driving energy market · 2017-07-10 · opening pandora’s box •but costs continuing to fall...
TRANSCRIPT
Driving energy market innovation in East Anglia
07 July 2017
Gareth Miller, CEOCornwall Insight
#PixieEnergyLaunch
Driving energy market innovation in East Anglia
07 July 2017
Nigel Cornwall, Founder
Pixie Energy
Today’s agenda13:00 – 13:15 Welcome and Introduction: The Rise of Diversity
Gareth Miller: CEO, Cornwall Insight
13:15 – 13:45 Launch and Overview
Nigel Cornwall: Founder, Pixie Energy
Questions
14:00 – 14:20 Driving Regional Energy – The UK Perspective
Merlin Hyman: Chief Executive, Regen SW
Questions
14:30 – 15:00 Break
15:00 – 15:20 International Perspectives and Decentralised Markets
Catherine Mitchell: Professor of Energy Policy University of Exeter
Questions
15:30 – 16:00 Panel: Challenges and Opportunities for Local Energy Projects
Paul Bourgeois: Head of Sustainability, GCGP LEP
Matthew Rathbone: Group Accountant (Projects), Cambridgeshire County Council
Dominic Allen: Sustainability Manager, Norfolk County Council
TBC Suffolk CC/Ipswich BC
- Chaired by Dr. Craig Lowrey: Senior Consultant Cornwall Insight
16:00 – 16:15 Wrap-up
16:15 Drinks reception, Norwich Cathedral cloisters
New technologies and players
• All solar PV and nearly half of
wind generation “embedded”
− consumers are becoming
“prosumers”
• 20% of generation now
intermittent, prices more volatile
• pressure on networks is
increasing
• Some trials and regulatory
dispensations
Innovative
supply
Microgeneration
Load
management
Storage
Moixa
GLA
Bristol EC
Robin Hood Energy
Good Energy
Ecotricity
Tesla
Powervault
Daimler
“Piclo”
Hive
Nest
Energy Local
Ovo Communities
Siemens
Symbio
F&S Energy
Origami
Tonik
Flow
BulbIglooGreen
Energy
Transformation is happening
but it is happening but in a
piecemeal and uncoordinated
way
Opening Pandora’s box
• But costs continuing to fall
− solar costs ~10% by 2025
− lithium ion storage ~60% by 2030
• Interest in “peer to peer” trading
increasing
− Piclo, user chooser, LEM in Cornwall
• Decarbonisation will continue to
act as catalyst
• Increasing local system resilience
also an important driver
− active network management
• Costs vs. affordability − domestic bills set to increase £100 by
2020-21 based on legacy decisions
Efficient
sizing of
network
Trading
and
netting
Integrated
use of local
generation
Integrated
use of
demand &
storage
Moving to a smarter world will
lead to a more efficient use of
local energy resources, greater
energy resilience and
potentially lower costs
What is Pixie Energy?
• Pixie Energy - an advisory and services company established
by Nigel Cornwall of Cornwall Insight to develop and implement
local energy market ideas and initiatives
• Initial focus was Local Supply Communities Project
− structure of local tariffs and the relative costs compared with national
supplier offerings, especially through involvement of LAs as own
supplier
− supporting local stakeholders on understanding access options,
industry costs and valuation optimisation
− East Anglia one of three case studies
▪ The East Anglian Energy Market Innovation Project is now
building on knowledge and relationships by scoping and
establishing innovation projects with local partners to yield
“learning by doing”, smarter, low-carbon solutions
The project takes
national
knowledge and
relationships and
will apply them
for the benefit of
the East Anglian
region
Enter EAEMIP
• Four overarching objectives, focussing on East Anglia:
− build a detailed local energy map of the participating counties,
highlighting opportunities and challenges
• network deployment and “hot spots”, generation assets, storage, electric
vehicle (EV) charging points, etc.
− identify local energy solutions and network impacts
− examine demonstration or pilot schemes specific (including possible
rules changes)
• an important emphasis will be applying “smarter” approaches, emerging
technologies and other innovations
− demonstrate business case for new commercial models
Project structure
Website/Regional Knowledge Hub
Norfolk Suffolk CambridgeshireLocal Innovation Hubs
P2
Steering Group
Norfolk P1:
Electric
Highway (NDR
Project)
P2 P2Greater Cambs.
