Decoding ‘Peer-to-Peer’ for Electricity Networks
The energy market is changing and Scottish and Southern Electricity Networks is engaging with industry stakeholders to adapt to the changes taking place by working with the Electricity Networks Association (ENA). In this blog - published on the ENA website - by Dr Daniel Saker, SSEN's Policy Manager, he examines the concept of 'peer-to-peer' energy trading and what it means for network companies.
"Barely a day goes by without mention of the rise of distributed energy in the media. Typically this is commentary highlighting the opportunities and risks presented by technology such as Solar PV and Electric Vehicles. The level of excitement around distributed energy systems and so called ‘disruptive technology’ appears endless, but is well justified; Solar PV supply in the UK now outstrips that of coal on a daily basis and new Storage technology is starting to demonstrate its capabilities at scale.
"The burning issue for policymakers is how the electricity system will cope with and facilitate the continued growth of distributed energy resources, which is moving us away from the centralised system we are accustomed to. It is recognised that a transition towards a smarter system that unlocks flexibility right down to individual devices is one of the most attractive solutions – with estimates of customer benefits running into the tens of billions. Yet by all accounts this is highly complex to achieve, as it involves many interlinked technical and socio-economic factors, in addition to a complete re-think of industry roles and responsibilities. Fortunately the right questions are being asked and there is significant industry engagement, as demonstrated by the 240 or so responses received by the UK Government via its Call for Evidence published late last year.
"Government and Ofgem’s much-anticipated Smart Systems and Flexibility Plan recently gave a clear vision of the emerging electricity system, which is characterised by smart technology offering new system flexibility in a way that is in tune with end customers’ requirements. This was evident in their selection of case studies that covered Smart Storage Heating, Home Batteries, Electric Vehicle (EV) smart charging and smart Demand Side Response. In order to facilitate these new technologies Policymakers are rightly focused on establishing local flexibility markets that provide price signals for distributed energy resources to respond to.
"One of the concepts grabbing industry attention is a ‘Peer-to-Peer’ marketplace for energy transactions. Essentially this allows customers to trade flexibility with one another in a way that could benefit both themselves and the wider electricity system. In fact it’s not difficult to see how revolutionary Peer-to-Peer energy trading could be in an increasingly de-centralised system model. Take for example a street that has seen a rapid growth of Solar PV on household roofs and Plug-in EVs on driveways; the consequences of which would traditionally either involve upgrading local infrastructure or the curtailment of both EV demand and Solar PV generation. This is due to the fact that without intervention it is very likely that these new technologies would push maximum supply and demand points above the network limits required to maintain reliability. The issue with the aforementioned ‘traditional’ approaches is that they are cost-intensive, particularly if carbon is included in the calculation. On the other hand Peer-to-Peer offers a way of co-optimising distributed energy resources in a way that can lower curtailment and defer the need to build new infrastructure. For example, when a customer has Solar PV generation that forecasts show the wider network cannot handle, instead of disconnecting this low carbon supply the customer could agree to sell to a neighbour with a plug-in EV at a price that suits both of them.
"Local energy balancing through Peer-to-Peer trading is perhaps closer to reality than many people realise. Trials such as SSEN’s NINES project (Northern Isles New Energy Solutions) have demonstrated the benefits of using local flexibility within constrained networks. Shetland is currently completely disconnected from the main GB Gas and Electricity networks; however, its location is one of the best in Europe in terms of its wind power resource. The high penetration of electric storage heaters and hot water tanks in Shetland provided an excellent flexible resource to make use of Wind generation. With help from Smarter Grid Solutions SSEN commissioned one of the first Active Network Management systems in the UK. This enabled wind generation that the network could otherwise not cope with, to be delivered to household heating systems where it was stored it for later use.
"The next steps towards unlocking the benefits of local flexibility are increasing the visibility and controllability of distributed energy resources, as this will underpin new Peer-to-Peer marketplaces. Smart metering will go some way to improving visibility and will help drive new innovative business models. Another critical step to facilitating Peer-to-Peer and local flexibility services is the transition to DSO, as these parties will be responsible for providing information on network congestion to the market in real-time. The ENA’s Open Networks Project is working on the detail of this and is ensuring that new DSO functionality is fit for purpose, both in terms of continuing to provide network reliability and enabling smart technology to provide customer benefits."