, they accounted for about 30% of an electricity bill but today it is more than 50% and they are predicted

to exceed 60% by 2020. “Organisations now spend more on third-party charges than they do on their actual energy, so it’s vital that they can understand how these rising costs might impact business energy bills,” said Michael Dent, managing director of Inprova Energy. “Our calculator provides an indication of the charges over time, enabling businesses to forecast and budget better.” The calculator enables energy buyers to estimate the potential impact of thirdparty charges according to their regional location,

voltage, sector and annual energy consumption profile. Organisations can see how the April 2018 DCP228 changes to the Distribution Use of System bands (Red, Amber, Green) could affect their costs. The calculator also indicates the impact of rising Climate Change Levy charges, which will increase dramatically in April 2019 following the closure of the Carbon Reduction Commitment (CRC) scheme. Businesses can also assess how the cost of Energy Market Reform might impact their electricity bills.

Welsh start-up claims 96% lighting savings for Claire’s Welsh start-up EnModus claims its technology, which uses existing mains wiring to connect lights to an internet platform, has delivered 96% energy savings at a UK warehouse operated by retailer Claire’s. The trial follows claims by the company earlier this year that a similar project at a Virgin Media data centre cut lighting consumption by 99%. The project at Claire’s warehouse, which EnModus said was validated by the retailer against the replaced light fittings, suggested total

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savings of £107,000 could be delivered over five years if the comms technology and lighting was deployed throughout the facility. EnModus sales and marketing vice-president John Wanklyn suggested the

project shows “how energy efficiency is now a top priority for many companies”. He added that lighting was just one application for its powerline technology, which can “ultimately control any mains-connected asset.”

Erda Energy has launched a service tracking the carbon content of various heating technologies in the UK. Based on proprietary and third-party data and research, the weeklyupdated analysis provides regular insight into the carbon content of the main current and future source of space heating. Professor Alex Rogers, Department of Computer Science, Oxford University, said: “It’s great to see the emergence of these calculations in the heat sector – a sector which desperately needs decarbonisation and clarity on which technologies achieve that.” At the time of writing (early June), the carbon intensities of the UK’s major current and future sources of heat are estimated as follows: • Gas boilers: 195.7248.6 gCO2/kWh of heat delivered • CHP: 221.2 gCO2/kWh • Hydrogen (SMR+CCS): 91.3-100.9 gCO2/kWh This compares with 43.3 gCO2/kWh for Erda Energy’s electric geoexchange systems – a figure that is trending downwards over time as the power sector decarbonises. Erda Energy managing director Kevin Stickney said: “The current low/ no-carbon heating debate centres on the hydrogen versus electrification question. It’s an important debate but so far one that has precious little hard data behind it. The simple fact of the matter is, we have existing electric technologies today that offer a credible path to zero-carbon and we can’t afford to wait.”

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PRODUCTS

Whitbread upgrades to save 12% Whitbread has achieved energy savings of more than 12% across a number of its hotels following an energy efficiency and intelligent systems upgrade with Eon. Eon’s business energy efficiency experts worked with Whitbread to identify an initial 90 sites for improvement, each with different operational requirements and installed equipment. These sites were remotely connected to Eon’s 24/7 Energy Management Centre to monitor consumption and operations

to safeguard the overall investment for the long term. So far, energy consumption reductions have ranged between 5% and 35%, with some sites saving much more than expected. Overall results to date are ahead of expectations, with an average reduction of 12%, and on course to exceed the expected return on investment. Cian Hatton, head of energy and environment, at Whitbread, said: “After reaching our previous carbon target three years early, we set

out a new ambitious target to reduce emissions across our hotel estate, acknowledging the need to innovate and develop tailored solutions based on hard data and genuine energy consumption insight. “We trialled several different energy suppliers to find a system that provided

detailed feedback across multiple buildings. “Eon’s integrated approach and range of solutions spanned our entire energy strategy, from big data to investment including ongoing control and support – providing an effective hardware and software partnership.”