P1:
Smart
Communities
Suffolk P1:
Smart City
(Ipswich)
EA Energy Markets Innovation
Project
Norfolk Suffolk Cambridgeshire Cross-County
Learning
P2Cross-County
P1: FiT
Export
Aggregation
Projects
The future system
Commercial PV
I&C Customer
Storage
Solar PV Farm
Solar PV Farm
Solar PV Farm
Commercial PV
I&C Customer
Wind Farm
Wind Farm
Wind Farm
Energy Storage
MICROGRID
CONTROL
Domestic PV
Domestic Customer
Storage
Domestic PV
Domestic Customer
Municipal PV
Municipal Customer
Storage
Municipal PV
I&C Customer
EV Charging
GSP
Solar PV Farm
Solar PV Farm
Solar PV Farm
The journey so far
• Project commencement in April
• Regional inception meetings since
− Cambridgeshire scheme is considering an electricity
network capacity trading and optimisation scheme
• initial discussions with UK Power Networks
− Suffolk scheme is focusing on potential Ipswich Smart
City scheme
− Norfolk scheme is addressing micro-grid options
around western cluster
− trading platform for region with solar aggregation,
including integration with local battery storage
• Data mapping already in hand
• Regional launch today
We have made
an excellent
start, and will
continue the
scoping work
over the summer
12
Cambridgeshire has been
identified as key area of focus:
- Local growth
- Combination of load & generation
- ED1 reinforcement deployed
- Forecast network constraints
based on connection queue
Cambridgeshire Smart Community
Ipswich Smart City Project
• Suffolk County Council partnering with Innovate UK/Future
Cities Catapult on plans for a “Smart City” project
− objectives to increase generation and use of renewable energy
across Ipswich by deploying new and innovative technologies,
enabled by greater connectivity (“Internet of Things”)
− aim is to develop plans for wider deployment
• Pixie Energy support, expanding the project to embrace
other low-carbon technologies
− core constituent parts
− fleshing out the skeleton
Pixie Energy has already worked with both councils to submit a
funding application through Energy Catalyst Round 5 last month
Norfolk and a Smarter Norwich
• We are helping Norfolk County Council seeking ways to
better monetise existing generation assets and look at
ways in which new technologies can be incorporated
− areas include battery storage, solar PV, use of existing
and planned network connections, EV charging
− ability to generate an income stream is important, not just
for NCC, but for all local authorities
• We are launching a Smarter Norwich project later this
month in collaboration with Norwich Community Solar
− similar bottom up approach, learning by doing
Norwich has the potential to be at the cutting edge of energy market
innovation, and Pixie Energy are here to help.
Possible elements in a Smarter Norwich
UEA Research
ParkNNUH
Aviva
AvivaNCC
NCoCo
Airport
Municipal buildings
‘GenPark
Wind
= example demand centre
Some assembly required
Driving regional innovationThe UK perspective
07 July 2017
Merlin Hyman, Chief ExecutiveRegen SW
Driving Regional Energy
Norwich, 7/07/2017
Merlin Hyman, CEO
Fuel Poverty
Regen, Innovation Centre, Rennes Drive, Exeter, EX4 4RN T: 01392 493 399
Driving regional innovationThe international perspective and decentralised markets
07 July 2017
Catherine Mitchell, University of Exeter
34
Overview
• IGov argues that GB’s current governance framework is
not fit for purpose.
