Smarter Network Storage Low Carbon Network Fund Progress Report December 2016
Smarter Network Storage Progress Report December 2016
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Contents
Executive Summary ......................................................................................................... 3 1.1 Project Background ............................................................................................... 3 1.2 Summary of Progress ........................................................................................... 3 1.3 Risks and Issues Summary .................................................................................. 4 1.4 Learning and Dissemination Summary ................................................................. 4
Project Manager’s Report ................................................................................................ 5 2.1 Progress in the reporting period ............................................................................ 5
Business Case Update ................................................................................................... 12 Progress against budget ................................................................................................ 17 Bank Account ................................................................................................................. 17 Successful Delivery Reward Criteria (SDRC) ................................................................ 18 Learning outcomes ......................................................................................................... 23
7.1 Main Learning Outcomes from the Reporting Period ......................................... 23 7.2 Learning, Communications and Dissemination Activities in this Period ............. 23
Intellectual Property Rights (IPR) ................................................................................... 28 Risk Management .......................................................................................................... 28
Consistency with Full Submission .................................................................................. 28 Accuracy Assurance Statement ..................................................................................... 29
List of Appendices ................................................................................................................... 30 Appendix A: Progress against budget (CONFIDENTIAL) .............................................. 30 Appendix B: Bank account (CONFIDENTIAL) ............................................................... 30 Appendix C: Bid Risks Update ....................................................................................... 31
Table of Figures
Figure 1 Hours of Service availability provided ........................................................................ 3 Figure 2: Smarter Network Storage organisation chart ........................................................... 6 Figure 3: System response time to change in the frequency from an external source ........... 9 Figure 4: Trajectory for economic viability of storage against conventional reinforcement ... 13
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Executive Summary
1.1 Project Background
Energy storage is a source of flexibility that can help address some of the challenges associated with the transition to a
low-carbon electricity sector. This has been confirmed by the Smart Grid Forum, who identified storage as one of the key
smart interventions likely to be required in the future smart grid. Hence, we set out to address with this project the
challenges in leveraging the full potential of storage on distribution networks to benefit other industry segments, and a
lack of demonstrations of commercial models that were hampering the efficient and economic uptake of storage by the
electricity sector.
Interest in storage has increased tremendously with introduction of the Enhanced Frequency Response (EFR) service
by GB System Operator to meet its flexibility requirements. EFR is predominately aimed at storage assets as it has the
ability to provide frequency response in one second or less. The recent tender to secure 200MW of capacity attracted
interest from over 70 projects with a cumulative capacity in excess of 1.3GW, highlighting the interest from storage
developers. This is the first signal of a specific revenue stream that has triggered such significant interest for more storage
projects in the future. In the last year the interest in storage, triggered mainly by the Transmission System Operator’s
(TSO’s) Enhanced Frequency Response tender has led to more and more projects starting to come together although
not yet operational.
The Smarter Network Storage (SNS) project has carried out a range of technical and commercial innovation to tackle
these challenges, and facilitate more efficient and economic adoption of storage. It is differentiated from other Low
Carbon Networks Fund (LCNF) storage projects through the demonstration of storage applications across multiple parts
of the electricity system, including the distribution network but also outside the boundaries of the distribution network. By
demonstrating this multi-purpose application of 6MW/10MWh of energy storage at Leighton Buzzard primary substation,
the project has explored the capabilities and value in alternative revenue streams for storage, whilst deferring traditional
network reinforcement.
Now that the project is coming to an end, we are proud to confirm that the project has provided the industry with a greater
understanding and a detailed assessment of the business case with the full economics of energy storage, helping to
reduce system investment costs and accommodate increasing levels of intermittent and inflexible low carbon generation.
The project was awarded funding of £13.2 million by Ofgem, under the LCNF scheme in December 2012 and has run
for four years, from January 2013 to December 2016.
1.2 Summary of Progress
In this reporting period, we have concluded additional service trials, are on track to deliver the last project deliverable
(i.e. SDRC 9.8) and prepared SNS for the transition to Business as Usual (BAU).
SNS has full 6MW/10MWh operating capability and are at
the time of writing awaiting confirmation of 6MW Firm
Frequency Response (FFR) qualification from National
Grid.
In addition, we have successfully conducted trials that
demonstrated SNS’s capability to provide voltage control
service and contracted energy during capacity market
events.
From the date of the commissioning of the site until 31
October 2016, we have operated for over 10,005 hours of
service as shown in Figure 1.
570
920
980.5
7366.5
168 Service Hours to 31 Oct 2016
TRIADPeak ShavingSTORFFRTolling
Figure 1: Hours of Service availability provided
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The last project deliverable, SDRC 9.8 – “Full evaluation of the SNS solution”, is undergoing final review and is on target
to be submitted on time by 30 December 2016. SDRC 9.8 brings together the insight into the future of storage based on
our SNS experience with the evaluation of the crucial SNS software platform, assessment of storage business models
and future market opportunities for storage. As mentioned in the previous progress report, the busines case report, was
officially launched on 2 December 2016 at the SNS learning dissemination event due to increased interest in storage.
Extracts of this business case report on storage business models have been incorporated in SDRC 9.8.
Lastly, we have started the process to transition SNS to BAU to ensure a lasting legacy with the continued effective use
of the asset in Leighton Buzzard. At the time of writing, we have commenced operation and maintenance (O&M) contract
discussions and future commercial agreements as well as handover to the business. Further details can be found in
sections 2.1.3 and 2.1.5.
1.3 Risks and Issues Summary
a. Procurement risks and issues
No procurement related risks or issues have been experienced during this reporting period.
b. Installation risks and issues
No installation risks or issues have been experienced during this reporting period.
c. Other risks
No other significant risks and issues for the delivery of the SNS project have experienced in this reporting period.
1.4 Learning Dissemination Summary
We have continued to capture the key learning generated by the SNS project, which in this reporting period has
predominantly materialised from the trials and operation of the storage facility and the storage business case report.
The key learning points are summarised below:
Energy storage can provide voltage control both as a standalone service and as a service provided in parallel
with other services such as FFR and peak shaving;
A voltage control service provided by energy storage can improve voltage quality for customers and defer the
On Load Tap Changer (OLTC) system asset renewal need;
Energy storage can deliver contracted energy during capacity market events;
Battery costs, while falling, are still the most significant driver of the storage business case viability;
Balance of system costs (control systems, inverters, housing, connection, etc.) can also be material and must
not be overlooked in the business case assessment;
The battery size (i.e. MW:MWh ratio) has a major impact on project costs. Batteries with shorter discharge
duration are significantly cheaper;
A balance has to be struck between pursuing short term value based on current balancing services and catering
for longer term uncertainties;
Improving access to value from providing services to DNOs will improve the business case for third party storage;
and
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Capacity market revenues currently have limited impact on the storage business case.
This project has demonstrated through the service trials the versatility of battery storage to provide multiple services
sequentially and/or concurrently. The project has also demonstrated that a viable business case for grid scale storage
can be realised with appropriate revenues from the services it provides.
As these messages are critical to the uptake of storage, and as a key project in a time when interest in storage is growing,
the project has focused on continuing to disseminate the project learning across the storage industry in this reporting
period.
A major component of our dissmination activities was the learning dissemination event on 2 December 2016 at the
Institution of Enginering (IET), in Savoy Place, London. The event was a success with almost 190 attendees from across
the whole spectrum of the storage industry. The project used this opportunity to gather valuable feedback from this
diverse group of stakeholders.
SNS has also received recognition from the industry for its contribution to the industry. The project to date was short
listed for four awards and won the Clean Energy Award for large scale energy storage. Details of the award can be found
in section 7.2.2.
