Update and Annual Review 10 September 2018 What is Pixie Energy? - - PowerPoint PPT Presentation

Update and Annual Review 10 September 2018

What is Pixie Energy?

• Pixie Energy: established in 2016 to develop and

implement local energy market ideas and innovations. Focus has been on East Anglia − Official launch July 2017 − Now building on knowledge and relationships by scoping and establishing innovation projects with local partners to yield “learning by doing” ▪ Now focussing more broadly: − Build regional maps, highlighting opportunities and challenges, to be made available through local LEPs − Support local thinking, solutions and players − Demonstrate business case for new commercial mechanisms and models

The project takes national knowledge and relationships and will apply them for the benefit of the East Anglian region and beyond

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First session

• Tomorrow’s smart grid - Alex Jakeman, UKPN
• Norwich Virtual Energy Community – Nigel

Cornwall, Pixie

• ECO Switch – Tom Andrews, Pixie
• Ipswich draft flexibility feasibility report – Dan

Starman, Pixie

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Second session

• Local Energy East and the local energy hub and

strategy – Paul Bourgeois

• Mapping East Anglia and beyond – Neil Mearns, Pixie
• Innovation in supply and the local energy scene – Anna

Moss, Pixie

• Decarbonisation and innovation – Panel discussion

chaired by Gareth Miller, Cornwall Insight

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Alex Jakeman, UK Power Networks - Innovation Project Lead 10 September 2018

Tomorrow’s Smart Grid

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Purpose

The changing energy landscape Innovation at UK Power Networks Active Response project

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About UK Power Networks

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The Changing Energy Landscape

What is driving change?

• Transition to low carbon

economy

• Changing regulatory

environment

• Technology revolution
• Societal changes

Pace and scale of change continues to increase

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The distributed energy world in 2030

~4 GW of storage ~13 GW of solar ~1.2-1.9m Electric Vehicles

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Our Innovation Strategy

Low Carbon Ready Efficient And Effective Future Ready

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The Innovation Portfolio

Improve asset lifecycle management Electrification

• f transport

Connecting more renewable energy Air quality Optimise network capacity

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Active Response

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How will we achieve this?

NETWORK OPTIMISE: Optimisation and Automatic Reconfiguration of HV & LV networks in combination, using remote control switches and SOPs PRIMARY CONNECT: Controlled transfers between primary substations using a SPB to share loads and optimise capacity.

Normal open point

• The world of energy is changing fast, and we recognise

that our role has to evolve

• Our transition to Distribution System Operator (DSO) has

already started to enable a smart and flexible system

• Listening to our customers and stakeholders will continue

to be a priority

• We are committed to learning through doing to shape this

exciting future

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http://futuresmart.ukpowernetworks.co.uk/

Norwich Virtual Energy Community Nigel Cornwall

Basic idea

• A local community based supply model allowing

− Deployment of solar and storage at below market prices − Multi-supplier service provision and work around under Elexon sandbox process − Optimisation of consumer flexibility, trading of imbalances − Use of innovative time of use tariffs and elective half hourly settlement

• Learning by doing but using good industry practice, managed by Pixie

Energy

• All this enabled under a recently approved Elexon innovation sandbox
• Supported by development of a crowd funding platform (CFP) with local

accountancy firm Aston Shaw

• Develop tool kit that be replicated and scaled based on project learnings

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Domestic supply, multiple suppliers

• New Anglia Energy will install PV and

battery assets, and provide on-site energy

• Green Star Energy to provide a time-of-

use balancing tariff

• A partner will provide energy to EV

charging points

• e-POWER will make billing and

settlement whole through establishment

• f a new customer notification agent role
• Aim is to fund a community battery once

