Catherine Early, Utility Week correspondent Electricity transmission/distribution, Energy networks, Gas transmission/distribution, Innovation, Analysis

A new approach to energy planning where network operators and local authorities work in collaboration could be the key to meeting decarbonisation targets, and lowering costs. Catherine Early reports.

Local consideration of energy networks and land use changes have typically taken place in silos, with network operators not even included on the list of non-statutory consultees for planning applications and strategies. Meanwhile, networks typically have considered only the needs of their own infrastructure, and investments within their eight-year licensing periods.

However, this will need to change. The UK has a legal obligation to reduce carbon emissions by 80 per cent on 1990 levels by 2050. Progress so far has focused on reducing emissions from electricity generation, but experts agree that a stronger emphasis needs to be placed on energy consumed as heat, and for transportation. This will demand significant changes to buildings and energy networks, and this in turn will require better planning to ensure changes are considered holistically, and are carried out as efficiently as possible.

In tandem, regulator Ofgem has asked network operators to consider “whole ­systems outcomes” through the new price control process, RIIO2. Although it is still working out the detail, guidance issued in September states that network companies will have to share information and co-­ordinate activities to a “much greater degree than has happened to date”. Companies will need to describe the process of engagement they have undertaken to support such co-ordination, and what steps they will take to continue this.

Meanwhile, the government’s Clean Growth Strategy has highlighted the driving role that local authorities should have in decarbonisation, through their “unique position” of managing policy on land, buildings, water, waste and transport. “They can embed low-carbon measures in strategic plans across areas such as health and social care, transport, and housing,” it states.

In response, innovation organisation the Energy Systems Catapult (ESC) has been working on a new approach, known as local area energy planning. This takes a longer-term view that considers how to achieve affordable and secure energy in the context of the whole energy system.

The process involves organisations which have not typically worked in partnership collaborating to consider interactions across systems, such as how alterations to buildings might influence the energy networks that serve them, the influence of decarbonisation on future choices, and options to shift demand between different networks.

“Local area energy planning is responding to the challenge in decarbonising heat, and the lack of progress that has been seen to date in the UK. Local areas need to take an active role to help accelerate the change that is needed,” says Richard Halsey, innovation business leader at the ESC.

Stuart Easterbrook, future gas strategy manager at gas network operator Cadent, notes that the options to decarbonise heat – such as replacing fossil gas with biomethane, hydrogen or hybrid electric and gas systems – are already known. However, many of these will need to be mandated across an area, he believes.

“You cannot convert one house to hydrogen and their neighbour to biomethane. A biomass or electric district heating scheme will require all properties in an area to convert to be viable. If the gas network is removed in an area, all the homes and businesses will face the same problem, and will need a pragmatic, community-level solution,” he says.

Multiple benefits

Local area energy planning has the potential to benefit all organisations involved. For example, the approach could help building managers and local government to identify high energy use public sector-owned buildings that could be retrofitted, and build the evidence base for assessing community infrastructure contributions such as new energy centres or distributed generation.

Meanwhile, the process could support electricity and gas distribution network operators to identify potential energy network constraints from new housing developments or heavy deployment of renewables, and finding potential resources for demand management and local balancing.

Halsey explains that local area energy planning attempts to bring the land use planning and network planning processes together, rather than creating a new one. “We’re not trying to change the established processes of the local council or the network, but rather to create a space through which those activities could be shared to create a shared plan,” he says.

Local area energy planning could work on the same basis as neighbourhood or transport planning, which relate to the council’s main land-use plan process, but have their own structure, he suggests.

“It could provide evidence and information to support the other planning processes, for example to inform an area of spatial plan or housing allocation. It could form part of a RIIO2 application, or it could inform the analysis of the planning application for a major distribution asset. It would be something that would connect these processes,” he explains.

Business and technology consultancy Baringa Partners has been working with the ESC since 2014, when it began development of the Energy Path Networks tool, an advanced local area energy planning tool that enables the gathering and analysis of a wide range of data impacting energy demand and supply for an area.

James Greenleaf, director of energy markets and analytics at the consultancy, says that typically all those making decisions on energy were “doing it through their own lens” – electricity networks would consider electricity, gas networks would consider gas, while local authorities would stick to their own housing stock.

“No-one had a way of bringing together a holistic picture for a real-world area, and create an objective evidence-based plan to reduce CO2 emissions significantly over time,” he says.

Test of concept

Over the past three years, the ESC has piloted the concept in three areas: in England Bury, in Greater Manchester, and Newcastle, and in Wales, Bridgend, involving local authorities and electricity and gas networks in each.

Electricity North West is one of the partners involved in the Bury project. Ian Povey, strategic planning manager at the network, says that, in the past, it was relatively simple to forecast future electricity demand by consulting plans for potential new housing, commercial or industrial development, and then converting that into electricity demand.

“Now the future is so different we’re not in that position. We need to work with people like the local councils to get a greater understanding of what people want to achieve and then how that can be done,” he says.

The pilots highlighted several challenges to the approach. One mentioned by several participants was access and managing data and information across the energy system and built environment. Povey says: “We have a lot of data about electricity networks, Cadent has data for gas networks, and the local authority has its own data on their economic areas. The problem is bringing it all together because you end up with an awful lot of data and you need to understand its relevance.”

The different partners had to work together to understand each other’s data properly, he says. “As we worked together, local councils started to understand our data better. That was one of the main issues, because we’re trying to plan a whole system, not just an electricity system.”

Greenleaf also reports challenges with the data, because quality, comprehensiveness and formats differed among partners. “Harmonising the data could benefit other areas doing the same analysis. Also, a lot of the information being gathered could be used in other areas by local authorities, so there needs to be a push on how the data is managed,” he says.