Finally, SNS project findings were presented at industry events and contributed to external documents and publications.
Further details are set out in section 7.2.
Project Manager’s Report
This section describes the progress made on the SNS project in the reporting period June 2016 through to December
2016, including the key milestones and deliverables met, any issues encountered. This will be the last progress report
as the project ends on 31 December 2016.
2.1 Progress in the reporting period
2.1.1 Project resourcing and governance
2.1.1.1 Project Resourcing
A new project sponsor was appointed following the previous incumbent leaving UK Power Networks in May 2016. To ensure a successful completion of the project additional support was procured for communication, PMO activities and report writing. This is reflected in the diagram under WS5 lead. Additionally, a new communication lead has joined the innovation team and his support has been critical as we conclude this project. The following organisation chart, in Figure 2, shows all the allocated resources within the SNS project structure from June 2016.
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Figure 2: Smarter Network Storage organisation chart
2.1.1.2 Project Governance
The governance model, as described in the previous six-month progress report, is unchanged, and continues to be operated by the Programme Management Office. The model identifies two distinct streams: Solution Governance and Project Governance and helps to ensure a focus on developing effective technical and commercial solutions to meet learning outcomes, as well as an effective structure for ensuring the overall solution is delivered on time, to budget and to the appropriate quality. Further information on this governance model, including supporting project control and reporting mechanisms, is documented in the SNS Project Handbook (SNS5.4).
Key Issues Encountered
No significant issues have been encountered in this area during the reporting period.
Key Deliverables
No new deliverables have been developed in this area during the reporting period.
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2.1.2 Project Planning
We have continued to work closely with the project partners on the remaining tasks to close down the project in a timely
manner, to budget and quality:
Delivering and publishing SDRC 9.8;
Publishing the business case analysis was officially launched on 2 December 2016;
6MW pre-qualification for Firm Frequency Response (FFR) and at the time of writing, awaiting confirmation of
qualification from National Grid;
Undertaking voltage control trials, which is an additional trial to the original set of trials stated in the bid
submission;
Organising a learning dissemination event (i.e. Electricity storage: idea to reality, story of SNS event on 2
December 2016 at IET Savoy Place in London), to disseminate all project learning to the storage industry; and
Preparing to transition SNS to BAU.
Details of the above tasks can be found in the subsequent sections of this report.
In addition, we have procured external consultant support to assist with closing the project. This includes the organisation
and facilitation of the learning dissemination event, coordination of team activities and report delivery.
In this reporting period we have also successfully undertaken the following additional work outlined in this section of the
previous progress report (i.e. June 2016 progress report):
Continued to engage with Department for Business, Energy & Industrial Strategy (BEIS) (previously named
DECC) and Ofgem on storage policy, regulatory challenges, business case and flexibility services;
Key findings from the SNS project have informed the business for developing a UK Power Networks internal
storage position paper which has also supported our response to the Smart, Flexible Energy System
consultation;
In response to the significant increase in connection requests for storage, the project team, in conjunction with
the UK Power Networks’ connection team, developed an energy storage standard for storage connections1; and
Tested the control system and communications changes to improve the system response time.
Key Issues Encountered
No issues have been encountered relating to planning in this reporting period.
Key Deliverables
There were no key deliverables during this reporting period.
2.1.3 WS 1 – Energy Storage Hardware
The focus within this reporting period has been supporting the ongoing operation of the energy storage system, closing
out remaining defects and transitioning SNS to BAU.
Progress Against Plan
In order to ensure a smooth transition to BAU contract discussions are underway with our suppliers on the ongoing
maintenance and operation for SNS after the project has closed. Maintenance of SNS will be undertaken by S&C Electric,
their subcontractors and UK Power Networks in accordance with their expertise on the maintenance of the various SNS
components. S&C will maintain the power conversion systems with sub-contractors covering various other systems: the
batteries by Samsung, building fire suppression system by Fire Suppression Ltd and Battery Energy Storage System
Manager (BESSM) by Younicos. The remaining balance of plant will be maintained by UK Power Networks.
1 UK Power Networks Engineering Design Standard EDS 08-5010 Energy Storage http://library.ukpowernetworks.co.uk/library/asset/9dd7b8d4-fd6d-
491d-aa18-196ffe25863P/EDS+08-5010+Energy+Storage.pdf
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2.1.3.1 Defects Closure
Since 1 July 2016, 34 new defects have been raised relating to various elements of the energy storage device. Of these
the majority have been closed out however, as of 8 December 2016, a total of 10 defects remain open. Resolution plans
are in place to close five of these defects by the end of the reporting period. However, five have been passed to the BAU
teams for resolution after the project closes.
The defects recorded during this period range from the requirement to make revisions to operating manuals (defect
N0075) to a significant loss of plant stability (defect N0049). For defect N0049, it was discovered that some of the changes
made to improve plant response had introduced a defect in one of the operating modes of the battery management
system causing it to become unresponsive. At no point was the plant at any risk of damage; however, it was not available
to respond to network or frequency events on 1 November 2016. This was resolved with a minor update to the BESSM
software once the cause of a memory leak had been identified.
One outstanding defect that was identified (defect N0004) is that the underlying software used in the battery management
system requires upgrades to ensure support going forward. As the energy storage device is going to continue to be used
to support the network into the future we have started the upgrade of the battery management system, an activity that
would be completed by the UK Power Networks business operations and IT functions after the close of this project.
2.1.3.2 Supporting trials
During this period, the key trial support has been in relation to development of frequency response services, in particular
Firm Frequency Response (FFR) and Enhanced Frequency Response (EFR).
FFR service support
Following the reliable 6MW operation gained during the previous reporting period, the plant was re-tested to demonstrate
compliance with National Grid’s Firm Frequency Response service. At the time of writing, we are awaiting confirmation
of 6MW FFR qualification from National Grid.
EFR service support
Work was also undertaken to investigate the possibility of modifying the plant to enable it to operate a potential new
frequency response service (i.e. EFR). The EFR service required a reduction of the plant’s existing response time.
This entailed modifying the control system to match the required response profile and minor modifications to the plant
communications and architecture to improve the plant response time.
These modifications were tested with an external piece of frequency generating equipment to prove the end to end plant
(frequency detection, control system delay and hardware) response time. The test showed that the plant started to
respond to a change in frequency in approximately 0.4s and reached the full required output in about 0.7s. This is
evidenced in the graph below.
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Figure 3: System response time to change in the frequency from an external source
This has provided valuable learning on the EFR service itself and also the complexity of retrospectively changing the
plant’s response time. A static mature market where all the market services are identified will enable equipment to be
appropriately designed from the onset to meet the service requirements to avoid costly and time consuming retrospective
changes to the plant.
Key Issues Encountered
The key issues encountered during this reporting period are discussed in the Defects Closure section above.
Key Deliverables
The key deliverables of this reporting period are:
6MW Firm Frequency Response pre-qualification tests (at the time of writing we are awaiting confirmation of
qualification from National Grid.)
2.1.4 WS 2 – Smart Optimisation & Control Systems (SOCS)
WS 2 is responsible for managing the design, development, testing, integration and deployment of the end to end IT
solution (i.e. the Smart Optimisation and Control System (SOCS)). This platform manages the shared-use of the storage
across multiple applications, whilst ensuring network security is maintained. The SOCS solution comprises two distinct
sub-systems, the software hosted within UK Power Networks’ corporate IT environment, called the Forecasting,
Optimisation and Scheduling System (FOSS), delivered by AMT-SYBEX, and the control software co-located with the
storage at site, called the Battery Energy Storage System Management (BESSM), delivered by Younicos on behalf of
S&C Electric.
