Innovation is crucial to transforming the UK energy system to meet carbon reduction targets and achieve our clean growth ambitions. And cutting edge energy efficiency solutions that integrate low carbon-generation, storage and energy demand management, will have a significant role to play.
Modern Energy Partners (MEP) is a ground-breaking collaboration between the Department for Business, Energy and Industrial Strategy (BEIS), Cabinet Office and Energy Systems Catapult (ESC), working with SALIX Finance Ltd, Crown Commercial Service and the public sector estate.
MEP seeks to utilise the public sector estate and private sector supply chain to develop innovation energy efficiency solutions that supports the cost-effective transition to a low carbon energy system, delivers savings to consumers and stimulates the UK market to lead a potential £100bn annual global industry.
The Challenge and Opportunity
Transforming the UK energy system to be clean, secure and affordable, will create huge global markets for expertise in integrated energy efficiency solutions that benefit both local sites and the wider energy system.
The UK has had some success in deploying simple energy efficiency solutions – such as solar power, insulation, LED lighting and Combined Heat and Power – but the focus on single technology solutions can have unintended negative consequences on neighbours and the wider energy system.
An initial feasibility study found limited private sector expertise in the UK to design, install and operate integrated energy efficiency solutions – such as combining low carbon-generation, storage and energy demand management.
With the UK’s ambitious carbon emissions targets, including the Clean Growth Strategy’s desired 50% further reduction across the public sector estate by 2032, there is critical need to address the barriers preventing market acceleration of integrated energy efficiency at scale.
So the public sector estate is uniquely positioned to stimulate a market for energy efficiency solutions that integrate multiple technologies on campus-scale sites. Delivering demand management, minimising the need for Distribution Networks Operator (DNO) investment, and reducing energy bills and carbon emissions.
MEP is working with a consortium of suppliers from the private sector supply-chain to develop cutting-edge energy efficiency solutions on campus-scale public sector sites (e.g. hospitals, military sites). Campus-scale sites are ideal for developing integrated solutions because consumption is big enough for energy efficiency and demand management to have material economic impact, but not so big and complex as to be unmanageable.
The project is piloting integrated solutions that combine multiple technologies such as self-generation, storage, electric vehicles and energy demand management, to benefit both the site and the wider energy system. The pilot is also supporting a wider team, including the Catapult, in developing a generic methodology suitable to support the roll-out of more complex energy systems across the public sector estate.
Four private sector suppliers were appointed to develop future energy system designs at four public sector sites, following competitive tender in 2018:
- Carbon Trust and its supporting consortia are assigned to Cardiff University;
- Ricardo and consortia are working at HMP Sheppey Cluster, Kent;
- Centrica and its consortia are appointed to HMS Collingwood, Hampshire; whilst
- Atkins, a member of the SNC-Lavalin Group, is assigned to Catterick Garrison, Yorkshire.
MEP is working with the energy supply chain and project partners to develop modular energy efficiency solutions that support the roll-out at scale across the public sector estate from 2019 and the private sector from 2021, including:
- Enabling site energy managers to set informed requirements for their specific energy systems
- Creating viable business cases for delivering cutting-edge solutions for campus-scale consumers
- Ensuring a suitable, flexible procurement processes
- Addressing issues of access to private and public-sector capital
- Ensuring the longer-term benefits obtainable from using site energy systems in a coordinated, aggregated manner to support DNOs and/or drive cost efficiencies (e.g. via new trading and sustainable investment opportunities)
- Helping the supply-chain build a competitive network of experts who can specify and deliver optimised and integrated energy efficiency solutions that are suitable for use in site design/build/commission tender activities
- Stimulating supply-chain activity to develop scalable modular solutions
- Ensuring solutions are robust with regards to regulatory frameworks now being consulted on by Ofgem and BEIS
- Acting as reference examples of successful deployments, building confidence and capability
The Catapult and the Cabinet Office completed a feasibility study in early 2018, funded by InnovateUK, investigating how the public sector estate could help stimulate the market for integrated energy efficiency solutions on campus scale sites (e.g. hospitals, prisons, MOD sites).
The Energy System Integration Guides (ESIG): Distributed Energy project worked with the Norfolk and Norwich University Hospital Trust and the Norwich Biosciences Institutes’ cluster of buildings and facilities to develop a prototype methodology for creating viable solutions that could be applied nationally to campus-scale energy installations. Learnings from this feasibility study included:
- Cooperation with neighbouring sites and DNOs would optimise the potential for a pool of local co-ordinated assets for mutual benefit – rather than sites simply pursuing self-interest
- In addition to site efficiencies, energy solutions can have significant benefits for national and regional network operators and wholesale energy generators (e.g. avoided infrastructure investment through coordinated planning and operation), particularly if wider benefits are designed from the start (e.g. active energy control to enable capacity sharing and demand flexibility)
- Individual site solutions, if designed only in self-interest, can be detrimental to the wider system and increase DNO reinforcement and large-scale generation investment requirements
- The value of a project initiation checklist: investment appraisal, access to capital, seasonal work peaks, management buy-in including PFI contracts, adequate data and site-specific information
- Successful delivery of energy transformation projects requires a not insignificant budget, time commitment, management support
- External expertise is likely to be required for the technical detail and analysis needed to create ‘Informed Design’ solutions. There is a clear gap in the UK market for innovators able to help site owners/operators scope, install and operate multi-vector energy system transformation solutions
- Campus-scale sites using distributed energy can reduce their bills and the average demand on DNOs but their true cost on the wider system is not correctly represented. Such sites contribute less to network upkeep through their bills, yet can create balancing problems by aggravating peaks and troughs as they cannot go entirely off-grid due to maintenance, changing economics, intermittent renewables, etc
- Energy managers of complex sites generally do not have the time, resources, or up to date knowledge to confidently take on an energy transformation at scale with present practice
The pilot phase of the project will conclude at the end of March 2019, with future phases currently being scoped.
Please get in touch if you wish to discuss any of these opportunities with us.