The Energy Transition | £31m funding to cut emissions and SPEN trial to restart power grid

£31 million government investment to reduce emissions and energy costs

The government has announced over £31 million in new funding to help reduce reliance on fossil fuels in order to cut carbon emissions and energy bills. The government hopes that this funding will enable the development of innovative carbon capture and green energy technologies in the UK.

Over £6.6 million has been awarded to 17 projects as part of Phase 1 of the Red Diesel Replacement competition. This is intended to facilitate the move away from red diesel (also known as gas oil), which is used for off-road vehicles and machinery in the quarrying, mining and construction sectors, by encouraging development of alternatives such as e-fuels and green hydrogen.

Additionally, a total of over £5.5 million will be awarded to winners of Phase 1 of the Industrial Fuel Switching competition, which is now closed. This will support projects that will replace natural gas with hydrogen in industrial processes and that will design heat pumps for use in manufacturing sites, thereby enabling cut back of high carbon fuels through switching to cleaner power sources.

Lastly, over £12 million will be given to successful projects from the first stage of the Carbon Capture Usage and Storage (CCUS) Innovation 2.0 competition, which is now closed, to advance next-generation CCUS technology for deployment at scale by 2030. £7.3 million will also be available for the second call of the competition which opened to applications on 31 May 2022.

Greg Hands, Energy and Climate Change Minister, said: "As we accelerate the UK’s energy independence by boosting clean, home-grown, affordable energy, it’s crucial that our industries reduce their reliance on fossil fuels. This investment will help them to not only cut emissions, but also save money on energy bills, on top of supporting jobs by encouraging green innovation across the UK."

SPEN trial to restart the power grid using distributed renewables

SP Energy Networks (SPEN) successfully conducted a trial in Galloway where it re-energised the electricity network using innovative new technology that harnessed energy from a hydropower plant and two small wind farms. The trial was part of the second phase of the Ofgem-funded Distributed ReStart project in which SPEN partnered with National Grid ESO and the specialist energy consultancy TNEI to explore the use of solar, wind and hydro generators connected at the distribution level to kickstart the energy system in the event of a partial or total shutdown.

Previously, the ability to restart the power grid was enabled through large transmission-connected fossil fuel power stations. SPEN hopes that the success of this trial will pave the way for using green energy to restore the energy system in order to reduce costs and enable the UK to reach Net Zero emission targets.

Head of Networks at National Grid ESO, Julian Leslie, said: "We have one of the world’s most reliable electricity networks, but our role is to be prepared for the most extraordinary of scenarios, including a nationwide power outage. This trial is a breakthrough moment for our Distributed ReStart project, which stands to improve system resilience and security of supply in a cleaner and cheaper way. … The concept of meeting our grid restoration needs by renewable generation alone has become closer to reality as a result of this trial.”

Ofgem publishes proposed scope for transmission charging task forces

Ofgem has set out its latest proposals on the scope of the transmission network charging task forces, an initiative announced by the regulator earlier this year. Transmission Network Use of System (TNUoS) charges recover the annual costs of the provision, maintenance, upgrade and expansion of the transmission system in England, Wales, Scotland and offshore. The charges are levied on generators and suppliers and are based on which geographical zone users are connected to.

As a response to growing concerns from stakeholders regarding TNUoS charges, including their cost-reflectivity, unpredictability and absolute values, in October 2021 Ofgem published a call for evidence seeking views on the review and reform of the charging methodology. In February 2022, following a general consensus that a review of TNUoS charges would be beneficial, Ofgem published its next steps, including proposing the use of task forces to lead the review process. Ofgem believes using task forces will "provide a flexible and constructive vehicle" for industry to consider the issues raised.

Most recently, Ofgem has published both its proposed scope for the task forces and the structure that each task force should take. Regarding scope, the publication sets out a non-definitive list of key areas within the remit of any task force, including:

• Review of the data inputs into the current locational TNUoS methodology to identify and quantify their effect on the predictability of TNUoS tariffs;
• Review of how closely the TNUoS methodology should align with the "real world" operation of the transmission system;
• Identification, consideration, and suggestions/recommendations of new inputs into the TNUoS locational methodology; and
• Determination of which elements of TNUoS charges should be paid by distributed generators with a clear, system-based rationale for any differences in treatment between classes of generators.

Regarding structure, each task force shall be made up of no more than 16 members from various different categories, including representatives from generators, storage operators suppliers, non-domestic energy users, consumers, transmission owners, distribution networks operators, National Grid ESO and Ofgem. 12 meetings will be held by each task force and are planned to take place twice per month for a period of six months.

Ofgem is due to publish further information next month.

Launch of National Grid ESO's first voltage management project

National Grid ESO has launched the first of its voltage management projects in Frodsham, Cheshire. Coined the "Mersey Reactive Power Solution", it is the first in a series of pioneering projects designed to manage voltage levels across Britain's electricity system. The project will aim to increase network resilience, reduce costs to customers and lower carbon emissions.

The project is built to provide a reactive power solution to managing high overnight voltage in the Merseyside region, created when demand and flows on the transmission network are lower. Traditionally, reactive power services have been provided by large fossil fuel plants, such as coal and gas. However, in the transition to low and zero carbon energy sources, there is a new-found demand for alternative providers of reactive power. This project uses a shunt reactor to absorb reactive power, increasing network efficiency and managing higher levels of voltage.

The project forms part of National Grid ESO's "Mersey High Voltage Pathfinder" programme, a series of grants awarded to companies and technologies aimed at tackling high voltage levels in the region. Two years ago, PeakGen, a company specialising in generation, storage, transmission and distribution energy networks, was awarded a grant under the pathfinder programme to develop and build the Mersey Reactive Power Solution. PeakGen's 200-tonne reactor has now gone live and will be in operation, providing reactive power services to National Grid ESO, for the next ten years.

Julian Leslie, Head of Networks at National Grid ESO, has said: “We are delighted with the successful launch of the first of our voltage pathfinders in the Mersey region as part of our mission to provide a safe, reliable and greener electricity system which is fair for all."

Octopus Energy and ilke Homes launch UK-first clean energy scheme with no bills for householders

Octopus Energy and housebuilder ilke Homes have joined forces to develop a renewable housing scheme that aims to guarantee residents zero energy bills and pave the way for zero-emission housing. The project will see two factory-built two-bedroom homes installed in Essex as the first step in ilke Homes' pipeline to 10,000 UK homes by 2030.

The homes will be equipped with various low-carbon technologies, such as solar, battery storage and air source heat pumps, to provide free and clean energy. Additionally, the homes are designed to be well insulated through the use of artificial intelligence, robotics and digital design.

Residents will pay no energy bills unless they use more than 10MWh of energy, which is around three times the standard usage per household. If the low-carbon technologies fail to generate sufficient energy, the homes will still be connected to the grid and can draw energy without it affecting their bills. Likewise, any excess energy generated can be fed back to the grid. The guarantee of zero bills is made for a 12-month period, rather than in perpetuity, but both Octopus Energy and ilke Homes have commented that they expect to roll out the zero tariff indefinitely. The initiative will, however, mean buyers face paying an extra £8,000 - £9,000 in upfront costs when buying their homes to cover the additional costs of installing the low-carbon technologies.

Giles Carter, CEO at ilke Homes, has commented: "The premise of this partnership is to both empower consumers, who are faced with one of the worst cost-of-living crises in decades, and demonstrate that net-zero and construction can work hand in hand."

Greg Jackson, founder of Octopus Energy Group, has said: "This breakthrough partnership debunks a long-standing myth – that cleaner energy will mean higher bills for consumers. Instead, people living in these homes won’t be paying for energy at all."