During this period, WS 2 has focused on solving final defects, delivering change requests and transitioning to BAU. All
software defect fixes and changes identified during this period were released and tested in relevant environments. The
release process was to agree system downtime before the supplier organisations can install and verify each release.
49.40
49.60
49.80
50.00
50.20
50.40
50.60
-8
-6
-4
-2
0
2
4
6
8
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9
Fre
qu
en
cy (
Hz)
Po
we
r (M
W)
Time (s)
Plant response time
Power /MW
Frequency /Hz
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Progress Against Plan
The optimisation and scheduling functionality of FOSS has continued to run in parallel on a pre-production environment,
while we have focused on solving uneradicated defects and implementing two change requests. As of 6 December 2016,
two change requests have been completed and, we are awaiting two remaining defects to be fixed prior to the testing of
the complete system.
Over this period there has been one software releases of FOSS. Newcastle University has provided a full evaluation of
the FOSS solution which has been included in SDRC 9.8.
The two key risks with the IT solution, mentioned in the previous progress report, have been resolved (i.e. communication
error and transition of IBM messaging platform).
The communication errors between the PI historian database and Remote Terminal Unit (RTU) which led to the
occasional brief loss of data values in the PI historian database, have been resolved.
IIB (IBM Integration Bus), the platform that SOCS messaging system is built on and is responsible for communicating
messages between three software platforms – BESSM, FOSS and Kiwi Operational Management Platform (KOMP),
transitioned to an pre-production environment. This required the collaboration between UK Power Networks who is
responsible for operating and maintaining the system and the suppliers of the three platforms; Younicos, AMT-Sybex
and KiWi Power. Further testing was conducted by UK Power Networks after the transition and it was confirmed that all
platforms can communicate as designed between each other.
Key Issues Encountered
No key issues encountered during this period.
Key Deliverables
The IIB was transitioned successfully to the quality environment.
2.1.5 WS 3 – Storage Value Streams, Services and Modelling
WS 3 predominantly covers the activities relating to the operational phase of the project, including the design and
execution of the range of trials to demonstrate the storage capability across a range of distribution network, ancillary and
wholesale services.
Progress Against Plan
In this reporting period, the focus of WS 3 has been to conclude the voltage control and capacity market service trials
and finalise agreements for SNS future services portfolio, as we transition SNS into BAU. WS 3 has undertaken the
following as part of this BAU transition:
Processed an invitation to tender (ITT) for ancillary services from aggregators and as of 6 December 2016, we
are in discussions with the tenderers; and
Developing an ITT for power purchase agreement and tolling.
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2.1.5.1 SNS Additional Services Trials
In order to deliver greater value to customers, the project decided to undertake additional trials for capacity market service
and voltage control service to obtain further learning of the capability of SNS before the project concludes. These trials
are in addition to all the trials completed as per the bid submission.
Capacity market service trials
SNS is participating in the capacity market for one year commencing from 1 October 2016. SNS has demonstrated that
it can deliver the contracted energy during capacity market events. SNS successfully delivered energy for three simulated
and one real capacity events from 1 October 2016 to 11 November 2016. The real capacity event occurred on 31 October
2016.
Voltage control service trials
In this reporting period, the project designed the voltage control service trials and completed them successfully. The trial
assessed the capability of the SNS to regulate the voltage within statutory limits through the provision of active and
reactive power.
Key learnings from this trial include:
SNS demonstrated that it can successfully provide a voltage control service with the provision of active and
reactive power and concurrent utilisation of both forms of power;
The local network’s electric characteristics (X/R ratio) and configuration can have a significant impact on which
of the two power forms has a higher impact when applying voltage control;
It has been identified that it is more beneficial to provide voltage control service with reactive power at the
Leighton Buzzard primary site due to the high X/R ratio, the reduced utilisation of the batteries and the low energy
exchanges;
The voltage control service is able to retain voltage within statutory limits should the On Load Tap Changer
(OLTC) scheme on site fail, provided a specific tap position is selected. Fixed tap positions for the site have been
identified for different loading conditions;
The response time of the voltage control service is less than one second which can improve the voltage quality
for customers and the continuity of the supply;
The service can run cooperatively with the OLTC scheme on site. During the voltage control trials an average of
four tap operations were avoided (30% reduction) daily for each of the transformers. With an approximate cost
of £300k for replacing the two OLTCs, the provision of reactive support at the site can save up to £82/day and
defer the requirement for replacement for 6-7 years, based on a 20-year life span; and
Delivering voltage control service with reactive power enables the active power to be simultaneously used for
peak shaving and dynamic firm frequency response services.
Key Issues Encountered
No key issues have been encountered during this reporting period.
Key Deliverables
The key deliverables of this reporting period are:
Voltage control trials; and
SNS successfully delivered energy for three simulated and one real capacity events
2.1.6 WS 4 – Commercial & Regulatory Frameworks
This workstream is responsible for the commercial and regulatory aspects of the project, including assessment and
validation of specific business models for storage, and identification of key regulatory barriers.
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Progress Against Plan
The business case report was brought forward as a result of the increased interest in storage. It was officially launched
on 2 December 2016 at the SNS learning dissemination event.
The main focus of this work stream for this reporting period was the drafting, reviewing and preparation for publication of
the final SDRC report – SDRC 9.8 Full evaluation of the Smarter Network Storage solution and is on target to be
submitted on time by 30 December 2016.
SDRC 9.8 report shares insights into the future of storage based on our SNS experience. The storage software platform
is an essential enabler for the multiple applications of storage. This report provides an evaluation of the SNS software
platform and recommendations for future software platforms. Extracts from the business case report were also
incorporated in SDRC 9.8 which summarised the assessment of storage business models viability. The report also
explores the whole electricity system benefits and future market opportunities for storage in Great Britain.
Key Issues Encountered
No project delivery issues have been encountered during the reporting period.
Key Deliverables
SDRC 9.8 – Full evaluation of the SNS solution
Business case of storage based on real evidence from UK Power Networks’ SNS project
2.1.7 WS 5 – Learning Dissemination & Stakeholder Engagement
WS 5 was specifically created to ensure the effective identification, capture and dissemination of learning from the SNS
project. Activities relating to the learning and dissemination carried out during this reporting period are provided in Section
7.2 of this report for clarity.
Key Issues Encountered
No significant issues have been encountered in this area.
Business Case Update
One of the key outputs of the SNS project is to understand the different commercial models for storage and provide
insight into the business case for this technology. In previous reports we have illustrated the benefits of building a storage
facility to avoid conventional reinforcement.
Since the beginning of the project we have illustrated a single scenario, shown in Figure 4 below, outlining how storage
could be a lower cost method than conventional reinforcement at the Leighton Buzzard site, over a 10-year lifetime period
and with a discount factor of 7.2%.
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Figure 4: Trajectory for economic viability of storage against conventional reinforcement
This scenario assumes ‘system cost savings’ (£2.5m), or societal benefits, coming from storage’s capability in displacing high carbon peaking generation, reducing curtailment and hence lowering emissions when operated in this way. As identified in previous deliverables, these benefits cannot currently be captured within existing regulatory frameworks, and hence are not currently ‘bankable’ by investors looking to deploy storage.
The experience gained from the SNS trials offers unique insight in relation to the commercial operation and potential
revenue streams of battery storage in GB, which allows us to gain further insights from analysis of different business
models which has been undertaken during the course of 2016. The focus and main findings from this are presented
below.
