Utility Week

12 | 11TH - 17TH JANUARY 2019 | UTILITY WEEK Policy & Regulation Analysis T owards the end of last year the winners were revealed of Ofgem's annual Net- work Innovation Competition (NIC). As usual, £90 million was up for grabs – £70 million for electricity networks and £20 million for gas networks. Ofgem received five full submissions – one for gas and four for electricity – seeking a total of £57.9 million. It dismissed two further electricity submis- sions at the initial screening stage – Connec- tion from Scottish and Southern Electricity Networks and Project Vision from SP Energy Networks The regulator approved funding for all but one of the remaining projects, awarding £46.8 million to the winners and their part- ners. They in turn have committed to chip in another £35.9 million. The only project to be turned down was Revise from Western Power Distribution. The Winners HyDeploy2, Cadent A few weeks before the winners were announced, Cadent received the green light from the Health & Safety Executive (HSE) to begin blending hydrogen into the private gas network at Keele University. HyDeploy2 will build on the foundations of this earlier NIC trial by doing the same for public gas net- works in the North East and North West of England. Cadent has been awarded £13.3 million of funding and will spend another £1.5 million itself. Both projects are seeking to demonstrate the safety of blending hydrogen into natural gas networks at volumes of up to 20 per cent. Current rules limit hydrogen blending to just 0.1 per cent. Cadent had to secure an exemp- tion from the HSE for the Keele University trial and will need to again for HyDeploy2. The scheme will involve two clusters of 700 households, carefully selected to include a range of property types and demograph- ics. The injection phase of the trial will take place over a ten-month period covering both winter and summer. Cadent will also develop a roadmap for wider deployment as part of the four-year project, starting in April 2019. The company estimates the adoption of hydrogen blend- ing across the whole of Great Britain could reduce carbon emissions by 120 million tonnes by 2050 and says it would cost con- sumers £8 billion more to do the same using electric heat pumps. The expert judging panel said the project is timely, well thought out and represents a significant step towards decarbonising heat. Ofgem agreed, saying the project will provide "a knowledge base for a decarbonisation option that will utilise an existing asset and if successful, will have minimal effects on consumers". Optimise Prime, UK Power Networks The aim of Optimise Prime is to examine the potential impact of commercial electric vehi- cle (EV) charging on distribution networks and how it can be mitigated. In its submission to Ofgem, UK Power Networks noted that there is still a relatively limited understanding of the likely charging models for commercial fleets, despite them accounting for roughly one in every five vehi- cles registered in the UK. It also noted that they are expected have a greater impact on demand than private vehicles due to their higher mileage and significant clustering, both in terms of location and time. The scheme is very much a team effort, involving a total of six partners: UK Power Networks, Scottish and Southern Electric- ity Networks, Hitachi, Royal Mail, Cen- trica, and Uber. It was initially proposed by Hitachi, which will provide the platform for collating data. The project will include three separate trials. For the first, Royal Mail will use vehicle mileage and other data to determine total daily charging requirements for an EV fleet depot. A behind-the-meter optimisation tool will also be created to help limit the size of required grid connections in future. For the second, Centrica will develop and demonstrate flexibility services provided by commercial vans charging at workers' homes. And for the third, Uber will provide data about the on-route charging habits of its drivers and the effectiveness of variable pric- ing in reducing the demands placed on dis- tribution networks. In total more than 3,000 vehicles will be involved – at least 1,000 for each company – making it the largest such project in the UK to date. UK Power Networks expects the project to create £200 million of financial benefits by 2030 and £485 million by 2050. The firm has been awarded £16.4 million of NIC funding to undertake the project and will itself provide £1.85 million. The majority of the charging infrastructure costs will be borne by the other partners, which will col- lectively contribute a further £16.24 million. Ofgem said the project has the potential to deliver "considerable" financial benefits, even if commercial EV uptake is relatively slow. The regulator also praised the diversity and scale of the participating fleets, which will allow the findings to be extrapolated to others. The three-year scheme begins this month. Charge, SP Energy Networks This project will seek to help developers decide where to deploy EV charging infra- structure and network operators to antici- Network innovation Utility Week's Tom Grimwood runs through the four winners of last year's Network Innovation Competition. What is the NIC? As part of the RIIO-ED1, T1 and GD1 price controls, Ofgem introduced the Network Inno- vation Competitions (NIC) and the Network Innovation Allowance (NIA). NICs are annual competitions for electric- ity and gas, where network companies com- pete for funding for research, development and trialling of new technologies, operating and commercial arrangements. Funding is provided for the best innovation projects, which help all network operators understand what they need to do to provide environmen- tal benefits and security of supply at value for money as Great Britain moves to a low-carbon economy. The NIA is a smaller allowance each RIIO network licensee receives to fund smaller scale innovative projects which have the potential to deliver benefits to network customers. Objectives: The NIA and NIC aim to provide a financial catalyst for innovation on GB electricity and gas distribution and transmis- sion networks as the country moves towards a low-carbon economy. Source: Energy Networks Association

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