CFP is in place

• Keen to incorporate social housing group

in this or parallel solution

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Business supply

• Replicate locally on SME site,

ideally our new HQ

• Similar arrangement between

licensed and exempt supplier

• More scope to incorporate EV

charge points

• Sharing model for in front of

meter battery

• Exploring with Norwich Diocese

extension to local school

• Scaling based around

incorporation of existing local generation

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Phasing

• Initial, start-up phase from 1 October (phase 0) with >50kW of domestic

battery storage capacity and 100kW of solar PV over 15 or so households

• Prior to April 2019, participants will be asked to switch to Green Star

Energy for at least a year

• The aim then will be to at least double the size of the scheme by start of

phase 1, at 1 April 2019

− Adding existing Green Star Energy customers, other behind the meter suppliers − Potentially a community battery and EV charge points − Potentially adding church, school and commercial buildings

• First full year will be done under sandbox conditions
• Intention to support growth through crowd funding platform

− Aim to go live 1 April 2019

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Commercial parameters

• New Anglia Energy provides panels and batteries
• Pay as you save

− Contracts being drawn up by Lux Nova − Tariff set at 20% discount to reference local green tariff − Payments repay loan − FiTs and battery availability payments rest with ownership

• Green Star Energy provides smart meter and offers competitive balancing

tariff

• e-POWER will be testing multi-party billing and settlement though a single

bill from Green Star Energy

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Behind the meter

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Analysing different supplier roles and routes for crystallising and sharing flexibility values.

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Norwich generation landscape

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Considerable scope to supplement with existing local generation. Actively discussing introducing these into the scheme.

“Sandbox” new relationships

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We have our application prepared and are good to go. Scope to develop other pilots.

Next steps

• Finalise contract with start up householders
• Surveys underway
• Commit funding for panels and batteries
• Establish MoU with lead supplier/s and other partners
• Continue engagement with local stakeholders

− NCC and other LAs − SHAs − Others

• Submit sandbox application
• Continue work on CFP, with aim to complete by 1 April 2019
• Develop dissemination portal

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ECO Switch Tom Andrews

What is ECO?

• The Energy Company Obligation
• Latest in a series of government-mandated energy

efficiency schemes

• Energy suppliers are required to support and

deliver “affordable warmth”

• Obligation based on supplier’s domestic market

share

• ECO3, beginning in October 2018, will support fuel

poor customers only, and will run through to end March 2022

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What is ECO Switch?

• A new route to market for delivering ECO measures

regionally

− A trading platform to allow local authorities and social housing groups initially in East Anglia to pull through measures funded by suppliers and delivered by installers/ solution providers − Targeting fuel poor and vulnerable customers − Meet extended market for flexible eligibility and increased regulatory expectations of domestic energy efficiency markets − Tri-lateral trading and reconciliation between the three parties

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Why a new platform?

• The BEIS brokerage has not delivered

− Illiquid, few lots posted and very few sold − Non-locational, inflexible

• But there is appetite for a trading

platform among independent suppliers

− Green Star, Coop, Utilita have all expressed interest − Will grow as more suppliers are

• bligated, with the cap dropping
• Why should suppliers pay over the
• dds for others to deliver obligations?

− Many suppliers developing local interests − Increasing pressures to compete on costs

200 400 600 800 1000 1200 11/03/2014 08/04/2014 06/05/2014 03/06/2014 01/07/2014 29/07/2014 26/08/2014 23/09/2014 21/10/2014 18/11/2014 16/12/2014 28/01/2015 24/02/2015 24/03/2015 05/05/2015 02/06/2015 30/06/2015 28/07/2015 25/08/2015 22/09/2015 20/10/2015 18/11/2015 15/12/2015 26/01/2016 24/02/2016 22/03/2016 19/04/2016 17/05/2016 14/06/2016 12/07/2016 09/08/2016 06/09/2016 04/10/2016 01/11/2016 29/11/2016 10/01/2017 07/02/2017 07/03/2017 04/04/2017 02/05/2017 30/05/2017 27/06/2017 25/07/2017 22/08/2017 19/09/2017 17/10/2017 14/11/2017 09/01/2018 06/02/2018 06/03/2018 03/04/2018 01/05/2018 29/05/2018 26/06/2018 24/07/2018 21/08/2018 ECO brokerage lots, sold and unsold Lots unsold Lots sold

