local energy devolution in practiceapse.org.uk/apse/assets/file/all slides for r&cc ag...
TRANSCRIPT
Local Energy Devolution in Practice
Dan Nicholls
Cornwall Council
Cornwall’s journey - local energy economy
Cornwall’s energy spend
Cornwall Devolution Deal
Devolution focus
Supporting communities
Supporting the growth of community energy in Cornwall and
beyond
Supporting communities - Funding
Cornwall Revolving Loan Fund
• £800k loaned
• £1m committed
• 1.5MW enabled
Supporting communities - Planning
http://www.cornwall.gov.uk/renewableenergy
Supporting communities - Innovation
Cornwall Devolution Deal
• Community heat (off gas)
• Community supply
Green transport
Developing the largest rural electric vehicle charging network
Electric car charging network
Affordable homes
Opening up ECO to local people that need it
Energy efficiency
Green economy
Fostering green innovation, new technologies and opportunity
New capacity and local ownership
New technologies
Smart & local energy market
Cornwall’s local energy economy
LED installation in Street Lighting
and other Energy projects in
Gloucestershire
Peter Wiggins
Outcome Manager, Community Infrastructure
Commissioning ‘Place’
How we got here……..
• 60,000 street lights – costing £2m per year to keep lit
• Electricity costs expected to rise, 57% of service spend
and requiring annual growth bids
• Energy efficiency projects – dimming, part night lighting
(gone about as far as we could go)
• 53% of CO2 footprint (excl schools)
• Carbon reduction target, 60% by 2020/21 – not
achievable without significant change in street lighting
LED Technology
• Mainstream solution
• Up to 50% energy saving, can then be dimmed
• 70% reduction in maintenance cost, fewer faults
• Better light quality – whiter so easier to see
• Less light pollution – better focussed
• Lighting for residential areas relatively mature
• Traffic routes need brighter lighting – more expensive but
also more energy efficient, cost still likely to fall as matures
Before After
Example of LED Scheme
Market Engagement Event
• Test our assumptions
• Whether right to time to enter market
• Scale – county-wide, market towns, Glos & Chelt
• Whether CMS advanced enough, eg common TALQ
platform
• Financial modelling, PWLB rates
0
2
4
6
8
10
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14 £ M
illio
ns
Street Lighting Budget Requirements including Energy from Waste
Street Lighting Budget (energy, maintenance, CRC)
Business as Usual, no LED @ market energy rate
Cost avoidance
Cashable savings
(after investment repaid)
0
2
4
6
8
10
12
14 £ M
illio
ns
Street Lighting Budget Requirements including Energy from Waste
Street Lighting Budget (energy, maintenance, CRC)
Business as Usual, no LED @ market energy rate
Business as Usual, no LED @ Energy from Waste facility energy rate
Cost avoidance
Cashable savings
(after investment repaid)
£1.1m budget shortfall to
2016/17
-
2
4
6
8
10
12
14 £ M
illio
ns
Street Lighting Budget Requirements including Energy from Waste - traffic routes last, 60% GCC Funded, 70% dimming with CMS
Street Lighting Budget (energy, maintenance, CRC)
Business as Usual, no LED @ market energy rate
Business as Usual, no LED @ Energy from Waste facility energy rate
LED with CMS - Glos-wide 60% GCC funding and 75% CMS coverage
MTC2
£1.7m cost
avoidance,
MTC2
Cashable saving Initial investment repaid
Driver replacement
Cost avoidance
Cashable savings
(after investment repaid)
Funding
£m
DfT Challenge Fund 5
Salix Energy Efficiency Loans (SEELS) 4.7
GCC Salix Recycling Fund 1.5
GCC Capital Receipts 2.5
Total £13.7m
0.0
0.5
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1.5
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2.5
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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
En
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ost (£
Millio
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CO
