CIRED Workshop - Lisbon 29-30 May 2012 Paper 219 Paper No 219 Page 1 / 4 REGULATORY AND FINANCIAL HURDLES FOR THE INSTALLATION OF ENERGY STORAGE IN UK DISTRIBUTION NETWORKS Oghenetejiri ANUTA Durham University UK o.h.anuta@dur.ac.uk Andrew CROSSLAND Durham University UK andrew.crossland@dur.ac.uk Darren JONES ENWL - UK darren.jones@enwl.co.uk Neal WADE Durham University UK n.s.wade@durham.ac.uk ABSTRACT This paper examines the feasibility of energy storage in in a low voltage distribution network to facilitate increased Distributed Generation (DG), and electricity demand. Modelling is used to quantify technical and financial benefits of storage over a 10 year period. Technical benefits are achieved through loss reduction, prevention of voltage rise and peak shaving. However, for energy storage to be financially feasible, all multi- stakeholder benefits need to be included in any investment strategy and regulation needs to be updated to foster energy storage adoption. INTRODUCTION The UK government has a target of 15% renewable energy penetration by 2020, and for increased electrification of transport and heating systems [1]. The resulting increase in electrical energy demand and integration of Renewable Energy Sources would change the way Low Voltage (LV), 400V, networks operate. Although this may have positive impacts for network operators, such as reduced losses, there is a risk of negative effects such as reverse power flow, voltage fluctuation and power quality problems [2, 3]. Electrical Energy Storage (EES) is seen as one way of addressing these problems and benefits include upgrade deferral through peak shaving, voltage control, power flow management, post fault restoration, energy market arbitrage, network management, and loss reduction [4, 5]. A combination of these benefits could make EES an attractive technology to Distribution Network Operators (DNOs) by enabling improved efficiency, and fulfilment of commercial and regulatory requirements in the UK. This paper aims to evaluate energy storage from the perspective of a DNO through modelling of a LV distribution network. Financial and regulatory hurdles are first discussed, followed by a description of a detailed technical and economic model. Finally, results are presented and discussed. DNO FINANCIAL/REGULATORY ISSUES tribution network between transmission and customers. Each of DNOs is regulated by the Office of Gas and Electricity Markets (OFGEM). OFGEM incentives encourage DNOs to continuously improve quality of service, security, reliability and network capacity. Furthermore, there are incentives for DNOs to increase the amount of DG in their networks [6]. A reduction in loss would assist in meeting environmental targets as losses in the distribution network currently accounts for 98% of DNO operational carbon emissions (or 1.3% of total UK greenhouse gas emissions). Accordingly, the £0.06/kWh financial incentive to reduce loss reflects the current carbon value [7]. The benefits of upgrade deferral may also be significant for en high capital costs of electrical equipment and aging assets. UK supply companies and DNOs must operate separately and consequently DNOs cannot partake in the electricity market, hence arbitrage benefits do not apply. METHODOLOGY In order to investigate technical and financial benefits of ESS to DNOs, this paper considers a case study of a LV network in Northern England (Figure 1). This network contains 406 domestic loads distributed between four ways from a secondary (11kV/400V) transformer. The 2.5km feeder cable to the primary substation supplies nine other LV networks. As of December 2011, 53 properties have domestic Photovoltaic (PV) systems installed, of average rating 2.03 kWp. These provide 7.3% of current annual demand in the LV network. In addition, 247 properties have suitable roof orientation to adopt a PV system in the future. If installed, these could provide 34% of local demand (thus meeting the 2020 UK target for renewable energy at this local level). Figure 1: Overview of network under study A bespoke temporal load flow tool has been developed to analyse such networks under various scenarios. This is built using a Matlab control program and an Open-DSS [8] load flow engine. Using GIS and technical data provided by the DNO, Electricity North West Ltd., a detailed representation of the network has been developed. Hourly demand [9] and PV generation datasets [10] are used to allow loads and generators to be modelled individually. 2.5km feeder Primary substation, 11kV side Secondary transformer 11kV/400V Voltage Source LV Network Energy storage system Rest of 11kV network. 9 LV networks of similar size