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Benefits to participants

• Guaranteed, credible route to market
• Lower cost of providing ECO, especially search costs
• No cross-flow of capital to other suppliers
• Reputational benefits from publicity

Suppliers

• Extra funding to tackle fuel poverty
• More suppliers to work with will enable more LAs to secure

support

• Opportunities to trial innovative solutions

Local Authorities

• Easier to get involved in the market without becoming tied to

supplier

• Achieve local critical mass
• Allows innovation parties to attract funding

Solution providers

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Process

LA lists “lots”

• f measures
• n auction

platform Solution providers

• ffer prices to

deliver (bid down) Automatic calculation of bill savings by Ofgem methodology Suppliers

• ffer prices to

buy bill savings (bid up) Delivery by solution provider Supplier nominates measures and pays solution provider

• Other parties – social housing, large private landlords, innovation parties –

could also list measures for delivery

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Approximate size of the market

£533.33 £106.67

ECO Switch market (£mn/year)

Big Six Independents

• Total ECO spend of £640mn/year

− 75% of customer accounts with Big Six − Small & medium suppliers hold >15%

• Sizeable revenue stream to attract to

fund fuel poverty initiatives in-region

− Eastern GSPG is 2nd largest, c.12% of total meters = >£10mn available market

• “Flexible eligibility”, which is

expending to 25%

− Will give LAs greater ability to designate targets for ECO

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What are we selling?

• LAs/SHAs list auction lots consisting of geographically

proximate houses needing similar ECO measures

• Include details of existing structure of homes & EPC
• Include details of existing heating solution
• Include high-level details of suitable measures, e.g. loft, solid

wall, boiler replacement

• Solution providers provide details of exact measures
• ffered
• Allows calculation using Ofgem methodology &

deemed scores of amount of bill savings

• These bill savings are the product on sale

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Worked example

• LA lists 10 three-bedroom semi-detached houses

which have cavity walls, gas boilers, and EPC bands F or G

• Solution providers offer cavity wall insulation of

0.033W/m2K thermal conductivity

• Cost approximately £16,000
• Suppliers bid for bill savings of:

10 houses × £156.04 year × 42 years × 25% LA uplift × 95% average POPT = £77,824.95 bill saving

• r 200p/£1 of bill saving

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Governance and transparency

• Managed by Pixie for participating suppliers
• Supported by regional mapping tool
• Learn by doing – need for flexible governance

which can change with knowledge and changes to the scheme from government and Ofgem

• Regular progress reports:
• Periodic reports to participating stakeholders
• Annual reporting to external stakeholders and public
• Anonymised price disclosure of costs/£ bill saving to

demonstrate value of platform

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Delivery options

• Existing third party provider
• New third party provider
• Pixie JV with IT partner
• Pixie in-house developer
• Others?
• Franchising option with accredited providers
• Club structure with option for supplier subscription

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Next steps

• Obtain quotes for online auction platforms
• Confirm commercial model
• Hoping to award contract by end October
• Engage with newly obligated suppliers
• Coop, Green Star, Utilita, Green Networks, plus 6 others now
• E and iSupply Energy from April 2019
• Robin Hood Energy, Ecotricity and possibly Flow Energy (again)

from April 2020

• Re-engage with regional LAs and SHAs
• Then build engagement and auction platform, for launch in

April 2019

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Thank you

Tom Andrews Tel: 01603 959887 Email: t.andrews@cornwall-insight.com

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Local Flexibility Study Dan Starman

• The task

− Deliver a feasibility study based on Ipswich about innovative approaches that can be used to value and trade flexibility in the UK electricity system

• Our approach

− How can integrated solar PV and battery storage behind the meter provide maximum value to domestic customers − Key feature is use of different domestic consumer archetypes and application of time

• f use and half hourly settlement
• Draft report at this stage

Our Ipswich study

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• Consumer –

lower charges

Value of flexibility

• DNO – avoid network reinforcement,

services to the national or local system

• Supplier –

avoid imbalance

• Market

arbitrage

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Our approach

• Value for flexibility lies

in regular large pricing differentials

• On a bottom-up basis

this is clearly behind the meter

• In comparison
• ~£30/MWh for

wholesale

• ~£95/MWh for

embedded benefits (plus triad export)