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Financial Year Start
Street Lighting, LED with CMS Implications
Street Lighting CO2 Street Lighting CO2 Forecast Street Lighting £ Street Lighting £ Forecast
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5
10
15
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Financial Year Start
Actual Emissions
Predicted Business as Usual Emissions
Rebaselined Predicted Business as Usual Emissions
Target Emissions
Emissions in CO2 reduction plan
CO
2 (
tho
usa
nd
to
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es
) Carbon progress against 60% reduction
target on 2006/07 baseline
Further Energy Work
Done almost all we can energy efficiency-wise
• Insulation – loft, wall, pipes
• Heating & lighting upgrades and controls, remote BEMS
• Office rationalisation
• Shire Hall refurbishment, inc cladding, new windows,
open plan, thin client
• ICT – server virtualisation, moved off-site, upgrades
• LED street lighting with CMS, bollard de-illumination, LED
signs & bollards
Saving over £1m a year
Further Energy Work
Now set to become a net electricity producer
• Residual Waste Project, Energy from Waste plant 2019
o 116,000 MWh generation
• Renewable energy generation
o £12.7m for ground-mounted solar (GMS), approved by Cabinet on
the day DECC published subsidy consultation
o Now putting in grid connections for battery storage, some with GMS
to follow, plus solar car ports inc private wire
o Working with APSE Energy
Local Advisory Adaptation Partnership (LAAP)
• Established 2011 - forum for Local Government, Central
Government and arm’s length delivery bodies
o Key role in shaping the Local Government Chapter of the National
Adaptation Programme report (NAP), published in July 2013
• Now chaired by Gloucestershire County Council
o Inc reps of Climate UK; Local Authorities; DEFRA; the Environment
Agency and the Local Government Association (LGA)
• Series of meeting to better understand the risks to areas
that are being impacted by climate change
• ADEPT will help to input technical advice, with political
input via the LGA
LAAP
• Meetings around the CCRA receptors
o July 2016 Infrastructure
o Sep 2016 Heat & Built Environment
o Nov 2016 Natural Capital
o Jan 2017 Public Health
• Outputs will help to identify any gaps in existing
Government policy and suggest modifications to policy to
improve the country’s resilience to climate change
• Submit for inclusion within the next iteration of the
National Adaption Programme (NAP) due to be published
in 2018
LAAP
If anyone is interested in becoming more involved or have
colleagues who might assist, please contact Nigel Riglar,
LAAP Chair at [email protected]
Thank you
Peter Wiggins
Outcome Manager
Commissioning
Gloucestershire County Council
01452 328538
A Guide to Delivering a
Standalone Battery Project
This guide has been created to provide Local Authorities with all the necessary information
and reasons to instigate a strategy to deliver a standalone battery programme.
Electricity purchased at low
costs in early morning
What Is Standalone Battery Storage?
Answer : It is a battery on a small parcel of ground that has no requirement for renewable energy generation
Electricity is purchased from the grid when prices are at their lowest and then resold between 4-7pm during
the Red Zone when the highest prices can be obtained.
This transaction is controlled by an ‘energy trader’ whose responsibility it is to manage the battery and
maximise the financial income achievable.
The battery must be carefully ‘specified’ to be able to charge and discharge quickly in order to for the process
to be repeated at peak times. The quicker the process, the greater the revenue earning potential.
Procurement of energy trader and battery must be managed as a package.
Electricity sold at higher
prices 4pm-7pm
Reasons To Consider Standalone Battery Storage?
