OFGEM Approves £57m For UK Smart Grid Projects

  • Posted on: 27 November 2011
  • By: Patrick Oliphant

The UK energy management body OFGEM has approved the availability of funds for six smart grid projects across Britain. The money will be used to fund energy projects run by Distribution Network Operators (DNO). OFGEM is hoping that lessons learned in the pilots will help grid companies to develop the grid networks of the future. The £57 Million is being made available from the regulator’s £500 Million Low Carbon Network Fund.

The money and projects being piloted is no coincident; the UK like the rest of European countries have signed up to the European Union’s lower carbon emissions initiative. Members of the European Union have set themselves ambitious objectives for the year 2020; to lower CO2 emissions by 20%, lower energy consumption by 20% and ensure that 20% of energy is generated using renewable resources.

“Britain’s energy grids need to undergo a revolution in how they are run so they can connect more renewable generators and a range of low carbon technologies,” said Rachel Fletcher, Ofgem’s Acting Senior Partner for Smarter Grids, Governance and Distribution. “Lessons learnt from the projects will be shared with all network companies and other interested parties.”

The projects are to run from 2010 to 2015 as part of the current price control regime for electricity DNOs. The general £500 Million fund has been set aside to encourage and enable the operators to trial new technologies, operating and commercial arrangements that can aid the transition to a low carbon energy sector.

One of the challenges facing grid companies the world over is the transition to in-cooperate the energy from renewable sources into the general distribution. According to Fletcher “The aim here is to ensure that the networks do not hold up the decarbonisation of our energy use, and that the cost of this transition is kept as low as possible for customers.”

An example of the one of the projects by the DNO is installing electric storage batteries in homes, schools and an office to see if customers could be encouraged to use this stored electricity at times of peak demand.

The UK and many develop countries are funding these test bed pilots as a means of creating a smarter energy grid infrastructure. Putting aside the issue of security, privacy and data management; governments want to increase the availability of energy without the need to invest in new network assets such as overhead lines and substations. Therefore, they are looking for innovation solutions that will help make better use of what is already in place.

OFGEM believes that this is a significant opportunity for companies to contain the cost of transitioning to a smarter grid by making better use of existing capacity and exploring the scope to use demand side response.

Another of the project being funded involves using network capacity, which has only been used in the event of outages due to power cuts or planned maintenance. This “latent” capacity could be used to connect more renewable sources without impacting on secure supplies. Several projects involve better use of existing network capacity to manage congestion on the grid, or looking at how more low carbon generation can be connected without having to build new power lines.

From the £500 million fund, a further £100 million is available as a discretionary award for the projects that bring particular value in helping the networks adapt to climate change while providing security of supply and value for money to consumers.

The projects that are being funded this year are:

Project and DNO Location Cost
Capacity to Customers (Electricity North West Limited) North West England £9.1m
Flexible Plug & Play (UK Power Networks) Cambridgeshire £6.7m
Flexible Networks for a low Carbon Future (Scottish Power Energy Networks) St Andrews (Scotland), Wrexham (Wales) and Whitchurch (England) £3.6m
FALCON (Western Power Distribution plc) Milton Keynes £12.4m
BRISTOL (Western Power Distribution plc) Bristol £2.2m
New Thames Valley Vision (SSE Power Distribution plc) Bracknell £22.8m