Electricity flexibility project gets Ofgem green light

SP Energy Networks Project Fusion will get underway this month (October) after energy regulator Ofgem confirmed its funding for the scheme.

3rd October 2018 by Networks

Electricity flexibility project gets Ofgem green light

The project will see people’s electricity demand and supply “flexibility” traded in a newly-created digital marketplace, as the network company continues to pioneer innovative ways of cost-effectively managing the electricity grid for the financial benefit of customers.

Working with partners, including Fife Council, the University of St Andrews and Imperial College London, the total investment in Project Fusion will be £5.67m, with £5.1m coming from Ofgem’s Network Innovation Competition fund.

It will be piloted in East Fife, an area with a rich and diverse range of energy resources, including onshore and offshore wind and hydrogen storage. It is expected to run for five years.

Project Fusion would allow people to work with their energy retailer – or another market participant – to secure additional income from being flexible in terms of their electricity usage.

As well as being financially rewarded for their flexibility, this would reduce the amount of money required in the future to build new grid networks to support electric vehicles, local electricity generation and heat-pumps.

Chief executive of SP Energy Networks, Frank Mitchell, said: “Project Fusion will create a world-leading, smart energy, online platform which will allow customers to trade their electricity supply and demand capacity.

“The project is at the heart of making more effective use of existing electricity infrastructure and ensuring we keep customers’ bills down and their lights on.

“This is critical as we move towards an electric future in the transport and heat sectors to meet the challenges of climate change and make our society cleaner and greener.

“It will also be an important part of ensuring any necessary future investment in our network is minimal and meets customers’ demands. And it is a good example of the type of support and forward-thinking that we need from Ofgem if we are to meet the increasing demands of a low carbon society.”

SP Energy Networks has already raised the issue of a need for regulation change with Ofgem, to allow electricity network operators to invest ahead of demand to ensure future consumer needs can be met.

It is anticipated that if Project Fusion is successfully rolled out across the UK, it could result in over £200m of savings in electricity bills by 2050.

Colin Taylor, SP Energy Networks director processes and technology, added: “The decision by Ofgem to support Project Fusion by providing £5.1m of funding is very welcome.

“Flexibility is key to the management of the electricity network of the future and SP Energy Networks is leading the charge. This funding will allow us to press on with what we consider will be the model for the future marketplace for electricity supply and demand.

“Being flexible with how we use and produce electricity will mean the power generated and delivered continues to meet customers’ demand but without the need for ever bigger power stations.

“Project Fusion is an exciting new way of helping to deliver that flexibility – one where customers that sign up and get involved will be able to secure income by selling their flexibility – while still providing a reliable and secure electricity supply.

“We will now work with all the partners involved in Fusion to get the project up and running as soon as practical.

“This is a very exciting innovation project which I believe will have a large impact on how we control electricity supply and demand in the future.

“The aim is to create a new competitive marketplace where communities and customers can take control of the demand and supply of electricity in their areas. The test will be in making sure the system is simple so that there is opportunity for everyone to get involved and to save money.”