Reason 1 : Financial Returns
- Attractive income for 10+ years
- Capital repayment within 7 years
Reason 2 : Urgency is Required
- Limited connection capacity in the grid
- Private developers are ‘capacity bagging’ in the same way as they did with ground mounted solar
- National Grid’s storage contracts have been allocated to energy traders who are allocating them to
battery owners on a first come basis
LOCAL AUTHORITIES SHOULD MAKE FORMAL GRID APPLICATIONS
BY DECEMBER 2016 TO SECURE THEIR POSITION WITH THE GRID
Reason 3 : Small Parcels of Land Required
- 1 MW of Battery Storage = 40ft container = 90 sq m of land required
Reason 4 : Local Authority Can Choose Level of Financial Risk and Financial Reward
- Three possible options available
Reason 5 : De Risked Delivery Process
- Asset Utilities can de-risk the delivery process and provide the local authorities with investment options
to match a risk and reward profile
Example of Financial Returns : Option 1 – Local Authority Owns the Battery
Year 1 2 3 4 5
Date 2017 2018 2019 2020 2021
Cost of battery -£1,144,000
Battery installation -£115,000
Grid connection -£734,000
TRIAD £93,080 £98,040 £112,180 £120,840 £149,080
Capacity market £40,000 £40,800 £41,616 £42,448 £43,298
CM charge £4,958 £5,058 £5,158 £5,262 £5,366
GDUoS £4,508 £4,598 £4,690 £4,784 £4,880
FFR £235,875 £235,875 £235,875 £235,875 £235,875
Running cost -£37,000 -£37,740 -£38,495 -£39,265 -£40,050
Net income -£1,993,000 £341,421 £346,631 £361,024 £369,944 £398,449
Cumulative income -£1,993,000 -£1,651,579 -£1,304,948 -£943,924 -£573,979 -£175,530
This example is for a 2 MW (import of 2 MW and export of 1 MW) battery with no renewable energy generation.
Land required 180 sq m.
A 5 year model has been shown as the industry is only able to provide with present contracts for this period
Battery has a 10 year warranty which can extended to year 15.
The grid connection is an assumed maximum. A lower connection cost will enhance the financial model and reduce the
capital repayment period.
Capital repayment is achieved in year 6.
Further energy trading assumptions to support the model are available.
Battery Technology + Energy Trader = Required as a Package
Energy traders have the contracts with National Grid, which battery owners require to access
Energy traders will only accept projects that have a proven viability :
• Site Survey
• Full Financial Feasibility
Energy Trader
FFR Firm
Frequency Response
CM Capacity Market
Triads
GDUoS
Ownership and Investment Options
There are principally three options with different levels of risk and reward that can be considered.
Option 1Local Authority Owns
the Battery
HIGHER RISK :
HIGHER REWARD
Option 2 Shared Income / Profit Model
MEDIUM RISK :
MEDIUM REWARD
Option 3Local Authority Receives
Rental income for 15 years
LOWER RISK :
LOWER REWARD
Reward Potential Capital repayment within 7
years
By negotiation ** £7,000-£10,000 pa rental
for a 1 MW battery
Grid Application * Local Authority Local Authority Local Authority
Procures and Pays for Battery Local Authority Investor Investor
Planning Application Local Authority Local Authority / Investor Investor
Pays for Grid Connection Local Authority Local Authority / Investor ** Investor
Appoints and Manages the
Energy Trader
Local Authority Investor Investor
Notes
* Grid Application – securing connection capacity increases the land’s capital value. The capital value will be further
enhanced if no further capacity is available to other battery developers
** Share of Income or Profit – this is by negotiation on a site by site basis. The local authority is able to define what they
wish to commit to the project e.g. the land, capital, the cost of the grid connection etc. which defines the financial reward
received.
Key Strategic Actions and Considerations
Securing The Grid Connection
The starting point to secure the grid connection.
There is limited capacity in the grid and if the Local Authority fails to secure a grid connection, a private
developer will.
Enhanced Land Value
The grid connection demonstrates the site can be developed for battery storage.
This site therefore has a value to battery investors, which enhances the land value.
Ownership and Investment Options Available
The Local Authority has the ability to choose the level of risk and reward required.
Option 1 : Local Authority Owns and Operates the Battery HIGHER RISK :HIGHER REWARD
Option 2 : Shared Income / Profit Model MEDIUM RISK : MEDIUM REWARD
Option 3: Local Authority Receives Rental income for 15 years LOWER RISK : LOWER REWARD
Questions You Should Be Asking
Grid Connection
How do I know if there is capacity in the grid for a battery?
