Network

NETWORK / 38 / DECEMBER 2016/JANUARY 2017 The expert panel originally had reservations about using customers' money to fund the development of technology that could offer significant commercial benefits to the third party technology developers. Aer discussions, ABB increased its contribution to the highest proportional amount it had contributed to an LCNF/NIC project – £500,000, with AMAT contributing £388,000. Not funded Inspire Scottish Power Distribution (SPD) Funding Requested – £6m Project overview The project would have created a new network data-handling package that integrated a variety of soware and data to enable more efficient management of the distribution network. Ofgem's assesment Both Ofgem and the expert panel concluded that the project would not deliver the low- carbon, environmental and financial benefits necessary to be funded, and did not have a robust methodology. SPD said the project could reduce carbon emissions by 2,230 kilotonnes and deliver £93 million of savings to customers by 2050 if rolled out across GB, potentially breaking even by 2026. But Ofgem believes there will not be sufficient appetite among other DNOs to achieve this, with each instead choosing to develop their own bespoke soware to best incorporate their legacy systems. The soware solution should also not be funded with customers' money because, while necessary for the transition to smarter grids, it will directly benefit SPD rather than customers and should be developed as part of business as usual. The solution may also not be able to be adopted by other DNOs using bespoke IT systems and may be superseded before the break-even date of 2026. It would have provided useful information for other DNOs on how to create such an IT system, but fell short of being an innovative concept. Instead it planned to make better use of existing data and systems, and development as part of business as usual would not expose customers to disproportionate risk. A more suitable approach would have been to run the project as a collaboration with other DNOs to explore the challenges of creating a single platform to control legacy systems. Such an approach may help create a strategy for the long-term application of such systems. Proteus Western Power Distribution (WPD) Funding requested – £7.8m Project overview Proteus would have created a mobile, modular unit which could have been rapidly deployed to temporarily ease low-voltage network constraints. The unit would have contained reconfigurable power electronics to enable, among other things, rapid connection of batteries, extra ventilation and cooling, and an autonomous control system. Ofgem's assesment Ofgem did not think the project would meet the low-carbon, environmental, financial benefits, value for money, and relevant and timely outputs, and did not demonstrate a robust methodology. It thought there would be insufficient demand for the solution, which is at risk of becoming obsolete as alternative solutions emerge before the applicable situations emerge at scale, and could affect the development of more proactive network planning to address the problems in a strategic way. Ofgem concluded that Proteus would be unlikely to contribute to the acceleration of the development of a low- carbon energy sector. Significant demand for Proteus might not emerge for about ten years, by which time alternative, potentially more cost-effective l    It should be clear within the full submission that the counterfactual case is based on the actual alternative technologies (including any being developed in live trials) available to the licensee rather than simply assuming the issue would be resolved through traditional reinforcement. l    To better assess the appetite for other licensees to implement the solutions being trialled by a project, instead of generic letters of support, evidence should be provided that other licensees have been consulted on and/or allowed to shape the project. l    If a project is addressing an issue relating to the day-to-day operation of a network company, there should be more collaboration between the licensees, providing comfort on the level of buy-in of other operators into the solution being developed. l    The companies should be able to demonstrate that the costs of all partners (particularly those with a lead role) are reasonable. l    If there is the potential for the third party partner to benefit significantly from the product developed by the project, the submission should include a transparent profit-sharing arrangement to ensure the customers funding the project obtain value for money. Ofgem Feedback and proactive solutions might be available. WPD said the project could deliver £407 million of financial benefits to customers, along with carbon savings of 7.1 kilotonnes by 2050, based on the assumption of 550 of these units being rolled out across GB. The project would enable DNOs to trial a variety of different solutions to constraints on the network before choosing the most appropriate solution to the issue. A number of assumptions in the project raised concerns, such as customer tolerance for a temporary vehicle parked in neighbourhoods for several weeks at a time. The project was thought to be innovative in the automatic operation of the temporary equipment and the size reduction for a mobile unit, while maintaining requisite functionality. Furthermore, some of the solutions within the toolbox are not yet proven on the low-voltage network. INNOVATION FUNDING

• Cover