To gain insight in relation to business cases, the business case assessment tests three different scenarios:
Business Model 1 – DNO led asset equivalent to SNS;
Business Model 2 – Third party led SNS equivalent asset; and
Business Model 3 – Third party led asset sized for EFR.
Business Model 1 focuses upon a DNO led business model for deployment of an asset equivalent to SNS based on
current costs for storage given recent observed cost reductions over the SNS project lifetime, with sensitivity tests in
respect of the storage cost and also the cost of reinforcement. The business case centres upon the value of storage as
an alternative to conventional network reinforcement, plus the provision of a selection of other services, that complements
the DNO’s role to ensure system reliability and security.
Business Model 2 focuses on a third party owned business model again for deployment of an SNS-equivalent storage
asset at current costs considering the value of commercial services that can be derived from more market-oriented
operation of the storage facility. The business case is based on provision of multiple services to a range of counterparties.
Business Model 3 considers the market-led business case that third party developers are currently pursuing, based on
6MW/6MWh battery (i.e. shorter duration storage than under SNS) geared towards provision of EFR. This business
case is founded upon revenue potential from single service provision (in this case, EFR).
Table 1 provides an overview of the intended focus of each scenario and Table 2 provides a summary of the underlying
revenue streams.
5.13.2
2.5
2.7
2.9
11.4
0.0
4.0
8.0
12.0
16.0
ConventionalReinforcement
LifetimeInstalled
Cost
TechCost
Reduction /Ahead of Need
FutureIncomeStreams
SystemCost
Savings
Future NetMethod Cost
£mConventional Once Proven
Successful
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Table 1 Summary of modelled scenarios: focus of analysis
Business Model 1
DNO led asset equivalent
to SNS
Business Model 2
Third party led SNS
equivalent asset
Business Model 3
Third party led asset sized
for EFR
Storage size 6MW/10MWh 6MW/6MWh
Ownership DNO Third party
Focus of analysis
Balance between storage
costs and alternative
reinforcement costs
Value of multiple
commercial revenue
streams alongside DNO
services
Value of single commercial
revenue stream from EFR,
without DNO services
Table 2 Summary of modelled scenarios: sources of value
Business Model 1
DNO led asset equivalent
to SNS
Business Model 2
Third party led SNS
equivalent asset
Business Model 3
Third party led asset sized
for EFR
Storage size 6MW/10MWh 6MW/6MWh
Ownership DNO Third party
DNO peak shaving
Firm Frequency
Response
Enhanced Frequency
Response2
Triads3 (2 triads periods captured) (3 triads periods captured) (3 trial periods captured)
Arbitrage
Capacity Market
payments
Terminal value
The business case analysis for the assumed business models provides valuable insights into the drivers that affect
battery projects in GB and their importance for DNO and third party projects respectively.
The key findings are summarised below:
Battery costs, while falling, are still the most significant driver of business case viability
Despite recent reductions in battery cell costs, at today’s costs viable projects are reliant upon being able to capture
value from avoiding/deferring traditional reinforcement and from high value balancing services such as frequency
response. Until costs reduce significantly, projects will be targeting niche applications, focused on site specific or
balancing service value sources.
2 The EFR tender process has reached its conclusion since the analysis prepared in this report was undertaken. The price attached to accepted
tenders for provision of EFR is £10-15/MW/hour lower than assumed in this analysis. 3 Ofgem has issued a letter in respect of Triads since the analysis prepared in this report was undertaken (https://www.ofgem.gov.uk/system/files/docs/2016/07/open_letter_-_charging_arrangments_for_embedded_generation.pdf). In it, Ofgem highlights its concerns in respect of the potential distortionary impacts of, in particular, the embedded benefit arising from the residual demand payment element of Transmission Use of System Charges, which, at value of ~£45/kW and rising, is the most significant contributor to embedded benefits. If this embedded benefit is dampened or removed it will reduce the value of Triad for sub-100MW embedded projects.
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Balance of system costs can also be material and must not be overlooked in assessment
While the initial focus understandably tends to be on battery cell costs, balance of system costs can be critical to a
storage project’s economics. For example, the cost of connection, development, control systems, inverters and housing
costs can be material, and these costs must be understood and factored into future business cases.
Project economics are sensitive to terminal value expectations
Based on our engagement with developers and the finance community, there is uncertainty concerning expectations of
the terminal value of the battery at the end of its economic life. Again, based on feedback from engagement, given the
lack of a track record with battery projects, the tendency amongst third party developers is to assume zero terminal value
and an economic lifetime of 10 years.
However, a positive terminal value assumption can have a material positive impact on project economics and the viability
of business cases, particularly given the short economic lifetimes and high capex currently associated with battery
projects. With experience, it may be possible to adopt a less conservative view regarding terminal value and economic
lifetime than those of today. At current costs, however, viability is still a challenge.
Battery sizing decisions have a major bearing on project capex
Costs are dependent upon the MW:MWh ratio of the battery. SNS is sized at 6MW:10MWh to give a discharge duration
in excess of 1.5 hours in order to cover the peak on a typical winter business day. This allows SNS to provide a peak
shaving service for the DNO. This flexibility results in a higher battery cost compared to an asset with a shorter discharge
duration requirement.
At present, frequency response is the key market for storage and, therefore, the market is responding to these
requirements by developing shorter duration projects. A location and site specific estimate is that a battery sized to
deliver balancing services at 6MW:6MWh would cost 60-65% of the SNS capex, if both were procured today. This is a
significant cost saving. However, the potential to capture revenue from activities that require longer discharge duration,
such as peak shaving services, is constrained by the up-front sizing choice, as discussed further below.
Battery sizing choices will also be influenced by the standard sizes of the components needed to deliver the complete
battery project, such as inverters. Such factors may also affect the services that the battery is able to provide.
Targeting and capturing value from the current balancing services is essential for project economics, but specialisation around today’s products carries risk
In all the cases considered, project economics are reliant on revenues from balancing services, particularly variants of
frequency response.
The rationale for this is understandable. But it does make a project founded on the provision of a specific service sensitive
to the future evolution of that service. If multiple providers follow the same strategy and chase value in the same service,
or if the requirement for that service decreases, then value associated with that service could drop below expectations,
compromising project economics. If an asset’s specifications are such that it lacks flexibility to respond to evolving market
conditions, then the potential downside risk may adversely affect the business case.
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There is a balance to be struck between pursuing short-term value and catering for longer-term uncertainties
Linking the points above, battery developers must give careful consideration to the desirable trade-off between battery
cost and the ability to respond to possible developments in respect of potential future value sources when sizing their
battery. That is, developers should acknowledge that revenue streams and service requirements will most likely change
over the lifetime of the battery.
This balance can be helped by improving access to value from DNO services
The project economics for the DNO, as well as the value that DNOs would be willing to pay a third party for the provision
of services such as peak shaving, are both dependent on the DNO’s counterfactual cost – the avoided traditional
reinforcement cost. If third parties are able to offer DNO services and realise value from them, this offers an additional
revenue stream to enhance project economics.
Sensitivity analysis highlights that there is scope, relative to assumptions made in the business case scenarios, to
increase total revenues for third parties from the whole system.
The potential for third parties to offer DNO services relies upon DNOs identifying service requirements and opening up
the provision of solutions to market providers, where this can offer a lower cost solution versus conventional
reinforcement. By opening up such opportunities and allowing third party providers to provide services to a DNO through
contractual arrangements, potentially spanning multiple years, benefits can be realised by project developers, the
relevant DNO and the system as a whole.
