Utility Week

14 | 3RD - 9TH NOVEMBER 2017 | UTILITY WEEK Policy & Regulation "If our power, heat, transport and waste sectors are all interdependent, then so must be the solutions for their decarbonisation." Opinion Chris Clarke and Nigel Turvey I f there is one message our industry seems to have taken away from October's publication of the Clean Growth Strategy by government, it is that a balance is slowly returning to energy policy, with decarbonisation now viewed as an enabler, rather than a barrier, to reducing energy costs and delivering economic growth. In both Westminster and beyond it seems a consensus has emerged that the biggest piece of the decarbonisation jigsaw that is still missing is how to go about reducing carbon emissions related to heat. That much was clear from the recent Parliamentary Group for Renewable and Sustainable Energy event on whole- systems thinking in low-carbon heat. Government policy remains notably quiet on the issue. While the Clean Growth Strategy included welcome announcements on innovation funding for decarbonising heat, we still lack a long-term strategy from Whitehall that provides a much needed direction of travel for policy and therefore certainty for investment. As David Smith, chief executive of Energy Networks Association (ENA), recently set out in Utility Week ("Gas is vital to making our whole system robust", 17 August), the best way to strike a balance between cost, decarbonisation and security of supply is through a whole-systems approach – one that looks at how our energy infrastructure can use new smart technologies in an integrated way, and builds on the strength of our existing assets to do so. If our power, heat, transport and waste sectors are all interdependent, then so must be the solutions for their decarbonisation. Wales & West Utilities and Western Power Distribution (WPD), along with other network companies, have been working closely with each other to turn this concept into a reality. While much of the limelight on decarbonised heat innovation in recent years has focused on the renewable heat incentive, energy networks have been quietly making progress as a result of innovation supported through the RIIO price control framework. One such example is a £5 million joint Wales & West Utilities and WPD project: the Bridgend "living heat laboratory" in south Wales. Using an air source heat pump and a high-efficiency gas boiler hybrid system in 75 residential properties, the project clearly demonstrates the value that an integrated approach to deploying low-carbon smart technologies can deliver. Project estimates suggest that a hybrid approach to decarbonising our heating combined with green gas growth could result in as much as an 80 per cent reduction in carbon emissions from domestic heat. Smart switching between the two technologies through a control panel enables the buying of fuel and the sale of heat simultaneously, both creating value for the consumer and enabling the system to offer heat and power flexibility services to the wider network. The project simulates a residential demand-side response service, with an aggregator buying gas and electricity on live wholesale markets on behalf of consumers to meet their chosen settings. This fuel arbitrage creates value for both the consumer and the wider system. In creating a product that can be sold to heat demand aggregators and service providers, the system reduces or removes the need for capital spend by the consumer, eliminating the need for government subsidy and giving fuel-poor households the ability to benefit from low-carbon technology. With just a 6 per cent penetration of traditional heat pumps leading to a 16 per cent increase in peak electricity demand, the hybrid approach of the two technologies will allow empowered distributed service operators to utilise the technology to manage electricity demand. Up to 50 per cent of gas used for domestic heating could be replaced with electrical heat generated from renewable sources. Whether the technologies are used simultaneously or one rather than the other, they will ensure that customers not only benefit from the lowest-cost fuel source but aren't unnecessarily penalised for heating their homes at a time of peak demand, helping them reduce their bills. The Bridgend project is just one example of the kind of whole-systems innovation that local distribution network operators and gas distribution networks are pioneering around the UK. In September, in conjunction with Newcastle University, colleagues at Northern Powergrid and Northern Gas Networks launched Integrel, a £30 million energy research and development facility that will provide a space for industry, academia, SMEs and government to test the integration of new energy technologies in a way that brings transport, electricity and gas together in one place. Across the sector and supported by RIIO innovation funding, networks are finding exciting ways to meet the heat decarbonisation challenge. While we still might be waiting for greater clarity on government policy on decarbonising heat, one thing is clear – an integrated, whole-systems approach will be key to delivering that. Chris Clarke, director of asset management, Wales & West Utilities; Nigel Turvey, network strategy and innovation manager, Western Power Distribution, and chair of ENA's Open Networks Project Chris Clarke Nigel Turvey

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