DRIVING LOCAL DECARBONISATION: NORTHERN POWERGRID, TNEI, AND LCP DELTA SECURE OFGEM FUNDING FOR £14.5M ‘COMMUNITY DSO’ PROJECT

• Major Community DSO innovation project set to develop a new framework for integrating Smart Local Energy Systems (SLES) to facilitate and incentivise decarbonisation.
• Northern Powergrid, TNEI, and  LCP Delta are partnering to drive local decarbonisation and strengthen local energy markets.
• Primary partners to implement the project via delivery partners (such as community groups and technology providers) who will be encouraged to come forward.
• Focused stakeholder engagement to ensure the project delivers on local customer needs and expectations.

Northern Powergrid, the company responsible for the electricity distribution network that powers everyday life for 8 million customers, is partnering with consultancies TNEI and LCP Delta to establish a Community Distribution System Operator (Community DSO) project.

The innovation project, which has received £14.5m Ofgem funding, aims to enable communities to pursue their own decarbonisation agenda and have greater control over their own energy and assets. This will strengthen local energy independence and incentives for local decarbonisation, delivering cost and carbon savings, whilst supporting DSO functionality for distribution networks.  In conjunction with other distribution company innovation projects such as SSEN’s Resilience as a Service and Northern Powergrid’s own Microresilience project, it will strengthen resilience of energy supplies.

The project will develop a new framework for enabling Smart Local Energy Systems (SLES) across the low voltage network. SLES have the potential to drive flexibility and efficiency across the energy system by managing electricity demand and availability in hyper local areas. In particular, they will support local communities and create value on the distribution systems rather than the transmission system. SLES are an important tool to encourage the uptake of low carbon technologies (LCTs) that support net zero energy, for example, domestic solar generation, EVs & EV charging, and heat-pumps.

Rolling out SLES is a complex process and not without its challenges. For example, each group of LCTs perform differently, in terms of how the owners prefer to use them, economic and technical effectiveness, and impact on the broader network. The project will explore how DNOs can be more active in helping customers to integrate their LCTs, overcoming technical issues, and supporting a level playing-field enabling a fair net-zero transition for all customers.

The Community DSO project will develop and trial different approaches to identify how communities and local stakeholders can best work together, with their local DNO, to deploy SLES. Trials will take place in four local communities encompassing rural and urban networks.

Northern Powergrid will lead the project and host the trials, in addition to providing electricity, safety and continuity regulations (ESQCR) oversight. LCP Delta, a research and consulting company, will advise on delivery and business models, manage customer research and engagement, and toolkit development. TNEI, a specialist energy consultancy, will work with Northern Powergrid to understand network impact, lead the development of technical SLES solution specifications, and undertake simulations for virtual trials.

The project will seek to provide a proof of concept of a new replicable local energy market framework operating on local networks and addressing local network and energy issues, which can be deployed across the majority of network areas. The learnings from this project will be used to inform future network operation strategies, and changes required to regulations to facilitate the approach. The project is expected to run until 2028.

A move to local generation and management can deliver financial savings for customers. For example, there could be a direct energy cost saving of 10% or more derived from local generation and management according to 2020 LCP Delta research which examined a range of SLES projects and typologies.

Paul Glendinning, Northern Powergrid’s Director of Policy and Markets, said: “This project aims to simplify and encourage decarbonisation in local communities; minimising the barriers and maximising the incentives. It is a bold, yet achievable, innovation project and one that will see modifications to DNO’s roles; becoming a responsive facilitator of customers’ needs. It gives greater control to local communities. This project has the potential to create financial and carbon benefits for customers and communities - and unlock new network capacity.”

Dr Stephanie Hay, Director of Networks and Innovation at TNEI said: “TNEI is proud to partner with Northern Powergrid and LCP Delta on this innovative and timely project. The decarbonisation and decentralisation of energy could have an enormous impact on local energy systems, and Community DSO will give the networks a new way to manage this. The collaboration between the three partners so far has been brilliant, and we’re excited to continue contributing our network modelling and energy systems analysis expertise.”

Andrew Turton, Head of Consulting, LCP Delta said: “Community DSO addresses many of the energy transition challenges for the first time in a single project – optimising the system for both markets and networks, whilst enabling local communities and all customers to benefit from local energy management.  LCP Delta has for many years been at the centre of understanding how energy markets and systems are changing with a particular focus on the changing consumer, and this project is the first time we have seen a coherent approach to bringing together many of the energy transition strands in a way which is truly innovative and attempts to overcome the potential complexity of future network management. We are proud to be part of delivering the project and helping networks and a wide range of players identify future DSO solutions.”