Ofgem has given the green light for an investment of almost £6 million in SP Energy Networks’ (SPEN) flexibility project called “Project Fusion”.
The regulator confirmed its support for the scheme, which will see people’s electricity demand and supply “flexibility” traded in a newly-created digital marketplace.
It is anticipated that if Project Fusion is successfully rolled out across the UK, it could result in more than £200 million of savings in electricity bills by 2050.
SPEN is working with organisations including Fife Council, the University of St Andrews and Imperial College London. The total investment in the project will be £5.67 million, with £5.1 million coming from Ofgem’s Network Innovation Competition fund.
Project Fusion is expected to run for five years and will be piloted in East Fife, an area which SPEN describes as having a “rich and diverse range” of energy resources, including onshore and offshore wind and hydrogen storage.
It will allow people to work with their energy retailer – or another market participant – to secure additional income from being flexible in terms of their electricity usage.
As well as being financially rewarded for its flexibility, SPEN says this would reduce the amount of money required in the future to build new grid networks to support electric vehicles, local electricity generation and heat-pumps.
Frank Mitchell, chief executive of SP Energy Networks, said: “Project Fusion will create a world-leading, smart energy, online platform which will allow customers to trade their electricity supply and demand capacity.
“The project is at the heart of making more effective use of existing electricity infrastructure and ensuring we keep customers’ bills down and their lights on.
“This is critical as we move towards an electric future in the transport and heat sectors to meet the challenges of climate change and make our society cleaner and greener.
“It will also be an important part of ensuring any necessary future investment in our network is minimal and meets customers’ demands. And it is a good example of the type of support and forward-thinking that we need from Ofgem if we are to meet the increasing demands of a low-carbon society.”
Colin Taylor, SP Energy Networks’ director of processes and technology, added: “The decision by Ofgem to support Project Fusion by providing £5.1 million of funding is very welcome.
“Flexibility is key to the management of the electricity network of the future and SP Energy Networks is leading the charge. This funding will allow us to press on with what we consider will be the model for the future marketplace for electricity supply and demand.
“Being flexible with how we use and produce electricity will mean the power generated and delivered continues to meet customers’ demand but without the need for ever bigger power stations.
“The aim is to create a new competitive marketplace where communities and customers can take control of the demand and supply of electricity in their areas. The test will be in making sure the system is simple so that there is opportunity for everyone to get involved and to save money.”