Smarter Network Storage: Introduction to grid-scale storage and applications, the DNO perspective

Smarter Network Storage: Introduction to grid-scale storage and applications, the DNO perspective

2 Storage: the DNO perspective Context to the storage boom Smarter Network Storage: What have we achieved? Trial results: how storage helps local and national networks Key takeaways

3 UK Power Networks Total % of Industry End Customers Millions Service Area km² Underground Network km Overhead Network km Energy Distributed TWh Peak Demand MW New Connections 8.1 29,250 139,000 46,500 84.8 16,229 130,768 28% 12% 29% 15% 28% N/A 35% One of the largest electricity distributors in the UK

MW # Applications 4 Current status of Customer Driven Storage We have received over 400 formal storage applications for over 8GW in the last 7 months 10000 Storage applications - UK Power Networks (EPN, LPN and SPN) 500 8000 6000 4000 2000 0 January February March April Capacity Total Formal Applications 400 300 200 100 0

5 Introduction: Why is storage so relevant? Historical technical challenge Enabler to low carbon transition System stability Avoid network reinforcement Multiple purpose and fast response

The Smarter Network Storage Project 6 Partners Location: Leighton Buzzard Energy capacity: 10 MWh Suppliers Real power: 6 MW 13.2m LCN funding awarded in Nov 2012 4.0m investment by UK Power Networks 6

7 Challenges and achievements so far High CAPEX cost of commercial storage technologies = multiple stacked benefits needed Demonstrated multi-purpose application of storage sharing learning on the realisable benefits Challenges in accessing multiple benefits & optimising Developed novel optimisation & control systems for storage Limited experience of any proven business models Provided insight & assess viability of multiple business model variants Uncertainty in policy and regulatory landscape Assessed regulatory & legal barriers, made recommendations & developed commercial arrangements for shared use Limited experience and confidence in storage as network-connected assets CHALLENGES Deployed & operate of large-scale battery energy storage adding to body of learning for DNOs ACHIEVEMENTS

8 Overview of regulatory issues identified Lack of classification of storage Inconsistencies in the framework Treatment of storage as import (end consumption) can impact climate change, renewables and low carbon supplier charges Distribution charging methodologies depend on classification Ensuring competition with supply and generation is not distorted, storage efficiency could be compromised Value assessment across the whole system is not clear Reactive Power capabilities remain underutilised and are not remunerated

Functions of SNS 10 Peak Shaving SNS uses its stored energy to meet peak demand which reduces the load on the network. This defers the need for network reinforcement to meet peak demand. Frequency Regulation SNS can regulate the grid frequency through power exchanges. This assists National Grid in stabilising the frequency of the wider electricity system. Reactive Power Support SNS has 7.5MVAr of reactive power capability. Reactive power can help improve power factor, reduce losses and support voltage levels on the local network. Reserve SNS provides reserve capacity and can be triggered remotely to export power. This assists National Grid in balancing electricity demand and supply. Tolling SNS can provide energy based on a given energy delivery profile. This can be used to manage imbalance risk and assist in hedging against peak electricity prices.

SNS Smart Optimisation and Control System 11 The SNS smart optimisation and control system is a novel platform that schedules the energy storage to be utilised for a range of different applications, optimising value whilst ensuring network security is maintained.

12 SNS Trial Results TSO - Frequency Response - Reserve -Triads DNO ENERGY SUPPLIER - Tolling - Peak Shaving - Reactive Power Support

SNS trials findings Peak shaving TSO - Reserve - Frequency response - Triads DNO ENERGY SUPPLIER - Tolling - Peak Shaving - Reactive Power Support 13 40 35 30 25 20 15 10 Leighton Buzzard Loading 11kV (MVA) Loading Limit (MVA) Annual requirement (hours) Annual requirement (days) Annual energy requirement (Total MVAh) Daily maximum power (MVA) Daily maximum energy (MVAh) 97 48 141.6 5.7 19.9 Peak shaving can be provided with: Active power Reactive power Active and Reactive Power

100% 80% 60% SNS trials findings - STOR Costs Revenues TSO - Reserve - Frequency response - Triads DNO ENERGY SUPPLIER - Tolling - Peak Shaving - Reactive Power Support 14 40% 23.86% 20% 3.25% 17.91% 0% -20% -40% 2.54% 0.17% -0.13% -0.98% 0.00% -0.02% -1.13% -16.76% -12.75% -3.48% -3.08% -0.87% -36.93% -60% -80% -76.14% -100% LV auxiliary consumption Energy BSUoS RCRC FiT Capacity Market Settlement Levy CfD Operational Levy Daily Service Fee RO DNO Fixed Charge DNO Capacity Charge STOR Service Revenue Net Totals

SNS trials findings Static FFR TSO - Reserve - Frequency response - Triads DNO ENERGY SUPPLIER - Tolling - Peak Shaving - Reactive Power Support 15 100% Costs Revenues 80% 60% 59.41% 63.06% 40% 20% 0% -20% -40% -4.95% LV auxiliary consumption 3.58% -9.09% 0.07% 0.00% -0.48% -0.17% 0.00% 0.00% 0.00% Energy BSUoS RCRC FiT Capacity Market Settlement Levy CfD Operational Levy -0.24% Daily Service Fee -1.51% RO -0.19% DNO Fixed Charge -7.87% DNO Capacity Charge FFR Service Revenue -24.50% Net Totals

16 Conclusions UK Power Networks has proven through SNS that storage can provide multiple services at very fast speed which can improve network operation Currently the best value of storage is driven by Frequency Response and NG have the best leverage to trigger the market. However, there are no divers for developers to connect storage at specific distribution network locations DNOs must work collaboratively with NG to ensure we bridge the gap between TSO services provision and DNO potential requirements We must continue to work with DECC and Ofgem to address the regulatory barriers going forward

17 Current work Business Case update: understand tipping points and full value potential Consistent approach to treating storage connection requests Work closely with DECC and Ofgem on addressing regulatory barriers Work closely with NG to design best practice approach for tendering new services New asset, new standards, new skills

18 Other Learning Outputs July 2013 Consultation on possible future business models for grid-scale energy sto October 2013 Design & planning considerations for grid-scale storage December 2013 Design & Architecture of Optimisation & Forecasting platform June 2014 GB Regulatory and Legal barriers for energy storage October 2014 Commercial Arrangements for the shared use of storage flexibility May 2015 Energy Storage as an Asset Asset management, training and commissioning September 2015 Recommendations for regulatory & legal amendments for storage January 2016 Energy storage contribution to Security of Supply, and effect on standards March 2016 Evaluation of value streams, business model viability More Information available at: http://innovation.ukpowernetworks.co.uk

Dr Panos Papadopoulos