Smarter Network Storage Low Carbon Network Fundinnovation.ukpowernetworks.co.uk/innovation/asset/f135f025-10a7-4b...Smarter Network Storage Low Carbon Network Fund ... we have commenced

Smarter Network Storage Low Carbon Network Fund Progress Report December 2016

Smarter Network Storage Progress Report December 2016

UK Power Networks (Operations) Limited. Registered in England and Wales. Registered No. 3870728. Registered Office: Newington House, 237 Southwark Bridge Road, London, SE1 6NP Page 2 of 34

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

https://workpyramid.paconsulting.com/jobs/UKPN0077S/Working%20Documents/SNS%20Dec%202016%20progress%20report/Superseded/SNS%20Progress%20Report%20Dec%202016%20draft%20v0.5.docx#_Toc467596977



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



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



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.



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.



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.


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

http://library.ukpowernetworks.co.uk/library/asset/9dd7b8d4-fd6d-491d-aa18-196ffe25863P/EDS+08-5010+Energy+Storage.pdf

http://library.ukpowernetworks.co.uk/library/asset/9dd7b8d4-fd6d-491d-aa18-196ffe25863P/EDS+08-5010+Energy+Storage.pdf



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.



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.


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




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.


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.


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.



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.


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.




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.


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.


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%.



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



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



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.

https://www.ofgem.gov.uk/system/files/docs/2016/07/open_letter_-_charging_arrangments_for_embedded_generation.pdf



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.



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:



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



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.


UK Power Networks (Operations) Limited. Registered in England and Wales. Registered No. 3870728. Registered Office: Newington House, 237 Southwark Bridge Road, London, SE1 6NP

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

http://innovation.ukpowernetworks.co.uk/innovation/en/Projects/tier-2-projects/Smarter-Network-Storage-(SNS)/Project-Documents/SNS1.2_SDRC+9.1+-+Design+%26+Planning+Considerations+Report_v1.0.pdf



Page 19 of 34


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

http://innovation.ukpowernetworks.co.uk/innovation/en/Projects/tier-2-projects/Smarter-Network-Storage-(SNS)/Project-Documents/SNS4.6_SDRC+9.3+-+CA+for+IU+of+Flexibility_v1.0.pdf

http://innovation.ukpowernetworks.co.uk/innovation/en/Projects/tier-2-projects/Smarter-Network-Storage-(SNS)/Project-Documents/SNS1.12+EnergyStorageAsAnAsset+Learning+Report+v1.0.pdf



Page 20 of 34


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.


29

January 2016

http://innovation.ukpowernetworks.co.uk/innovation/en/Projects/tier-2-projects/Smarter-Network-Storage-(SNS)/Project-Documents/Report+9.5+19Oct_v2.1_%28Final+Photos%29.pdf

http://innovation.ukpowernetworks.co.uk/innovation/en/Projects/tier-2-projects/Smarter-Network-Storage-(SNS)/Project-Documents/SNS_P2_6_SDRC9.6v1.pdf



Page 21 of 34


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.


30 March

2016

http://innovation.ukpowernetworks.co.uk/innovation/en/Projects/tier-2-projects/Smarter-Network-Storage-(SNS)/Project-Documents/SDRC+9.7+Successful+Demonstrations+of+Storage+Value+Streams+LoRes+v1.pdf



Page 22 of 34


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



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



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

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/567006/Smart_Flexibility_Energy_-_Call_for_Evidence.pdf



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)/

http://innovation.ukpowernetworks.co.uk/innovation/en/Projects/tier-2-projects/Smarter-Network-Storage-(SNS)/



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





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



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.



List of Appendices

Appendix A: Progress against budget (CONFIDENTIAL)

(See separate document)

Appendix B: Bank account (CONFIDENTIAL)

(See separate document)



Page 31 of 34

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.



Page 32 of 34

Ref No. RAG Status


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



Page 33 of 34

Ref No. RAG Status


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.



Page 34 of 34

Ref No. RAG Status


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.