Capacity market currently has limited impact on business cases considered
In cases where revenue from the capacity market was assumed, it had a relatively minor role in overall project economics.
Nevertheless, as a potential part of a business case that relies on multiple revenue streams, it is important that batteries
have the ability to access capacity market revenue streams, as this could tip the balance of project viability.
The business models assessed highlight requirements needed to make business cases work for both DNO led projects and third party led projects
Table 3 provides a summary overview of the outcome of the business case assessment for the scenarios that have been
tested, based on the set of underpinning assumptions upon which the scenarios are founded. This considers the
perspective of the different actors involved as relevant in the different scenarios, namely:
DNO: for whom the assessment is based on the economics of a battery project net of the costs of conventional
reinforcement that are avoided by virtue of the battery;
Third Party Off-taker: for whom the assessment is based on the economics of providing a route to market
only; and
Third Party Developer: for whom the assessment is based on the economics of financing, owning and
operating the battery.
This shows that, based on the assumptions made informed by the SNS site specific project, the DNO led SNS equivalent
project and the third party led EFR focused project are viable. The final case, as assessed, is not viable overall as it is
not workable for the third party developer.
However, the outcomes can change with different input assumptions that alter the balance between cost and value.
Performing sensitivities around the business cases as tested provides insights into what conditions are needed to make
them viable. The sensitivity analysis reveals that:
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Business model 1 is viable, leaving other input assumptions unchanged, when either:
o the cost of storage is below approximately £9.45m (around 5% higher than assumed); or
o the cost of conventional reinforcement is above £5.4m (around 13% lower than assumed); or
o the terminal value of the asset at the end of the economic life is above £3m (around 25% lower
than assumed);
Business model 2 is viable, leaving other input assumptions unchanged, when:
o the value of revenue streams collectively from the range of services that can be provided is above
approximately £2.4m (around 20% higher than assumed);
Business model 3 is viable, leaving other input assumptions unchanged, when:
o the cost of storage is below approximately £5.25m (around 5% higher than assumed).
The sensitivities highlight the importance of the cost of storage for all projects as the key driver for viability and, for the
third party projects, the range of revenue requirements.
Table 3 Summary of results
Business Model
1
DNO led asset
equivalent to
SNS
Business Model 2
Third party led SNS equivalent
asset
Business Model
3
Third party led
asset sized for
EFR
Scenario
assumptions
Scenario
assumptions
~20% increased
revenue
Scenario
assumptions
Storage size 6MW/10MWh 6MW/6MWh
Ownership DNO Third party
Viable for
Third Party
Off-taker Yes - -
Developer - No Yes Yes
Viable overall Yes No Yes Yes
Further details can be found in SDRC 9.8.
Progress against budget
This section is provided in Appendix A.
Bank Account
This section is provided in Appendix B.
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Page 18 of 34
Successful Delivery Reward Criteria (SDRC)
SDRC Criteria Evidence Progress Date
9.1 Design & Planning Considerations for large-
scale energy storage
Successful early capture and dissemination of
learning related to the practical issues and
consideration in the design and planning of large-
scale distribution-connected storage by 1 October
2013.
Minutes and notes captured from meetings with local planning authorities and environment agency.
Planning approval granted at either Leighton Buzzard Primary or an alternative contingency site.
The final design of the storage facility will be signed off by UK Power Networks Design Review Board.
A summary report of the key learning and considerations in securing planning at the trial site, and how this impacted designs, will be produced and shared through the project website.
This SDRC has been completed on
schedule. The summary learning report is
available on UK Power Networks innovation
website here
1 October
2013
9.2 Confirmation of the Smart Optimisation &
Control System design
Successful completion and sign off of the overall
design of the Smart Optimisation & Control System
by 30 December 2013. The functional design will be
developed with operational partners and Durham
University, and incorporate the description of
business processes to be implemented across
participants to facilitate the SNS Solution.
Regular meetings held between UK Power Networks, operational partners, Durham University and AMT-SYBEX to further develop the full requirements and design, with minutes and notes captured.
The final design will be signed off by UK Power Networks, including approval by UK Power networks IT Design Authority Board.
A report describing the final design, optimisation and forecasting algorithms and business processes required will be produced and shared through the project website.
This SDRC has been completed on
schedule. The technical report is available on
UK Power Networks innovation website here
.
30 December
2013
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Page 19 of 34
SDRC Criteria Evidence Progress Date
9.3 Commercial arrangements for integrated use of
flexibility
The commercial arrangements for the independent
service trials and optimised period of operation will
be developed and translated into skeleton contract
templates by 31 October 2014. These will provide
the basis of commercial arrangements that could be
tailored for other forms of flexibility and leveraged
system wide by other DNOs.
Practical and ongoing experience of the
arrangements during the operational periods will be
captured and reflected in the project final report
(SDRC 9.8), with any recommended changes to
these arrangements.
Meetings will be held between UK Power Networks and the operational partners to discuss and design the necessary arrangements for the service trial demonstrations, with minutes and notes captured.
Completed commercial arrangements will be signed off by UK Power Networks legal counsel for the provision of reserve, response and wholesale market services using the storage.
Reviews of the commercial arrangements underpinning the service trials will be carried out by UK Power Networks and will be developed into contractual templates for reuse by DNOs and other industry participants and subsequently shared.
This SDRC has been completed on schedule.
The learning report is available on UK Power
Networks innovation website here.
31
October
2014
9.4 Energy Storage as an Asset
Successfully commissioned energy storage device,
with knowledge developed, captured and
disseminated relating to the commissioning and
operation.
The knowledge generated through the early
operational experience and training materials will be
incorporated, along with methodologies for the
asset management and maintenance of storage. A
visit to the storage facility will be organised and
hosted for interested DNOs and other stakeholders
to provide an additional opportunity for
dissemination.
Sign off of documentation of the installation, commissioning and test of energy storage device.
Training will be undertaken with operational field staff relating to safety and operational procedures of the energy storage device and training materials will be shared.
Meetings will be held with asset management to establish and design appropriate asset management methodologies for storage. Minutes and notes will be captured and the methodologies and considerations for large-scale storage will be shared.
At least one visit to the storage facility for DNOs and other stakeholders will be organised and hosted by UK Power Networks.
This SDRC has been completed on schedule. The summary learning report is available on UK Power Networks innovation website here.
29 May 2015
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Page 20 of 34
SDRC Criteria Evidence Progress Date
9.5 Evolution of Regulatory and Legal
Arrangements for energy storage
This criterion relates to the assessment of
regulatory, market and legal considerations in the
wider deployment of distribution-connected storage
and development of recommendations to facilitate
the optimum use of storage and other forms of
flexibility. This assessment, incorporating learning
captured during the development and operation of
trials will be completed by 30 September 2015.
Regular meetings will be held with project partners and other stakeholders to discuss ongoing reviews and amendments to the regulatory frameworks and the impact on energy storage, incorporating EMR, Electricity Balancing SCR and other on-going developments. Minutes and notes will be captured and stored.
Interim reports and or briefing notes may be published to facilitate these meetings.
Assuming that the issues identified have not been solved in regulation in the interim period, issue a report detailing the market and regulatory issues affecting storage, the way future developments may impact storage flexibility and possible changes required to regulatory and commercial frameworks will be produced and shared through the project website.
This SDRC has been completed on schedule. The learning report is available on UK Power Networks innovation website here.
30
September
2015
9.6 Analysis of integrated energy storage
contribution to security of supply
This criterion relates to the studies undertaken on
the contribution of energy storage to security of
supply over various time scales. An emphasis will
be placed on quantifying the risks to supply when
the network is supported by energy storage with a
limited amount of energy, taking also into account
that storage may be used to provide other services.
