Earlier this week Ofgem announced the nine projects that have won a total of £62.8 million through the NIC. If these new projects follow in the footsteps of those funded by the Low Carbon Networks Fund previously, they have the potential to not only lay out the future for distribution and transmission in Great Britain, but also reveal savings for consumers that could run into billions.
Previous projects have investigated the potential impact of increased demand on the system through the uptake of electric vehicles and demand side response. The nine projects rewarded this year sees a shift to network reinforcement with a particular focus on substations, and investigating new types of gas such as biomethane which is forecasted to provide up to 40 per cent of domestic gas demand in the future.
Ofgem’s senior partner for distribution Maxine Frerk said: “Investments in networks have a real potential to connect more renewable generators, and enhance security of supply in a more cost efficient way.”
Frerk said the nine winning projects show how new sources and uses of gas combined with smarter grids can “benefit consumers by making the energy system more secure and cost effective.”
The NIC is split into two competitions, one for electricity and one for gas. The majority of the funding, £44.9 million, was awarded through the electricity NIC. This funding should help meet the challenges of intermittent generation on the networks, increasing impact of distributed resources and active demand, and new sources of generation connecting to the network in areas far from consumption centres. Ofgem says these challenges will “directly affect the way electricity network companies plan and manage their businesses.”
Winning projects include £13.1 million for Scottish Power Manweb to investigate a new approach to network reinforcement by converting alternative current to direct current. National Grid Electricity Transmission also received £12 million to convert an existing substation into a field trial facility.
But the NIC is not just free money. The projects must demonstrate good value for customers and have robust working methods. Ofgem felt two applications for funding, one from SP Distribution and one from Western Power Distribution, did not meet this strict criteria.
Ofgem said both projects lacked a “robust methodology” although intended to investigate important areas such as the role of a distribution system operator and communication solutions for smart networks.
Gas distribution companies have had their future reinvigorated by the realisation that electrifying heat is not the cheap and less carbon-intensive alternative to the traditional gas central heating system the government thought it could be. The gas NIC therefore focuses on supporting projects that “meet customers’ changing requirements as Great Britain moves toward a low carbon economy” Ofgem says.
Four projects requested £18.4 million in funding from an available pot of £18 million. Three of the projects were fully funded. Northern Gas Networks (NGN) only receiving £0.7 million of the £1.1 million they requested to build the first scalable city-based compressed natural gas fuelling station. NGN will now have until the new-year to decide if they wish to progress with the project with the funding that has been made available.
Winning projects will explore how to minimise the cost and time of new connections, build a commercial demonstration plant to produce renewable low carbon methane, and develop, install and demonstrate a flexible ‘real-time’ network to test new technologies and infrastructure.
While individual companies have been awarded funding, a key condition of the competition is that the sharing is learned. Ofgem’s senior partner for distribution Maxine Frerk said: “As with all the projects we have funded we expect to see learning from these projects being shared across industry and are pleased to see many of the earlier projects now being rolled out across companies and delivering real benefits for consumers.”
Just last week the network companies gathered for their annual Low Carbon Networks and Innovation conference to disseminate the findings from previous innovation projects. The feeling amongst those present was one of optimism about meeting the challenges a low carbon future will bring to running the networks, but also the acknowledgement that many of the answers are yet to be discovered.
What is clear is these types of innovation projects do have the ability to lower costs for consumers. UK Power Network’s £28.3 million Low Carbon London project has allowed them to save £43 million in network investment over the next eight years. Northern Powergrid’s £28.6 million Customer-Led Network Revolution has even wider potential impact. The company says the project has opened the door to up to £26 billion worth of net benefits to Great Britain by 2050.