Innovation in systems: Accelerating our net zero ambitions

Rob Saunders, Challenge Director for Prospering from the Energy Revolution, discusses the UKRI’s role in innovation on the journey towards reaching net zero ambitions

Innovation often means developing and testing new technologies with an aim to securing their commercialisation. Sometimes though, innovation is needed to enable new and existing technologies to work together to create novel systems that can deliver society’s future needs. In no area are these needs more pressing than in energy and climate change, as there is no time to waste in decarbonising our society. While technological breakthroughs will form part of the solution, there are clear, nearer-term opportunities to fight climate change that build on existing solutions. Innovation is needed to put these together in new ways that get us on a path to net zero emissions, while delivering better value and user-friendly, energy services.

Energy systems

Smart local energy systems provide one such ’low-regret’ opportunity (an option where moderate levels of investment increase the capacity to cope with future climate risks) to set us on a net zero trajectory. UK Research and Innovation’s ‘Prospering from the energy revolution’ challenge is a £102 million programme, part of the industrial strategy challenge fund, that is funding industry and researchers to create new smart local energy systems. The challenge’s ambitious aims are to demonstrate approaches that intelligently put together the component parts of clean local energy systems, using the latest digital technologies.

More unusually, it also aims to prove a set of investable business models that can scale and replicate these approaches through the coming decade – with the potential benefits from these approaches ranging from improved system cost and efficiency through to improving regional prosperity. Sustainable finance into this area is needed in order to realise societal benefits, and proving business model approaches is a key stepping stone to unlocking that.

While costs of locally-based energy solutions (e.g. batteries, PV, wind) continue to plummet, the digital world’s ability to control and optimise thousands of interlinked pieces develops apace. The opportunities for such smart approaches operating across power, heat, mobility and energy efficiency hold the promise of creating vastly more flexible and resilient systems that deliver clean and affordable energy, but also generate high value local jobs through their more local footprint.

The Energy Revolution Programme

The Energy Revolution Programme helps fund four large-scale demonstrators and a number of design projects which aim to create a range of different models that could be replicated and scaled in future. One of these is the Local Energy Oxfordshire (LEO) project, which is showing how an intelligent local electricity network can act as the clean energy backbone of future energy services. It will allow much more local renewable power onto the grid by facilitating smart competitive market services for mobility, heat and power which can balance supply and demand in real time. This balancing frees up capacity, which then allows more resource connection.

The ReFLEX project

The ReFLEX project in Orkney, another Energy Revolution demo, deals with a slightly different set of conditions; an excess of local wind power and how to maximise its use locally to benefit islanders, especially the large proportion in fuel poverty. A smart data system working across power, heat and mobility, and using local batteries, EV’s and hydrogen capability, can optimise the use of power at any given time. In very windy periods with inadequate demand to soak up the power generated, it will determine whether the best use is into electrical, hydrogen or heat storage, or export to the mainland grid.

The learning from this programme is only just starting, but a few things are already clear:

1. A very complex group of collaborators is needed to make smart local systems work, including local authorities, NGOs, universities, technology businesses and regulated monopolies. This kind of consortium don’t naturally work together, and until benefits are proven, UKRI and others may need to catalyse these collaborations.
2. Data will be a key enabler for energy system integration because smart systems will rely on its open provision. Balancing privacy concerns, commercial value and system efficacy benefits will need concerted effort. The energy data taskforce has made a great start on this.
3. Investment in novel systems will be needed to replicate and scale successes. While there is clear appetite – private investment is supplying twice the public support in demonstrators – there are not obvious, proven models for financing local energy projects yet. Working with investors financing businesses and projects is needed to unlock capital in the next few years.
4. Insights from this programme will be needed by policy and regulatory bodies to help bring latest thinking into their considerations for the future, for instance how consumer engagement is affected by a more local approach.

In this decade of climate action, it is critical that we turn learning into real and rapid change in our actions. This programme’s pioneering approach focusing on innovating in complex systems and investable business models aims to play a leading role in doing just that.