Scenario tests will be designed to demonstrate and assess the storage contribution to network security by Imperial University.
Operational data and performance relating to the trials will be captured and analysed.
Assuming that storage has not been incorporated into the security of supply standards within the Distribution Code in the interim period, a summary report will be produced by Imperial College London describing the methodology applied, key assumptions and results of the analysis of the benefits of energy storage to distribution networks and contribution to security of supply, including recommendations for amendments to network design standards.
This SDRC has been completed on schedule. The summary learning report is available on UK Power Networks innovation website here.
29
January 2016
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Page 21 of 34
SDRC Criteria Evidence Progress Date
9.7 Successful demonstrations of storage value
streams
The end to end learning from the planning to the
operational performance in performing a range of
services with the storage facility will be captured
and shared.
Both technical data, relating to the impact of the use
of the storage on the distribution network, and
commercial data, relating to the way in which the
service was provided and any economic return for
the service will be identified and shared.
The detailed trial plans for each storage service, including key requirements and processes required, will be captured through meetings with UK Power Networks and operational partners and shared through the project website.
The operational data relating to the impact on the distribution network will be collected and stored by Newcastle University. Any financial performance data will be captured and reported by UK Power Networks.
A report assessing the capabilities of the storage device in providing the range of services will be produced and shared, incorporating an assessment of the relative value of services provided.
This SDRC has been completed on schedule. The summary learning report is available on UK Power Networks innovation website here.
30 March
2016
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Page 22 of 34
SDRC Criteria Evidence Progress Date
9.8 Full Evaluation of the SNS Solution
A detailed final project report describing the project
findings, knowledge generated and
recommendations on the wider roll out of the SNS
Solution will be produced.
The report will be designed to provide sufficient
information to:
Validate and assess which future business models for storage are viable
Inform stakeholders on the commercial arrangements and software platforms necessary to enable these business models.
Inform the ways in which storage can be most economically incorporated into future DNO business plans.
Assessment of the impact on different future market scenarios on the business cases, including varying carbon prices, high versus low wind penetration and demand side response.
Compare the performance and value of storage flexibility to other forms of flexibility
Inform the design and structure of future product or services that storage may provide to DNOs and TSOs.
Lessons learned throughout the project have been captured and recorded and shared.
Analysis has been carried out on the business models for storage, and validated with commercial results from operational trials.
Comprehensive end of project report developed, incorporating the information above, and shared through the project website and other dissemination channels.
This SDRC is is undergoing final review and is on track to be submitted on time by 30 December 2016..
30 December
2016
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Learning outcomes
7.1 Main Learning Outcomes from the Reporting Period
During this reporting period, SNS has continued to capture specialised learning relating to the commissioning and
operation as well as the regulatory and market aspects of distribution-scale energy storage.
Through this reporting period, a number of key findings have been identified through the trial results analysis and
business case assessment. These include:
1. Energy storage can provide voltage control as a standalone service and as a service provided in parallel
with other services such as FFR and peak-shaving;
2. The voltage control service provided by energy storage can improve voltage quality for customers and defer
the OLTC system asset renewal need;
3. Energy storage can successfully deliver contracted energy during capacity market events;
4. Battery costs, while falling, are still the most significant driver of storage business case viability;
5. Balance of system costs (control systems, inverters, housing, connection, etc.) can also be material and
must not be overlooked in business case assessment;
6. Battery size (i.e. MW:MWh ratio) has a major impact on project costs. Batteries with shorter discharge
duration are significantly cheaper;
7. A balance has to be struck between pursuing short term value based on current balancing services and
catering for longer term uncertainties;
8. Improving access to value from providing services to DNOs will improve the third party storage business
case;
9. The capacity market currently has limited impact on storage business cases; and
10. DNO led SNS equivalent and third party led Enhanced Frequency Response (EFR) focussed projects are,
today, potentially more viable than the market led SNS equivalent.
7.2 Learning, Communications and Dissemination Activities in this Period
As described previously, a comprehensive Knowledge Dissemination Roadmap has been developed in order to capture
all the key learning activities and events, and is available on request.
There are four core elements to the Knowledge and Dissemination Roadmap, covering the following areas:
Internal Communications;
External Communications;
Local Engagement; and
Knowledge Dissemination.
The following provides an update on the progress on each of the above elements:
7.2.1 Update on Internal Communications
UK Power Networks staff tours of the facility – we have continued to accommodate interest within the
company to visit the site during this reporting period. A total of 31 staff from Asset Management, Innovation,
Connections, and other departments have visited the storage facility and learnt about the project details, lessons
learnt and experiences from the project team.
Support for storage connections – as UK Power Networks receives increasing number of storage connection
requests, the SNS team continues to support planners and connection project managers on the operational
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characteristics of storage and advised the internal Storage Steering Group on the treatment of future storage
connection requests.
Internal presentations on SNS – as part of our learning and dissemination activities we presented at the Major
Connections/Competition in Connections Team Engagement Day on 20 September 2016 on the overall
innovation portfolio, but also with a focus on the SNS project and results.
7.2.2 Update on External Communications, Knowledge Dissemination and Local Engagement
As the project draws to a close at the end of 2016, the team has ramped up its external learning dissemination activities
with all relevant stakeholders.
Final learning dissemination event
The project held the following final learning dissemination event to close the project and share our insights and
experiences mindful of the current high levels of interest in storage.
Event title: Electricity storage: idea to reality, story of SNS
Event date: Friday, 2 December 206
Event location: IET, Savoy Place, London
This event was carefully planned with clearly defined objectives – to disseminate all the project’s learning and
gain valuable feedback from stakeholders on the SNS project. The event was designed to meet these objectives
by ensuring the event agenda comprehensively covered all project learning, inviting all relevant stakeholders
and using methods to gain and capture stakeholder feedback. These feedback methods included live electronic
voting during the event, video interviews of key stakeholders and a post-event survey. These methods were
designed to obtain feedback on the robustness of the SNS project findings and recommendations, how SNS has
contributed to the advancement of grid scale storage and gather stakeholders’ thoughts on the BEIS/Ofgem
flexibility consultation report4.
Deirdre Bell, Senior Manager of Energy Systems from Ofgem, presented at the event on the role of storage in
flexibility. Two of UK Power Networks’ directors (the Director of Strategy, Safety & Support Services and the
Director of Asset Management), the SNS project team and project partners also presented at the event.
Figure 5: (From left to right) Deirdre Bell from Ofgem, Sul Alli (UK Power Networks’ Director of Strategy, Safety & Support Services) and Barry Hatton (UK Power Networks’ Director of Asset Management) presenting at the event
The event was a success with almost 190 attendees from across the whole spectrum of the storage industry.
Attendees included representatives from Ofgem, all DNOs, the Transmission Operator, government bodies,
4 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/567006/Smart_Flexibility_Energy_-_Call_for_Evidence.pdf
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academics, industry associations, storage developers, storage suppliers and investors. The event also attracted
press interest, with Utility Week, New Power, BBC Look East and Envirotec Magazine all present at the event.
Figure 6: Event attendance
After the event, the project team received emails from attendees commending the event. In addition, Dr Jill
Cainey, Director of UK Electricity Storage Network (who was unable to attend the event) provided the following
positive feedback on SNS:
“UKPN's SNS project has not only lead the way in the UK, but has had far reaching influence, with their
contestable approach to DNO ownership and operation of electricity storage being incorporated into the
European Union's amendments to the Third Energy Package (the "Winter Package"), published on 30 November
2016.”