100 200 300 400 500 600 1 7 13 19 25 31 3743 1 7 13 19 25 31 3743 1 7 13 19 25 31 3743 12/12/2018 13/12/2018 14/12/2018

£/MWh

Total import cost

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• We have used a number of “archetypes”:

Different consumer types

Description Profile Class Mean annual electricity usage (kWh) Mean annual gas usage (kWh) Archetype 1 Low-income electrically-heated PC2 6,130 n/a Archetype 2 All other electrically-heated PC2 8,912 n/a Archetype 3 Low-income non-metered fuel-heated PC2 3,383 n/a Archetype 4 All other non-metered fuel-heated PC2 4,814 n/a Archetype 5 Low-income, out-of-work single adults in small 1-bed social rented flats (London) PC1 2,158 8,495 Archetype 6 Young working adults in rented flats (London) PC1 2,853 10,372 Archetype 7 Low-income single adults (lone parents or elderly) in social rented houses PC1 2,640 10,592 Archetype 8 Younger working families in medium-sized rented houses PC1 3,491 13,595 Archetype 9 “Average” mains gas-heated households PC1 3,585 15,280 Archetype 10 Wealthy working families in 3-4 bed semi’s owned with mortgage PC1 4,588 18,784 Archetype 11 Asset-rich, “empty-nesters” in detached houses in less urban areas PC1 4,098 19,226 Archetype 12 Wealthy working families in larger detached houses in less urban areas PC1 5,306 23,832

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Domestic profile differentiation

User 1 User 2 User 3

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Load shapes

The figures on the left show storage-only behaviours behind the meter, while graphs on the right also include on-site solar Batteries charge during periods of solar generation and low price periods (4am-6am) and discharge during peak hours

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• Benefits (avoided costs and revenues) are
• utlined below

Indicative savings

200 400 600 800 1000 1200 1400 1600 1800 2000 B1 B2 S1 S2 SB1 SB2 B1 B2 S1 S2 SB1 SB2 B1 Plus B2Plus S1 Plus S2 Plus SB1 Plus SB2 Plus Single Rate Multi Rate SMART Benefit from N (£) Archetype 1 Archetype 2 Archetype 3 Archetype 4 Archetype 5 Archetype 6 Archetype 7

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• Payback periods are outlined below
• Including costs of asset, ongoing fees, and installation
• Value of avoided charges and falling cost of technology will

improve returns

Emerging conclusions

SMART B1 B2 S1 S2 SB1 SB2 Archetype 1 20.48 18.69 11.32 13.17 10.82 11.71 Archetype 2 19.07 16.44 10.55 12.30 10.15 10.84 Archetype 3 24.84 21.62 12.55 14.46 12.12 12.83 Archetype 4 22.35 19.99 11.83 13.72 11.38 12.21 Archetype 5 23.14 20.52 12.12 14.04 11.66 12.46 Archetype 6 21.01 19.08 11.52 13.41 11.02 11.90 Archetype 7 21.62 19.50 11.69 13.59 11.20 12.06 Archetype 8 19.81 17.93 11.08 12.93 10.58 11.45 Archetype 9 19.72 17.77 11.02 12.87 10.53 11.39 Archetype 10 19.01 16.25 10.49 12.27 10.10 10.79 Archetype 11 19.31 16.95 10.73 12.55 10.30 11.06 Archetype 12 18.72 15.69 10.19 11.93 9.87 10.49

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Thank you

Dan Starman Tel: 01603 604400 Email: d.starman@cornwall-insight.com

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Paul Bourgeois Head of Sustainability

What is is lo local energy?

