Local Area Energy Planning: Supporting clean growth and the decarbonisation of heat

Published: 6 December 2018

Introduction

Energy is an essential part of national and local economies. It is required for everything from heating and lighting our homes and offices to transporting our goods and powering our industries. For the UK to decarbonise, significant change will be needed, both to the existing energy networks, as well as building heating systems and fabric.

Yet every local area is unique – buildings, existing energy networks and people all vary between areas – and the changes needed to decarbonise will be specific to each area.

Energy Systems Catapult has pioneered a new whole-systems approach to Local Area Energy Planning (LAEP) and run pilots in three different local areas of the UK – Newcastle, Bury in Greater Manchester and Bridgend in Wales – to provide proof-of-concept for the approach.

The Challenge and Opportunity

Transforming the UK energy system to be clean, secure and affordable requires a significant transition that will call for close coordination between many different stakeholders, including local and national government, network operators including gas, electricity and heat, energy suppliers, local communities and businesses, as well as individual consumers. Currently, there is no structured whole system planning process in place to help manage this transition.

In urban planning, “masterplans” establish a long-term view of how an area – be it urban or rural – should be developed, providing a clear and consistent framework for change, rather than stipulating exactly what is going to be built where and when at a building-by-building level. To decarbonise the UK’s energy system efficiently, and at least cost, Local Area Energy Planning can provide a similar long-term framework for transforming local energy systems in the UK.

The Innovation

Local Area Energy Planning requires a Whole Systems approach – meaning to consider the entire energy system across vectors, (heat, electricity, transport) supply chains (from energy generation to how it reaches people’s homes) and systems (physical, digital, market and policy systems).

Whole Systems thinking has already been predicted to save costs on decarbonising national energy infrastructure, keeping costs at around 1% of 2050 GDP according to a separate Catapult study: Options, Choices, Actions (updated 2018) Clockwork & Patchwork – UK Energy System Scenarios. This is significantly cheaper than a more simplistic ‘blanket’ solution to decarbonisation, such as maximising the use of electricity or hydrogen, which were projected to cost twice (2.28%) to three-and-a-half times (3.51%) as much respectively. LAEP is based on taking this ‘best value-for-money’ approach, but applying it at a local level.

Our Approach

Pioneered by Energy Systems Catapult, a new whole system approach to LAEP has been piloted in three different local areas of the UK – Newcastle, Bury in Greater Manchester and Bridgend in Wales as part of the Smart Systems and Heat (SSH) programme.

This also involved working with companies such as Western Power Distribution, Cadent, North Gas Networks, Wales and West Utilities, and Six Town Housing.

The studies in the three areas found that while there are similarities between them, the decarbonisation options available were highly specific to local conditions, existing buildings and infrastructure. In the final reports, it was concluded that no single solution able to meet national, and increasingly ambitious local, decarbonisation targets.

What’s more, the pilots provided an insight into how the three areas could secure a value-for-money transition to low carbon via LAEP.

The Outcomes

The pilots studies found that the decarbonisation of heat in the three areas could be achieved for just 15% above the cost of decarbonising electricity alone. However, if not well planned, the costs could be significantly higher.

Local authorities, energy network operators, and other key local stakeholders involved in the pilots gained:

  • Experience of a collaborative data-driven Whole Systems planning approach to transforming local energy systems focusing on the challenge of decarbonising heat;
  • Collaborative investigation of future local energy scenarios in each of the different areas, sharing data, information and expertise between local government, gas and electricity network operators;
  • Insights and evidence to help inform the development of a pipeline of innovation projects in the context of a long-term plan for energy system transformation;
  • Identification of opportunities and risks to help support more open dialogue, future engagement and investment in building retrofit, heat, gas and electricity networks.

The Impact

As part of the Smart Systems and Heat phase 2 programme, we worked with Newcastle, Manchester and Bridgend to develop Smart Energy Plans focused on near-term project opportunities in response to the challenge of decarbonising heat.

We are also working with a number of local areas on how the Catapult can scale up LAEP across the UK and increase accessibility and application of the methods and tools we have developed.

Update: December 2019

The UK has a national target to achieve Net Zero carbon emissions by 2050. Yet every local area in the UK is unique. The characteristics of buildings, energy networks and people can change substantially from place to place, as can the approach required to decarbonise.

Energy sector regulator Ofgem has now included LAEP recommendations in its latest RIIO-2 Business Planning Guidance for energy networks.


 


“Given the potential benefits with LAEP .. to provide improved data on and assessment of possible heat decarbonisation options, provide a structured framework for engagement and investment planning decisions .. for net zero energy systems and network infrastructure .. we are interested in any information companies can provide in their business plan … to support the creation of shared LAEPs.”

RIIO-2 Business Plan Guidance