Dr Jill Cainey, Director of UK Electricity Storage Network
Attendees have also requested the event presentation slides. These, a short video of the event highlights and
video interviews of key stakeholders will shortly be uploaded to our SNS website5.
As mentioned earlier, the event was designed to gather and capture attendees’ feedback via an electronic voting
system during the event and a post-event survey. The post-event survey is currently open to attendees to
complete. The results will be uploaded to our SNS website.
Summary of electronic voting results
The event captured attendees’ feedback to voting questions live during the event, via a web browser or app. A
summary of the key feedback is shown below, highlighting the highest voted answers.
1. 41% of attendees who voted believed that grid connected energy storage would still require some
integration effort;
2. 71% of attendees who voted believed that electricity demand patterns will become less predictable but
progress of optimisation software will keep up;
3. 70% of attendees who voted believed that revenues are the biggest driver for the storage business case;
4. An overwhelming majority of 82% of the attendees who voted believed that storage should have a distinct
classification as a separate licensed activity;
5. 40% of attendees who voted believed that the biggest barrier to storage was clarity of regulatory
classification of storage; and
6. 38% of attendees who voted believed that SNS made the greatest impact on the storage business case.
5 http://innovation.ukpowernetworks.co.uk/innovation/en/Projects/tier-2-projects/Smarter-Network-Storage-(SNS)/
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Industry awards
The SNS project has also received accolades from the industry – being shortlisted for four awards and receiving
an award. This demonstrates the industry recognition of the quality of the SNS project.
Table 4 Industry awards received
Awarding organisation Award Category Status
Ceremony date
Solar Power Portal awards
Clean Energy Awards Large scale energy storage project
Winner 5 October
2016
European Utility Week
European Utility Week Award
The Energy Revolution Award
Shortlisted with second highest vote
15 November
2016
SMUK Summit European Smart Energy Award
Storage Innovation of the Year
Shortlisted 28 January
2016
Renewable Energy Association
British Renewable Energy Award
Energy Storage Award Shortlisted 16 June
2016
Energy Institute Energy Institute Awards Technology Award Shortlisted 10
November 2016
Contribution to external documents and publications
A key highlight for SNS is its recognition as the first multipurpose storage facility in the UK. Specifically, during
this reporting period SNS was featured in the BEIS’s consultation report on A smart, flexible energy system6
published on 10 November 2016 (pages 28, 29 and 85).
In addition, the following articles on the SNS project findings and interviews with the project director, Adriana
Laguna, have been published:
o Energy Ireland Renewable Energy magazine – The big battery article (published in October 2016)
o Canal Energia (Brazilian news agency) published on 21 October 2016
o Country Land and Business Association December 2016 magazine
External tours of the facility
As developers, investors and the industry in general become increasingly interested in storage, we continue to
receive requests to visit the SNS facility. Throughout this period we hosted 64 external stakeholders at the site
where they learnt about the project details and lessons learned, being able to ask questions and understand how
the technology has worked so far. Table 5 outlines the details of these visits.
Table 5 External visits to Leighton Buzzard SNS site
Site visit
Date Stakeholder Organisation Total
1 15/06/2016 Project partner, Local community
AMT Sybex, Leighton Buzzard Fire Services, NWL 10
2 24/06/2016 Airport UK Power Networks Services, Heathrow Airport Limited 5
3 29/06/2016 Project partner, Storage developers
UK Power Networks Services, Green Hedge Energy, AES, RWE, AMP, UK Power Reserve, Kiwi Power, Lombard
26
6 BEIS, A smart, flexible energy system https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/567006/Smart_Flexibility_Energy_-_Call_for_Evidence.pdf
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Site visit
Date Stakeholder Organisation Total
4 04/08/2016 Transmission Operator
National Grid 2
5 20/08/2016 Manufacturer Siemens 1
6 20/10/2016 Airport Gatwick Airport, UK Power Networks 7
7 06/12/2016 Press ITV Anglia 1
8 13/12/2016 MP, DNO, local community, academic, generator
Bridget Philipson (Labour Member of Parliament for Houghton and Sunderland South), SSE, Leighton Buzzard Friends of the Earth, Birmingham University, ESB Generation
12
Industry event presentations
During this reporting period the project team has continued to communicate the findings from the project. Table
6 summarises all the events, indicating the date, location and presenter from the SNS project team.
Table 6 SNS presentations at industry events
Date Event Audience Location SNS
1 27 June 2016 Engerati webminar on project and project learnings
All interested stakeholder
Internet Adriana Laguna, Dr Panos Papadopoulos, Ian Cooper
2 15
September 2016
Northern Ireland Energy Forum Regulator, DNO, SO, interconnector
Belfast Adriana Laguna
3 6 October
2016 Major Energy Users Council Roadshow London
Industrial and commercial customers, utilities
London Ian Cooper
4 11-13
October 2016
Low Carbon Networks and Innovation (LCNI) Conference – SNS had a stand with the model showcased and 180 people attending the SNS presentation
DNO and Transmission Operator
Manchester Adriana Laguna
5 31 October
2016 Solar Trade Association - Renewable and storage event
Industrial and commercial customers
London Simon Bradbury (Project partner)
6 28 November
2016 Energy storage: A game changer for the energy market
Industrial and commercial customers, regulators, academics, SO
Belfast Simon Bradbury (Project partner)
7 5 November
2016 Power Responsive Storage Working Group
DNO and Transmission Operator
London Adriana Laguna
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Intellectual Property Rights (IPR)
During the current period, the following key IP has been generated:
WS ID Product Owner
WS 2 SNS0.4 Overall Solution Acceptance Report UK Power Networks
WS 3 SNS3.15 Value of Energy Storage Imperial College London
WS 4 SNS4.10 The business case of storage UK Power Networks
WS 5 SNS5.1 SDRC 9.8 – Full Evaluation of the SNS
Solution
UK Power Networks
WS 5 SNS5.7 SDRC 9.8 Newcastle University Contribution Newcastle University
Risk Management
The SNS project has established a rigorous and proactive risk management process, as described in the SNS Project Handbook. It allows for the communication and escalation of key risks and issues within the project, it also defines where decisions will be made and how this will be communicated back to the WS level where the risk or issue has arisen. Key project risks are then escalated to the Project Steering Committee for review and approval of the mitigation on a monthly basis.
9.1 Full Submission (BID Risks) – update
This section is provided in Appendix C.
9.2 Risks raised in the current reporting period
Ref
No.
RAG
Status WS Risk & Impact Description Mitigating Actions
R0141 G WS4 Timely and good quality delivery of
SDRC 9.8
Monitor progress closely and follow up on
report producers and reviewers.
Consistency with Full Submission
The SNS project is on track to deliver the learning and outputs consistent with the full submission.
The following details are noted to have changed since full submission:
S&C Electric Europe replaced A123 Systems as the supplier of the storage system in early 2013;
Newcastle University is now carrying out the scope of work originally to be undertaken by Durham University,
representing a change of organisation as Project Partner, but no change to the cost, scope or quality of work to be
delivered. This change request was approved on 4 July 2013; and
The future expandability of the SNS facility is currently restricted to approximately 18MWh, based on currently
available storage cell technologies. This is down from 24MWh as originally envisaged as a result of a change in
battery-cell supplier which requires the use of a lower DC busbar voltage.
Smarter Network Storage Progress Report December 2016
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List of Appendices
Appendix A: Progress against budget (CONFIDENTIAL)
(See separate document)
Appendix B: Bank account (CONFIDENTIAL)
(See separate document)
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Appendix C: Bid Risks Update
Ref No. RAG Status
Risk Description Mitigating Actions Update
R0005 G
The installed storage technology fails and
needs to be disconnected from the
network whilst being repaired or replaced.
