Orkney, part of the archipelago off the northeastern coast of Scotland, is a renewable energy beacon and home to the £28.5 million ReFLEX Orkney project.
Launched in 2019, the project is looking to “digitally link” distributed and intermittent renewable power to flexible demand, incorporating local generation, transport and heat networks into a single, overarching system.
Smart energy solutions company SMS is part of the consortium behind the project, using its FlexiGrid software to monitor, control and aggregate flexible demand assets on the island. With its strong wind resource in particular, Orkney has about 60MW of renewable generation, however there is only around 20-25MW of demand on the island and approximately 40MW of export capability via a subsea cable link to the Scottish mainland. This means that at times of low local demand, wind generation can be heavily curtailed.
The ReFLEX project involves introducing flexible demand to the Orkney grid through technologies such as battery storage, smart EV charging and flexible electric heating, with smart control delivered via FlexiGrid to avoid curtailment through the network operator when renewable generation surges.
SMS recently announced that the FlexiGrid platform will now also form the cornerstone of a new service offered by the company to the social housing sector, dubbed Solopower. Current± sat down with SMS MD Mark Hamilton to discuss how FlexiGrid is managing demand in Orkney, what’s next for the ReFLEX project and what Solopower has to offer.
Could you walk me through exactly how the FlexiGrid platform works and how it fits into ReFLEX?
FlexiGrid is a cloud based aggregation platform, which we've developed over the past five years to be able to monitor and control any flexible demand asset, from domestic battery systems to large-scale battery systems to smart EV charging or flexible electric heating systems. What the platform does in real-time is monitor and control these assets to be able to basically be dispatchable on command.
So if there is a generation grid constraint - as we have in Orkney - and the platform sees that there's going to be a curtailment event, we can schedule and then dispatch these flexible demand assets to be able to avoid that curtailment event by increasing demand to balance the system.
Now, balancing of the grid has many different forms. There's local balancing, which can alleviate local network constraints, and then there's system wide balancing, which is obviously becoming much more challenging the more renewables that we integrate across the UK. So, FlexiGrid is basically the conduit between smaller flexible demand assets and flexibility markets.
We use the platform to trade that flexibility into both system services and local flexibility markets where we can generate revenue from the assets that we are financing and deploying in the ReFLEX project.
Is the ReFLEX model one you expect to see replicated around the country?
So SMS's involvement in ReFLEX is providing the FlexiGrid platform, but we're also financing a large number of the assets that are being deployed in the project, so there is a no upfront cost offer to the end customer. We install assets like solar panels and batteries in homes and businesses at no up-front cost to the consumer, we deliver value or savings to the end customer and then we recover the cost of the assets over time, partly through the customer's shared savings, but also through generating revenue from grid balancing services.
So in terms of replicability of the business model that we've got in ReFLEX, we certainly see that as a blueprint for deploying elsewhere in the UK and internationally. But I guess, Orkney at the moment is relatively unique in having generation constraints situations where there's too much local renewable generation capacity at times and not enough local demand for it.
The Active Network Management System that was introduced was one of the first in the UK and is still pretty unique in terms of the levels of curtailment of renewable generation that are happening. But we very much see - and I think Innovate UK very much see - Orkney as a vision of the future.
What we don't want to see is a situation where the DNOs [distribution network operators] are having to refuse new grid connections for new renewable generation capacity, whether that's small domestic solar PV, for example, or larger scale wind, because the system isn't flexible enough to accommodate it. So what we're trying to prove within Orkney is that by introducing this integrated energy system approach, you can accommodate more intermittent renewable generation.
And what's next for SMS and ReFLEX?
SMS is just one of six partners in the project (others are EMEC, Aquatera, Community Energy Scotland, Orkney Islands Council and Heriot-Watt University), and we're all together collectively working on successfully delivering the ReFLEX project. We're all then collectively looking at replication opportunities, both together but also separately.
SMS is particularly focused on mass market UK wide-replication for specific areas that have a commercially viable business model at the moment. So our FlexiGrid platform, just like other aggregator platforms, can be used to manage flexibility assets at large-scale, and we're looking at large-scale battery deployment in a number of different sites in the UK. That's going to be a big focus for the business.
We have a program called CaRe - the carbon asset reduction program - where basically we're looking to deploy private capital into decarbonisation assets to take the burden of decarbonisation away from the end consumer. So rather than asking the end consumer to pay for assets that are going to save them money and help decarbonise, we offer finance solutions to make it easier for the energy transition to happen.
With Solopower, you’re looking to utilise FlexiGrid to bring solar to social housing. Why did you choose this model?
The feed-in tariff (FiT) was far too easy for the end customer, whether it was a private homeowner or social landlords. The business model with FiT was you put the panels in, and you gave the electricity for free to your tenants from the social landlord point of view, and then you just made your money back through the subsidy and you were guaranteed to see a return on investment.
That was all very well, those kind of schemes are needed to get markets going and get some of a cost reduction happening. But now with no subsidy being available to domestic solar, it is going to be a big challenge for landlords to take on the risk and complexities of making a non-subsidised product work.
I think some landlords will look at bringing in the financing themselves, and if they do, optimisation of the assets is always going to be needed to get the maximum value out of solar and battery systems. This is where our new Solopower solution comes in, which offers social landlords this intelligent optimisation through our FlexiGrid platform, as well as the fully financed turnkey delivery of the assets.
We certainly see that the business case for combined solar and battery now is much, much stronger than solar alone. Obviously it costs more to deploy a battery system with solar. But to get the full value out of the system, there needs to be optimisation and that optimisation is partly about maximising self-consumption of solar generation. Also at times where the battery isn't needed to do that - certainly during the winter times - then the battery can deliver value to the end customer in terms of tariff optimisation, and also deliver value to the grid in terms of grid balancing. Basically it’s about smart control of the battery system to sweat the asset and get as much as you can out of it.
If landlords are having to take on all of the complexities of the business model that's needed to get the full value out of the assets, then it's going to be quite difficult for them. What we're looking to do through Solopower is make private financing available at a low cost of capital, to deliver simplified products, where basically we're just delivering a solar PPA [power purchase agreement] at a lower cost than grid-supplied electricity.
All the landlord needs to worry about is whether the PPA cost makes sense for them and their tenants rather than needing to look at taking on the full administration and complexities that would be involved if they were to do the project themselves.
So private financing is going to be a very key part of the decarbonisation journey. We know we're not going to be able to do it all through public money. Of course, there will be some available for the decarbonisation efforts. But I think there's an acknowledgement on all sides of the industry, from government to industry itself that we need to create an environment that makes it attractive for low cost of capital private investments to come in to support the decarbonisation effort, because it's not going to be done on public funding alone.