How much import and export capacity is required?
How do I make a formal application to the DNO?
How can this application process be managed effectively?
How can my application be ahead of the competition?
How can I reduce my connection costs?
Battery Choice and Location
What size and type of battery is required?
What size of land is required?
What distance do the battery sites need to be located to the DNO’s connection point into the network?
What effect does that distance have on the connection cost and the financial returns?
Financial
How is money made from the battery?
Who will managed the energy trading element?
How do I know this is being managed effectively?
What level of financial return can be achieved?
How can I use battery storage to enhance the capital value of my land?
How can I limit risk by working with a battery investor?
Delivery Process
What is the process from project commencement, to grid connection, to procurement to operation?
How can consultancy fees be limited to de-risk the project?
How can ‘gateways’ be built into the project to protect the local authority?
How can procurement procedures be managed effectively?
How do you procure a battery and an energy trading contract?
How quickly can an income be generated?
Which other local authorities can I work with to knowledge share?
Delivery Process
1 month 3 months
Gateway 1 : Viability Assessment
Asset Utilities
Site Identification : Local Authority
Gateway 2 : Grid Delivery Asset Utilities
Project Delivery : Local Authority
Delivery Process
Gateway 1 : Viability Assessment Timescale : 1 month Report demonstrating the viability of battery storage, the extent of delivery and financial benefits to the local authority.
This assessment ensures that the local authority only commits funding into viable projects
Grid Assessment
: Assess the import and export capacity at all DNO
primary substations in the local authority area
OUTPUT
: This defines the size and number of batteries
that can be connected to each substation
Site Location Assessment
: Identify the distance sites can be located from each
primary substation,
OUTPUT
: Location report recommending where land
should be identified
Energy Trading and Financial Modelling
: Produce financial models (high level) for different battery sizes at
EACH primary substation SEE NEXT SLIDE
: Understand importance of working with an ‘energy trader’ to access
CM (Capacity Market) and FFR (Firm Frequency Response)
OUTPUT
: Accurate financial modelling specific to the
local authority’s project
: Access to key players with National Grid
contracts
Battery Storage Ownership and Investment Options
: Options provided that illustrate levels of risk and reward
and the key players in the market
OUTPUT
: Local authority able to evaluate financial
returns
Key Battery Storage Information
: Key information regarding battery container and land
sizes, recycling, planning, visual impact etc
OUTPUT
: Local authority able to strategically plan more
effectively
Delivery Process
Gateway 1 : Viability Assessment
GRID WORK
: required because each primary substation
produces different results
: Local Authority can assess the financial models
(high level) for each primary substations
Primary
Substation
Location and mpannumber
Available import capacity
FFR rate
Energy Trading and Financial Modelling
: Financial models (high level) are different at EACH primary substation
Delivery Process : Site Identification – Local Authority
Local Authority locates
sites within agreed
distances to each primary
substation.
Local authority can also
consider purchasing
suitable land.
Gateway 1 : Viability Assessment
Asset Utilities
Site Identification : Local Authority
Gateway 2 : Grid Delivery Asset Utilities
Project Delivery : Local Authority
Produces an ENQ number which
guarantees a priority position in grid queue
Delivery Process
Gateway 2 : Grid Delivery Timescale : 3 months Delivering the project is completely subject to securing a grid connection.
Local Authorities can during the 3 month grid process complete all necessary due diligence
Timescale
Day 1 2 Weeks Month 1 Month 2 Month 3
Formal grid
application made
for each site
Budget grid
application made
for each site
Unsatisfactory quotations result in formal
applications being withdrawn. Local
Authority benefits from abortive fees for
formal applications.
Local Authority
considers battery
ownership and
investment options
Energy trader requires
site survey and
financial feasibility
report completed
Completed on 1 site to
provide comfort in
process (after budget)
quote received
Reports produced
on all sites
Triggers pre
development offer
from energy trader
Further discussions
on planning and
local authority
requirements
Delivery Process : Project Delivery - Local Authority
Project Delivery is driven by the Local Authority and includes the stages and
timescales to achieve cabinet approval.
