To transform the energy system to meet UK carbon reduction targets and achieve our clean growth ambitions, it is crucial that the UK energy sector overcomes systemic barriers and open new markets to deliver the innovative products, services and value chains required.
Energy Systems Catapult is developing a town-scale demonstrator – the Energy Town Support Platform – to provide a national capability for innovators to experiment under deeply digitalised new market arrangements with real consumers.
‘Energy Town’ will leverage Catapult capabilities and assets, along with those of our partners, to provide innovators with a safe, affordable, shared space to test products, services and business models, with the aim of de-risking and scaling innovations for market.
Energy Innovators are the customers of Energy Town, which should serve their needs to experiment, improve and launch new products and services. We will ‘co-create’ the design of Energy Town with innovators in the sector and are seeking your help to inform and influence its design.
The Challenge and Opportunity
In transforming the UK energy system to be clean, secure and affordable, “whole new industries will be created” with global markets worth USD$13.5 trillion by 2030 , according to the International Energy Agency.
The low carbon economy is expected to “grow four times faster than the rest of the economy”, while over £20billion will need to be invested in electricity networks over the 15 years to upgrade infrastructure and the energy digitalisation sector alone will be worth £45billion by 2025.
The UK needs to respond urgently to the transformation already underway in the energy system. Digitalisation and decarbonisation are likely to reverse the current value flow from the centralised, supply-side dominated system to the consumer. The new cultural and technological dynamics will change the whole shape of the energy sector from one of a linear supply-driven system to a diverse, distributed and dynamic market that will no longer be determined by a few players.
A new wave of technology and service firms is likely to focus on exploiting this value behind the meter, but the UK supply chain is not geared up to respond to the new value drivers. The same is true of most other developed countries. While most of the technology required exists, the competition is for innovation in market design, the creation of new value chains and the business models that operate within them.
However, at the moment no-one is clear how to respond. Policy makers can’t design new market arrangements because they lack evidence on the efficacy of one choice versus another; investors can’t evaluate returns, either in assets or in innovation, as they don’t know how the future market will operate; while regulators can’t design rules to protect consumers since they don’t know which solutions are viable and will get traction. Without change, the likely outcome is disrupted and fragmented value chains, and stranded assets.
Energy Systems Catapult is currently scoping with industry, academia and government, the opportunity to lead on the design and governance of a town-scale demonstrator – ‘Energy Town’. Work that is highly aligned to the “Prospering from the Energy Revolution” theme that is being developed through the second wave of the government’s Industrial Strategy.
‘Energy Town’ will address the urgent need for change by providing a national capability allowing innovators to test and demonstrate new technologies and business models under simulated new market arrangements with real consumers. A safe, affordable, shared space to test, improve, and scale-up new services and business models – deployed across homes and business premises in our towns and cities.
‘Energy Town’ complements and builds upon initiatives such as the Ofgem Innovation Sandbox. The Sandbox enables innovators to validate business propositions in an environment where regulation can be relaxed or derogated. There are various forms that interaction between the Sandbox and Energy Town might take, such as implementing a Sandbox in the Town or moving ideas from a Sandbox into Energy Town for testing at greater scale, to be integrated with other products or services, or to enable validation in a technically and commercially more complex environment, for example, under different market arrangements
Energy Town will include:
- A set of governance arrangements which enable secure equitable access and exploitation rights for innovators of all sizes; protect consumers; set the rules of the game for use of the environment; create incentives to promote open collaboration; give access to shared enabling assets; and regulates scale-up;
- Provide access to consumers ready and willing to take part in service experiments; and (if necessary) support innovators in the design of the services they wish to deliver;
- A trial Management Information System (MIS) which allows innovators to deliver their service experiments direct to consumers, allows them to evaluate the results, and simulates the operation of key aspects of the Town’s market arrangements;
- Integration services which support innovators designing effective trials, experiments and evaluation strategies;
- Modelling and simulation which extends the capabilities;
- Business model and service design;
- Trial/experiment design.
Please get in touch if you wish to discuss any of these opportunities with us.