Origami Energy is to trial the peer-to-peer trading of network capacity as part of a smart local energy system pilot in Oxfordshire.

The scheme will allow network users to earn money by selling spare capacity which they are entitled to under the terms of their connection agreement but often goes unused.

Local Energy Oxfordshire (LEO) was one of four demonstration projects to be awarded a share of £51 million from the government’s Industrial Strategy Challenge Fund earlier this month.

Project leader Scottish and Southern Electricity Networks will test multiple aspects of the distribution system operator model as it attempts to balance local supply and demand in a real-world environment. The distribution network operator (DNO) described the £40 million pilot as “one of the most wide-ranging and holistic smart grid trials ever conducted in the UK”.

Among the numerous partners is technology company Origami Energy, which according to its head of commercial delivery, David Middleton, will seek to create an “auction of import and export capacity… so that participants can trade that between themselves”.

“I think that’s incredibly exciting because there are lots of customers who have got excess supply capacity for very good reasons,” he told Utility Week. “It stops that authorised supply capacity from creating constraints in and of itself.”

He said the scheme would, for instance, enable generators to sell their export capacity when they are undergoing maintenance. He also gave the example on the demand side of a school shutting down for the holidays: “That capacity could be released and somebody else could do something with it.”

Middleton believes the trial will be the first of its kind in the UK. He said the most challenging aspect will be the commercial and contractual arrangements: “If someone wants to exceed their authorised capacity they need to get approval from the DNO which might be a simple yes, a simple no, or it could be a conditional yes. The idea then is that they go ahead and transact on the basis of that agreement from the DNO.” Origami will therefore need to “build conditionality into the system”.

In December, Ofgem launched a significant code review to examine connection arrangements and forward-looking network charges. The regulator said the potential for trading access rights would not be included within the scope of the review but encouraged the electricity system operator and network companies to explore the issue separately.

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