Within this Gateway are the following considerations :
• Procurement of choice of battery and energy trader or negotiations with
battery investor
• Timescale for battery ordering (typically 4 months)
• Commencement of planning application
• Acceptance of DNO formal offer (will have 90 day validity period)
• Instruction of DNO works and connection
• Instruction of onsite grid connection works
• Cabinet report and approval
Gateway 1 : Viability Assessment
Asset Utilities
Site Identification : Local Authority
Gateway 2 : Grid Delivery Asset Utilities
Project Delivery : Local Authority
Turning an Unviable GMS site into a Viable Project
Ground Mounted Solar 1 MW
• Connection cost £125,000
Answer
Develop the site as Battery Storage 1 MW (import) and 500 kva (export)
GMS 500 kva
The battery generic financial model shows a payback before the end year 7.
However, model includes an assumed grid connection cost of £604,000 but actual cost is £125,000. The
saving of £479,000 reduces the payback before the end of year 5.
The GMS site can then be developed
at an agreed date with no connection
charge
Year 1 2 3 4 5
Date 2017 2018 2019 2020 2021
Cost of battery -£572,000
Battery installation -£60,000
Grid connection -£604,000
TRIAD £46,540 £49,020 £56,090 £60,420 £74,540
Capacity market £20,000 £20,400 £20,808 £21,224 £21,649
CM charge £2,479 £2,529 £2,579 £2,631 £2,683
GDUoS £2,254 £2,299 £2,345 £2,392 £2,440
FFR £117,938 £117,938 £117,938 £117,938 £117,938
Running cost -£18,500 -£18,870 -£19,247 -£19,632 -£20,025
Net income -£1,236,000 £170,711 £173,316 £180,512 £184,972 £199,225
Cumulative income -£1,236,000 -£1,065,290 -£891,974 -£711,462 -£526,490 -£327,265
Next Stages
Initial meeting with the Local Authority to
explore opportunities
Fully costed proposal
submitted
Local Authority
either approves
feasibility or decides not to
proceed
Gateway 1 :
Viability Assessment - defines the opportunity
Gateway 2 :
Grid Delivery
- makes the project viable
Contact Information
Marc Wynn
Director
07798 646 936
42 Westdale Drive Moodiesburn Glasgow G69 0NR 01236 872 925 www.assetutilities.com
Bristol City Council
What’s next for community energy? A local authority perspective
Lorna Edwards
Community Energy Project Manager
£1 million spent on energy every
day in Bristol
Bristol’s Energy Service
Our Investment team leads on renewable energy installations and community energy projects which help local people to invest in clean energy like solar power.
Our Warm Up Bristol scheme is an initiative designed to make the private housing stock in Bristol more energy efficient to create cosier, healthier homes and reduce carbon emissions.
This scheme focuses on projects which will improve Bristol’s energy
security. We're working on installing heat and energy networks to
supply more efficient and lower carbon heat and power to the city.
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DECC Community Energy Strategy
Competition launched to find local community group providers
Construction of a 4.2MW Solar Farm completed at Lawrence Weston
Future projects?
Easton Community Centre 18kW installation
Cabinet Report Community Investment in Renewables
DECC community Energy funding received
Bristol Energy Cooperative have a pipeline of 20 projects
Community Renewables installed so far: 4.299MW
Bristol City Council & Community Energy 2
01
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Catalyst Fund launched
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www.bristolcommunityenergy.co.uk
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What’s next?
Funded Projects
Governance…
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What’s next?
What’s next?
Keep in touch
Mareike Schmidt: [email protected]
@Energy4Bristol
Bristol Community Energy
www.bristolcommunityenergy.co.uk
Thank you!
Lorna Edwards
www.bristolcommunityenergy.co.uk @energy4Bristol