• Department for Business, Energy and Industrial Strategy (BEIS)
• Funded strategy project – started April 2017
• One of nine in first funding round
• Collaboration to create a Tri-LEP Local Energy Strategy
• Creating the evidence base
• Mapping and analysis of data
• On-line energy data mapping portal

Id Identifyin ing the need

Mapping assets

Area chall llenges

• Overarching Clean Economic Growth priority
• Three broad thematic sub-priorities
• Housing growth and commercial site upstream infrastructure
• Electrification of transport infrastructure
• Affordable, secure, low carbon consumption in all sectors
• Inter-relatedness and tensions for growth

Understanding the area

• Engagement with stakeholders from all sectors
• Prioritising area needs for
• Generation and storage
• Supply and distribution
• Aggregating projects
• New Energy Innovation (approach, method, funding)

Agreein ing need

• Cambridge City Council
• Cambridgeshire County Council
• East Herts District Council
• Hertfordshire County Council
• Norfolk County Council
• Peterborough City Council
• Suffolk County Council
• West Suffolk Councils

In Involv lvin ing Stakehold lders

• Allia
• Anglia Ruskin University
• Cambridge Cleantech
• East of England Energy Group
• Nautilus Associates
• Peterborough Environment City Trust
• UK Power Networks
• University of East Anglia
• Extended Stakeholder Group – over 400 people

Agreeing the Strategy

• Strategy now endorsed
• 38 local authorities & energy related stakeholders
• Formal Ministerial launch of the Strategy in October
• LEP area delivery planning phase
• Agreeing prioritization and local targets
• Working with the Greater South East Energy Hub
• Creating a special purpose delivery vehicle (MUSCo)
• Community and stakeholder owned
• Reinvestment of profits into wider ‘local energy’ agenda

• East of England, Greater London, the South East and the Oxford to Cambridge

growth corridor including Northamptonshire and Milton Keynes

• 11 LEP areas in 15 counties plus London with 149 local authorities
• Dedicated team of eight resource funded by BEIS for 2 years
• Three started last week the remainder by December
• Project identification, feasibility, funding readiness & delivery commissioning
• Opportunity to test, pilot, scale up and accelerate delivery
• Work closely with the other four Energy Hubs in England

Greater South East Energy Hub

www.energyhub.org.uk

paul.bourgeois@cambridgeshirepeterborough-ca.gov.uk

Mapping East Anglia and beyond

Neil Mearns

Background

• Pixie mapping project started in

July 2017

• Local Energy East (34 local

authorities) project, August 2017 – March 2018

• High-level understanding of the

energy landscape

• Multi-stakeholder user interface

that comprises static and dynamic data sets – ‘Energy Data Hub’

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Heat map granularity

LA

• 10s of contiguous areas

MLSOA • 100s LLSOA

• 1000s

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Current extent

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Outputs and understandings

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Local Energy Markets Network understanding EV/infrastructure roll-out Energy efficiency schemes Environmental factors

Local generation Energy demand

Market share and tariff information

Demand

• side

e.g. air quality management Customer vulnerability Charging and petrol stations Generation and demand capacity

Customer vulnerability: indices of multiple deprivation

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Customer vulnerability: barriers to housing and services

• 1.

Geographical (accessibility

• f shops,

GPs, schools etc.)

• 2. Wider

barriers – e.g. access to affordable housing

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Customer vulnerability: energy performance rating of households

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Customer vulnerability: excess winter deaths

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Market share: dual fuel penetration

• Number of duel fuel

accounts / gas meters

• Proxy for tendency of

people to engage in the market

• Lowest: London – 79%
• Highest: Yorkshire and

NE England – 91%

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Market share: Big Six suppliers dual fuel accounts

• Highest: Northern

Scotland – 88%

• Lowest: SW England

– 69%

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Market share: independent supplier electricity accounts

• Lowest: N and S

Scotland – 17%

• Highest: NE England

– 27%

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Tariffs: annual dual fuel deals

• Lowest: East

Midlands - £789

• Highest: SW England
• £846

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Tariffs: Economy 7 average annual tariffs

• Lowest: East

Midlands - £789

• Highest: SW England
• £846

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Tariffs: incumbent supplier deals

• Lowest: Southern

England - £1,016

• Highest: West

Midlands - £1,156

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Improved platform and analytics