• IGov has put forward a framework it argues is fit for
purpose
• Distribution service providers (distribution market
facilitators) become the ‘heart’ of this new institutional
framework
– this is an institutionalised, new value proposition as a
coordinator of platforms
• Only established so far in NYS
• Otherwise, apps and platforms, occasionally using P2P
systems, exist within the current conventional wholesale
market structure
35
Fit-for-Purpose GB Energy Governance Framework
36
Overview Findings of IGov – 4 central dimensions
required for energy system transformation
Transfo
rmatio
n
Flexible, coordinated
operation & design
ReformingRegulation
Customer Focused
Transparent & legitimate
policymaking / institutions
37
Overview Findings of IGov1
Flexible, coordinated operation & design
38
Examples of International
decentralised marketsDeveloped World but still withinconventional wholesale market paradigm
Developed World but new institutionalised distribution / local market
Developing World
Apps NYS Eg Mobisol
Platforms Eg Solarkiosk
Some P2P – still rare on ground (ie Buffelton Sep 2016 Australia, PowerLedger) but some developing LO3 in NY)
P2P LO3 in NYS (no money passed yet)
Very occasionally demand side at local level
Community Choice Aggregation / Muni’s (sometimes owning the wires)
Amazon, Google more likely in this market structure
There are demand side electricity new business models but not as yet decentralised
Decentralised demand side AND integrated with heat and EV more likely in this market
39
IGov view: moving from uncoordinated
to coordinated flexible distribution
system operation is necessary for step
increase in activity on both demand and
supply side• Possible for decentralised apps / platforms to
develop but for them to really thrive and become
ubiquitous they need a new institutional framework
with some sort of local market facilitator, balancer
and coordinator which understands what the DER
value is by time and place within the local area
– Also easier to access domestic demand side
response and necessary for liquid heat markets
– May be tipped by rapid increase in Evs?
40
Institutionalised decentralised markets
• Only example, globally, which has already taken
steps towards developing a distribution level
coordinating market facilitator is New York State
– This is transforming the distribution utilities into
distribution service providers (DSPs)
• California is undertaking several of the necessary
pre-steps for develop DSPs
– A 6 blog series comparing NYS and CA
http://projects.exeter.ac.uk/igov/comparing-nys-and-
ca-blog-1-series-overview/
• Minnesota, Rhode Island, S. Australia are ‘exploring’
• IGov would argue these distribution market
facilitators are the way forward
41
From traditional electricity systems to flexible and
smart – the NYS approach [need to differentiate
between what is happening in NYS and the ideas]
Traditional Flexible and Smart
Generator
ISOWholesale/Pool
TO
Distribution
Customer
Service
ISO / Wholesale
PoolDistribution
Service Provider/ Local Markets /
Platforms
Customer
TransmissionOperator
42
The DNO should
become a Distribution
Service Provider
(DSP) not a DSO
• A co-ordinator and market facilitator of distribution areas, across electricity, heat and EV; and S and D
• Physical, local ‘spot’ market /platform which nets off S and D
• In general, does not own resources
• Any resource sold to / bought by any customer via co-ordinated private platforms + DSP
• Can we combined wires / SO or separate
• Regulated for different revenues• Traditional cost of service• Performance based• Transaction related
43
The way DSPs will earn revenue in NYS
43
44
Coordination at Distribution level important
Source: adapted from Vercschae, Kato, Kawashima & Matsuyam (2015) http://vision.kuee.kyoto-u.ac.jp/japanese/happyou/pdf/Rodrigo_ASN_2015.pdf
Demand Management (demand response) Co-ordinated energy management
Electricity, heat &
transport/DER
Aggregator
Supply-side Demand-side
Supply Management (operating reserve)
Top down signal
Consumers (EMS)
Electricity, heat &
transport/DER
Co-ordination
• Cluster of single actor best effort• Limited control ability
• Actors communicate to coordinate• control feedback
• Community best effort• Higher control ability
45
Steps to have DSPs in GB
• Need to have regulated distribution energy resource
plans (DSPs) to find out the value of DER
– This occurs in CA, NYS, and many other States now
moving to find value of DER
– Please see reset the reset blog series
http://projects.exeter.ac.uk/igov/new-thinking-reset-
the-reset-1-we-need-institutional-governance-reform-
and-we-need-it-now/
• More difficult - requires new type of regulation
(performance based / ambition driven)
– RIIO have structural flaws
– Ofgem and BEIS appear complacent and ineffectual
46
Conclusion
• Decentralised markets developing fast
• Being able to access granular energy and service
values is vital
• Undertaking regulated DRPs good first step
• DSPs, as a coordinating market facilitator, makes
sense
• In NYS, Regulator was central to that, and had
political backing
– Problem in GB is an entrenched regulatory system
(RIIO); a weak and expensive regulator; and a
complacent Government with other things on their
mind
47
Questions
• Do you agree?