It was also quite time-consuming to look in detail at each individual area, so it would be good to find a way of simplifying the process so that the same insight could be generated in a more streamlined manner, Greenleaf says.

Aligning people and plans

Another challenge reported by participants was getting all the right people from the various organisations together in a room, at the right time to influence plans. Michael Jenkins, principal sustainable development officer for Bridgend County Borough Council, says the first thing it did was to gather a group together and start talking to the network operators.

“We’ve never done that before – aligning our plans with their plans. This was the first time we’d said that we were going to put 1,000 new homes in an area, and looking at whether the grid capacity could cope,” he says.

Previously, the planning department would have just assumed that the housing developer had discussed its plans with the network operator, he says. “Local authorities don’t necessarily have relationships with network operators. It probably took us two years to get the plan at the end, it’s not something that happens very quickly,” he says.

Jenkins is a convert to the new approach, and says it “absolutely” makes sense to work directly with the operators. “Before, we didn’t have a point of contact, or anyone to speak to but now we can just pick up the phone and have a quick chat or send an email – I can’t imagine going back to the old way now,” he says.

Each of the three areas involved in the pilots has developed plans for a range of projects, including electric heat networks, electric heating and targeted retrofit, Halsey says. In Manchester, the project partners are holding stakeholder events to gain feedback on a near-term plan, he says.

In Bridgend, the council has developed a smart energy plan, which will be presented to its cabinet for approval in January 2019, according to Jenkins. The plan includes projects for the electrification of heat, hybrid heat and district heat projects.

Optimism is high that the concept can be scaled up and used in other parts of the country. The ESC sees the approach as critical for the decarbonisation of heat and for the integration of other technologies, such as electrified transport, and hydrogen.

Local area energy planning could be funded through a body similar to the government’s Heat Networks Delivery Unit, which provided a financial support mechanism for heat mapping to identify potential areas for heat networks, Halsey suggests.

Povey believes the concept will have to be used nationally. The group working on the energy plan for Bury wants to extend the project to Greater Manchester. “Once you can do it to a size of a conurbation the size of Greater Manchester then I think you can start to apply it nationwide,” he says.

However, Greenleaf says there are gaps that need to be filled in terms of implementation, particularly where significant decisions need to be made. “For solutions like large-scale re-purposing of the gas network for hydrogen and district heat, there isn’t really a decision-making framework. That’s a missing piece of the jigsaw at the moment.”

Key findings

The Energy Systems Catapult said its research found that a wide range of heating system options were needed to decarbonise heat in local areas. It said “no single solution was cost effective in any area”, however some common themes were identified across local areas regarding heating system options and cost-effective choices.

• Development and expansion of heat networks are a solution for built-up urban areas where the high heat density makes them a cost-effective decarbonisation solution under most future scenarios.

• Electric heating through technologies such as heat pumps is more efficient in rural areas. In smaller properties, air source pumps are likely to be most effective, while larger houses may require ground source heat pumps, or high temperature air source heat pumps. Solutions for suburban areas are much more variable.

• Smaller, better insulated homes are suitable for a wide range of solutions, while larger homes are harder to heat, with fewer low-carbon options. There were examples of “hard to heat” buildings such as these in all pilot areas.

• Hybrid heating systems, which can switch between gas and electricity at different times to manage peak network loads, may be a valuable future option as a transition technology, allowing consumers to experience their homes being heated by heat pumps without being significantly different to their current systems. However, hybrid heating systems are an expensive option and deliver limited carbon reduction benefits while national electricity generation is still carbon intense.

• Biomass was not popular with local authorities because of its impact on air quality, the cost and availability of biofuel, and because space constraints for fuel storage meant that it was only likely to be practical for larger homes. Source: Energy Systems Catapult

The elements of local area energy planning

Identify and engage stakeholders

These could include local, regional and national government; energy network operators; local enterprise partnerships; local industry and academia; and residents and businesses. Stakeholder engagement should be a continuous process that starts early, continues throughout preparation and implementation and on through the monitoring.

Set area vision, objectives and targets

The organisation leading the local area plan should set a local carbon emissions target and develop supporting policy to achieve it by a defined year, with ambitious but achievable interim targets. As well as carbon emission reduction, other objectives can focus on local priorities, such as creating jobs, encouraging economic growth and investment, and reducing fuel poverty.

Understand the local area energy system

The plan needs to be based on the local area’s current and future energy demand; the capacity of an area’s future energy system to meet the identified vision, objectives and targets; and the changing expectations of local communities and consumers. Various elements need to be identified and quantified, including current energy networks, their capacities and the buildings connected to them; current building types, numbers, locations and heating systems; current industrial and building numbers, locations and uses; local constraints such as conservation areas and likely future energy demands and growth.

Investigate future local energy scenarios

Cost-effective and robust scenarios of future local energy system infrastructure should be created.

These should achieve the vision, objectives and targets defined earlier, and should analyse energy system change from present day to an agreed end date. They will need to consider variation from any change to the national energy system, and any impact on the local system. It should test options across the whole energy system before identifying preferred options.

Develop a local area energy strategy

The strategy should be based on a technical evidence base, and set out the proposed different combinations of energy system and network change. It should include a land-use plan to illustrate the proposed energy system and network changes.

It should also identify short-term actions and priorities, with key milestones and critical points at which progress and decision making is needed pinpointed. These should be aligned with other stakeholders’ plans and investment cycles.

Lead and implement

Implementation will need to be an iterative and collaborative process, with the plan evolving along with technological innovation.

Monitor and review

The plan should be formally reviewed and updated regularly. Factors that may impact a local area energy strategy include major political, policy and regulation change; market forces and consumer behaviours; technology developments; and evolving national and local emissions targets.Source: Energy Systems Catapult