Demonstrators show smart local energy systems’ net zero benefits

Prospering from the energy revolution demonstrator trials show smart local energy systems can make a real contribution to net zero delivery, but barriers remain.

Background to the demonstrator trials

Findings from Innovate UK trials are showing that place-based energy projects could bring major benefits for towns and cities by:

  • helping them decarbonise more rapidly
  • supporting the drive to net zero
  • catalysing investment right across the UK

At the same time, the trial projects have identified barriers in the way of rolling out such systems more widely.

2 new insight reports published by Innovate UK’s prospering from the energy revolution (PFER) challenge highlight the findings of the projects in 2 key areas:

Smart local systems and the PFER challenge

A smart local energy system brings together energy generation, storage, demand and infrastructure and integrates them at a local level such as a town or city.

By balancing supply and demand locally, this approach could reduce the need to boost national networks, while bringing advantages in energy efficiency, carbon emissions and consumer cost.

Over the past 4 years, the £100 million PFER programme has funded more than 80 projects around the UK developing different aspects of local energy systems.

Projects range from data management tools, large-scale installations (such as batteries, renewable energy generation and electric vehicle charging hubs) to whole city-wide local energy markets.

Key findings

First report

The first report, ‘smart local energy systems: finance and investment’, looks at the potential returns and finance for such systems.

One project, Coventry’s Regional Energy Systems Operator, estimated that an integrated local energy system could be worth £721 million to the city.

The report also finds that, while there is no shortage of potential private investment in local energy systems, investors are discouraged by unstable business models due to uncertainty and perceptions of risk.

Second report

The second report, ‘smart local energy systems: policy and regulation’, notes that, in the long run, localised approaches could support national policy aims, including:

  • limiting costs for customers
  • better energy security
  • levelling-up
  • economic development

At the same time, the trial projects have identified policy and regulatory barriers that exist. This includes the fact that current energy markets are designed for a centralised energy system, and the lack of a joined-up, ’whole systems’ approach.

New generation of locally-optimised energy systems

Rob Saunders, Director of the PFER challenge at Innovate UK, said:

It’s increasingly recognised that locally-integrated approaches to energy can bring major benefits, helping local communities to prosper while also helping deliver our net zero ambitions.

The findings from our demonstrators and design projects add strongly to the evidence of what could be achieved, but also highlight key obstacles in the way of local energy initiatives.

Our ambition is that the learnings from these projects will prove valuable to all involved in decarbonising energy across the UK, and help in clearing the way for a new generation of locally-optimised energy systems in our towns, cities and regions.

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