• Improved visualisation
• Multifaceted dashboard
• Quickly connect to data and securely share insights

and reports

• Data analytics and relational information between

layers

• Observe data from previous years to measure rate of

change

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Thank you

Neil Mearns Tel: 01603 604424 Email: n.mearns@cornwall-insight.com

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www.cornwall-insight.com

HELPING YOU MAKE SENSE OF THE ENERGY AND WATER SECTORS HELPING YOU MAKE SENSE OF THE ENERGY AND WATER SECTORS

Anna Moss

www.cornwall-insight.com

• Traditionally a homogenised product
• Consumers seek convenience and choice
• So where can suppliers compete?
• Operational strategy and efficiency (cost)
• Service
• Added value

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www.cornwall-insight.com

• New entrants to the sector are trying to

reduce the time and complexity associated with switching

• Automated switching and switching apps

provide one alternative

• Paid for by consumer or supplier
• Labrador and Flipper give ease of use
• Look After My Bills has reached 40k

customers

• App services include Voltz

(DixonsCarphone), Lumo (Ovo Energy)

• Sending notifications to customer

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www.cornwall-insight.com

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Household suppliers Tariffs in the domestic market

Household energy share now held

• utside the Big Six

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>150 25%

24 25 25 26 27 29 30 34 37 41 41 48 51 57 59 66 68 68 65

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Number of fully licenced domestic suppliers

www.cornwall-insight.com

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• The cheapest supplier for the Eastern region has changed from Avro to Economy Energy to
• ENSTROGA. We now see regional competition across a large group of suppliers
• Different leaders in PPM and variable
• Number of dual fuel DD tariffs risen from 106 to 233 over two years to August 18

£- £200 £400 £600 £800 £1,000 £1,200 Cheapest fixed tariff Most expensive tariff Average Big Six Average Small and Medium Supplier Annual price cheapest fix Aug-16 Aug-17 Aug-18

Cheapest fix tariffs – snapshot each year at 31 August (Ofgem TDCV, direct debit, annual price)

www.cornwall-insight.com

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Variable Fixed (incl. long term) Tiered Bundled Rising proportion of dual fuel customers

50% 60% 70% 80% 90%

80% in 2018 64% in 2008

0% 50% 100% Eastern East Midlands London MANW Midlands Northern North Western Southern South Eastern South Wales South Western Yorkshire South Scotland North Scotland

Regional proportion of dual fuel customers

• Rising proportion of customers on fixed tariffs
• More variety from:
• Multi year
• Bundled
• Power packs
• Tiered

www.cornwall-insight.com

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Challenges in smart metering Smart thermostats Battery storage

www.cornwall-insight.com

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Traditional supply: Feature a single unit rate, but can be expected to gradually move towards TOU as smart meters provide insight into how customers respond to temporal price differences Full service: Currently at a formative stage, models typically encompass EVs, onsite generation/storage, possibility for consumers to trade in local electricity market Adjacent products: Where suppliers offer additional EV related services in addition to energy supply. This can include access to a public charging network, a home charger etc

www.cornwall-insight.com

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Local supply Expected proportion of market under capped tariffs (PPM, safeguard, SVT)

• Two tier market between affluent/disengaged

customers?

• We still have to recover fixed costs
• What’s the impact of a wider price cap on

innovation?

• PPM market has seen convergence
• Reduced marketing efforts?

0% 10% 20% 30% 40% 50% 60% 70% Capped Uncapped

www.cornwall-insight.com

• Challenges in innovation have been broadly recognised:
• Licence lite option
• Supplier hub consultation
• Regulatory sandbox
• Products become more sophisticated
• Likely to create more challenges as well as opportunities
• How are we supporting those locally that are less likely to take

advantage of complex products?

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www.cornwall-insight.com

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www.cornwall-insight.com

• Chaired by Gareth Miller
• Panel

− Mark Billsborough (Coop) − John McPate (Green Star Energy) − Ed Reed (Cornwall Insight) − Jack Peck (Powervault)

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Thank you for listening

Website: http://www.pixie-energy.com/ Twitter: @Pixie_Energy E-mail: enquiries@pixie-energy.com Phone: 01603 604406