• Do you think we need a more institutionalised
approach or can we continue as we are?
48
Links / References (1):• Our fit-for-purpose governance framework document:
http://projects.exeter.ac.uk/igov/paper-gb-energy-
governance-for-innovation-sustainability-and-
affordability-2/
• Our submission to flexibility call :
http://projects.exeter.ac.uk/igov/submission-beisofgem-
smart-flexible-energy-system-a-call-for-evidence/
• See our DSP slidepack
http://projects.exeter.ac.uk/igov/new-thinking-distribution-
service-providers/
• http://projects.exeter.ac.uk/igov/new-thinking-
transformational-regulation-comparing-the-ny-rev-riio/
• http://projects.exeter.ac.uk/igov/us-regulatory-reform-ny-
utility-transformation/
49
Links / References (2)
• A 6 part series
• http://projects.exeter.ac.uk/igov/comparing-nys-and-ca-blog-1-
series-overview/
• Reset the reset (3 blog series)
http://projects.exeter.ac.uk/igov/new-thinking-reset-the-
reset-1-we-need-institutional-governance-reform-and-
we-need-it-now/
• Overview of RIIO Review
http://projects.exeter.ac.uk/igov/new-thinking-the-riio-edi-
review-just-how-successful-is-riio/
• Argument for Ofgem to be reformed
http://projects.exeter.ac.uk/igov/new-thinking-ofgem-has-
to-be-reformed-if-gb-is-to-meet-its-energy-policy-goals/
50
Appendix
51
What is a traditional distribution network
utility?
Distribution Network Operator
• Supplying energy units to customers• Maintaining certain operational standards• Making a rate of return on capital assets, so incentive to add capital assets
Maintaining a safegrid
Maximising asset infrastructure
Rate of Return Regulation
Source: Adapted from CSIRO and Energy Networks Association 2015, Electricity Network Transformation Roadmap: Interim Program Report
52
What is a Distribution Service Provider?
Distribution Service Provider
• Integrating all types of DER via increased system and energy efficiency • Enabling customers to provide and be paid for services to D-grid• Facilitating services between 3rd party providers and customers• Reveal value• Becoming ‘active’
Maintaining a safe &
resilient grid
Increasing system
efficiency
Optimisinginfrastructure
Support/ enable public policies
Enabling highlyreliable & resilient energy services
Bring forwardcost-effective ways of achieving outcomes
Providetransparent data
Higher proportion of Performance Based Regulation to Revenue
Source: Adapted from CSIRO and Energy Networks Association 2015, Electricity Network Transformation Roadmap: Interim Program Report
53
54
Overview Findings of IGov
Transfo
rmatio
n
Flexible, coordinated
operation & design
ReformingRegulation
Customer Focused
Transparent & legitimate
policymaking / institutions
55
Overview Findings of IGov
Transparent & legitimate policymaking/institutions
• Coherent decision making• Less BEIS delegation• Consensus Building Body• Market Monitor and Data Body
56
Overview Findings of IGov
Customer Focused
• Contracts & bills• Customer at center• Meaningful consent• Engagement• Trust, equity and democracy
57
Overview Findings of IGov
Flexible, coordinated operation & design
58
Overview Findings of IGov
Reforming Regulation
• Ofgem to economic regulator• Performance based regulation• Access to data
59
Performance Based Regulation & Change
59
Challenges and opportunities for local energy projects
Chair: Dr Craig Lowrey, Senior Consultant Cornwall Insight
• Paul Bourgeois, Head of Sustainability, Gt Cambridge Gt Peterborough LEP
• Dominic Allen, Sustainability Manager, Norfolk County Council
• Matthew Rathbone, Group Accountant (Projects), Cambridgeshire County Council
• John Taylor, Project Officer, Suffolk Climate Change Partnership
• Maxine Narburgh, Economic Development Project Manager, Ipswich Borough Council