Esos tool for compliance and turning opportunities into real projects

Arriva to power UK bus and rail sites with 100% renewable electricity Almost all of Arriva’s UK bus and rail sites will be powered by 100% renewable electricity after entering a three-year electricity supply contract with SSE Business Energy. The new contract will allow Arriva to report zero carbon emission electricity, preventing an estimated 27,000 tonnes of CO2e from entering the atmosphere each year. The volume of carbon saved is the equivalent to powering almost 25,000 homes with green electricity. SSE Business Energy will supply the sites operated by the group’s UK businesses including, UK Bus, Arriva Rail North, Arriva Rail London, Chiltern Railways and Grand Central, with electricity fully backed by Renewable Electricity

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Guarantee of Origins and verified by Carbon Clear, a CDP accredited provider. As part of the contract, Arriva’s UK rail and bus sites will also have access to SSE’s online energy monitoring portal, Clarity, enabling the firm to monitor energy consumption and implement energy-saving practices. Lorenzo Visentin, head of environment, health and safety, Arriva Group, said: “As well as the actions we’re taking to reduce the environmental impact of our vehicle fleets, the new contract helps us achieve our goals relating to our wider business impacts. It’s a clear example of our commitment to decarbonising the transport sector and helping the UK meet its sustainability targets.”

JRP Solutions claims its new Esos Organiser simplifies the collation and organisation of all the information associated with an Esos audit to ensure a compliant report, making it easier to progress opportunities into real energy-saving projects. As many as 80% of the Esos reports submitted to the Environment Agency and reviewed by an independent auditor required remedial actions or were non-compliant – and therefore potentially liable for prosecution. Using the Organiser as the central store for all Esos compliance data, analysis, records and supporting evidence, allows all data and documents to be easily stored, viewed, referenced

and linked, says JRP. Information is presented clearly, consistently and is easy for all stakeholders to understand, adds the firm. The Esos Organiser can be used in isolation or with JRP’s other software tools such as Energy Initiator, its survey tool. The company says this will identify specific and practical improvement opportunities that will be automatically captured, evaluated and reported using Organiser. JRP also has another option where the customers’ goal is the long-term implementation and management of all energyrelated projects using its web-based tool, Energy Activator.

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Unlocking the benefits of behind the meter storage

The Battery Storage Event Tuesday 30th October / One Moorgate Place, London, EC2R 6EA The 2019 Battery Storage Report will launch with a morning conference that explores the outlook for battery storage and how to make it work for your business.

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Q&A

Louise Kingham The Energy Institute’s chief executive on running the New York Marathon, looking for the next big thing in energy… and calorie-free wine

Who would you least like to share a lift with? The gent I met early in my first job who told me I should be “seen and not heard”. I wouldn’t rate his chances now.

What’s your favourite film (or book) and why? As a child it was The Wizard of Oz, and probably still is. I love a story of good over evil and a happy ending.

You’re God for the day. What’s the first thing you do? Create calorie-free wine and ban email.

If you could perpetuate a myth about yourself, what would it be? That I ran the New York Marathon in record time – and not a blister in sight.

If you could travel back in time to a period in history, what would it be and why? Just to the 1960s to see if what my parents said was really how it was. Who or what are you enjoying listening to? I’m in training for the New York Marathon so it’s mostly anything with a really good beat to ensure 12-minute miles – and 26.2 of them. That essentially means whatever is on my son’s playlist.

What would your super power be and why? Mind reading – for pure entertainment value as well as cutting to the chase professionally.

What unsolved mystery would you like the answers to? I’m always looking for the next big thing in energy. Blockchain, geo-engineering, nuclear fusion… it’s very reassuring to work in a sector so full of ingenious brains. What would you take to a desert island and why? That calorie-free wine. And a good sun cream.

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Happy ending: The Wizard of Oz

Blockchain, geo-engineering, nuclear fusion… it’s very reassuring to work in a sector so full of ingenious brains What would you do with a million pounds? Share it. What’s your greatest extravagance? I like interesting jewellery but I mostly window shop. If you were blessed with any talent, what would your dream job be? I always wanted to be a doctor – so my career went rather off plan. What is the best piece of advice you’ve ever been given? Say yes to every opportunity and just

see where it takes you. What irritates you the most in life? I’m not good with negativity – I’m a glass half full person. What should energy users be doing to help themselves in the current climate? Simple – all they can to use less energy and be eagle eyed for the innovations that make that ever easier. And I should add every energy user should employ the expertise of a professional – ideally a chartered energy manager – to make that happen. What’s the best thing – work wise – that you did recently? This week I briefed policy makers in Westminster about the findings of our 2018 Energy Barometer survey. Connecting the views of energy experts with those who shape the system is an increasingly important part of the Energy Institute’s work. But I also spoke to a room full of 17-20 year olds about why energy – offshore wind in particular – is a great career option. I’m not sure which audience was harder. te

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