Continue to work closely with storage device
manufacturer and maintenance cycles continued.
Discussing with manufacturer O&M contract and
support required after the project finishes.
The SNS facility has been running for nearly
two years with only one significant component
failure. 24-hour support is available in the
event of any incident and the plant is
continuously monitored.
R0007 G
The installed storage technology has a
catastrophic failure, which adversely
affects customers’ supplies and needs to
be disconnected from the network
resulting in project delays.
Close collaboration with storage device
manufacture to ensure the design meets UK
Power Networks specification and standards
through robust testing (maintenance & training
delivered by storage device manufacture). Carry
out a full set of test to minimise the possibility
failure and affect upon customers.
SWIFT assessment carried out to highlight
areas needing particular focus during design
process.
Fire testing completed and demonstrated
thermal runaway does not occur.
Engineering Operating Standard created to
specify safe maintenance and operation
required through lifetime.
In addition, the SNS facility has been running
for over a year without health and safety
incident or catastrophic plant failure. 24-hour
support is available in the event of any
incident.
R0013 G
A storage battery fails with severe
consequences after the UK Power
Networks device has been
commissioned, resulting in limited
confidence in the device, so it is
disconnected until all tests have been
completed.
A full set of quality tests has been completed
before installation, with the design and operation
meeting the UK Power Networks requirements.
Ensuring full confidence in the equipment
installed. Monitor defects and issue reports
supplied by storage device manufacture for
existing installations.
Performance bond and design indemnity
included in contract.
Fire testing completed and demonstrated
thermal runaway is not likely.
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Page 32 of 34
Ref No. RAG Status
Risk Description Mitigating Actions Update
R0014 G
The installed storage technology causes damages to UK Power Networks asset(s), so needs to be disconnected from the network whilst issues are resolved, causing delays to the project.
Carried out a full set of tests to minimise the
possibility of failure. Close collaboration with
storage device manufacture to ensure the design
meets UK Power Networks specification and
standards through robust testing (maintenance &
training delivered by storage device manufacture).
Replacement parts are to be made easily
available. Maintain a regular maintenance cycle.
Investigations on the system have identified
the root cause of circulating currents and
heating effects. Additional earthing installed
has mitigated this issue. Installation of
interposing transformers in December 2015
and March 2016 has resolved the resonant
voltage issue.
R0016 G
Equipment is stolen or vandalised after
commissioning, so reduces the time to
realise benefits.
Improve security at the site with a manned presence.
Permanent, monitored CCTV system has been
installed and monitored by Security
Management Centre. There have been no
security issues to date.
R0018 G
The storage device does not perform to
specification, so not all benefits are
realised. The limited capacity of the installation increases the risk that progress on commercial services trials may be delayed, and revenues generated are reduced.
Interposing transformers have been installed to
isolate the AC sides of the PCSs. PCS1 and
PCS2 were completed December 2015, PCS3 in
March 2016. This is related to issue I0021.
Agreement has been reached with National Grid
to carry out STOR and FFR using the 3MW
capability. 6MW FFR pre-qualification testing
concluded in November 2016.
Performance KPIs included in contract. The
installation of interposing transformers in
December 2015 and March 2016 has resolved
this issue.
SNS has been fully operational at 6MW in this
reporting period and has successfully delivered
the main benefit – peak shaving. 6MW FFR
pre-qualification testing concluded in
November 2016. As of 15 December 2016, we
are awaiting qualification confirmed from
National.
R0020 Closed
Site load growth exceeds expectations,
whilst the storage capacity is still limited
by the PCS issues.
Ensure ongoing tracking of demand.
PLE review in progress.
We will continue to monitor the load throughout
winter.
The full 6MW capability of SNS is now
available. This risk is closed 21 November
2016
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Ref No. RAG Status
Risk Description Mitigating Actions Update
R0026 G
The lack of available technical,
commercial and project resources result
in delays in project delivery.
Resourcing plan completed using resources within
UK Power Networks/Innovation team.
External support has been engaged to assist in
closing down the project.
R0027 A
Significant connections activity in the area
puts pressure on SNS business case.
A formal request to assess the cost of expanding
the storage to 8MW/18MWh should be made to
S&C Electric.
Monitor and track connections activity and
materialisation of load growth.
Develop action plan for post-security of supply
operation (e.g. as part of ANM).
We will continue to monitor connection requests.
We continue to engage with our connections
colleagues to be aware of any load requests in
the area. We have also requested S&C to
provide an updated proposal of expanding the
capacity to 8MW/18MWh.
At time of writing a connection request has
been accepted and there is another
outstanding. As a result of the accepted
request the 33kV OHLs to Leighton Buzzard
are going to be uprated to full 750C operation
moving the site capacity limitation to the
33/11kV transformers.
This does not impact the business case at this
time.
R0029 G
Unfavourable changes in legislation or
market arrangements that restricts on the
usage and reduces the identified benefits.
The project has been scoped to look at multiple
ownership/operational structures, so should be
robust to legislative changes.
Continue to engage with industry, Ofgem and
BEIS on possible regulatory solutions to maximise
value of storage.
There have been no legislation or market
arrangements changes that will impact the
SNS project as it concludes at the end of this
year. We are working closely with BEIS and
Ofgem to understand any developments on
storage regulation and will be responding to
the consultation on flexibility published on 10
November based on our project findings.
R0038
G
During the project delivery stage the appropriate UK Power Networks staff do not engage adequately or in a timely manner with the Project. Resulting in poor engagement and delays.
Maintain engagement with control team and
Operational teams.
All relevant business teams have been
engaged and revised operational documents
(following feedback) are being prepared as the
project closes.
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Ref No. RAG Status
Risk Description Mitigating Actions Update
R0042 Closed
Key project partner(s) withdraw their
participation in the SNS project during the
project has started, leading to delays.
Tender process was carried out for several project
aspects and provides alternatives therefore
reduces this risk.
Partner forums had ensured good engagement
in project work.
R0043 Closed
Partner resources not available to complete work, attend meeting etc. Resulting in project delays and issue with quality of work.
All partners are to provide multiple names as
contacts, with deputies of the same standing. Also
partners are to provide an escalation path should
any issues be identified.
All partners were available and engaged in
delivering SDRC 9.8
R0044 Closed
Lack of clear scope/requirements for
Partners result in scope creep and
delays.
During scoping/design phase ensure all elements
of work are captured through engagement & 'sign
off' from key internal stakeholders.
Clear scope of work was provided to partners
for their contribution to the end of the project.
R0045 Closed
Partners do not have a clear delivery plan, which will result in delivery delays and missing milestones.
Partners are involved in producing a project plan
and monthly reports to track progress. Payment
for any works will be linked to its completion on
time to cost and quality.
We reviewed delivery plans for ICL, Newcastle
University, Poyry and Swanbarton.
R0051 Closed
Partner spend is higher than anticipated. Monthly account reconciliations and forecast
undertaken to understand financial reporting. Any
deviations on forecast or unexpected elements
will be reported or escalated as necessary.
Partner spent was not higher than anticipated.
R0053 Closed
Partners may have concerns about the level of resource they need to dedicate to the project. The risk is that partners withdraw involvement, leading to delays or additional costs to mitigate.
Make contingency available for additional partner
costs.
Provide update to partners in Forums on expected
upcoming resource needs.
Remained sensitive to time draw on partners
where there was no funding.
Resource forecasts were provided to project
partners for improved forward visibility.