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£6 million Electricity Flexibility Project gets Ofgem green light

23/10/2018

THE vision of SP Energy Networks to deliver a better future, quicker for electricity consumers has been backed by industry regulator Ofgem which has given the green light for a £6m investment in an innovative project which could radically change how people use their electricity. Project Fusion will get underway this October after Ofgem confirmed its financial support for the ground-breaking scheme.

The project will see people’s electricity demand and supply “flexibility” traded in a newly-created digital marketplace, as the network company continues to pioneer innovative ways of cost-effectively managing the electricity grid for the financial benefit of customers.

Working with partners, including Fife Council, the University of St Andrews and Imperial College London, the total investment in Project Fusion will be £5.67m, with £5.1m coming from Ofgem’s Network Innovation Competition fund.

It will be piloted in East Fife, an area with a rich and diverse range of energy resources, including onshore and offshore wind and hydrogen storage. It is expected to run for five years.

Project Fusion would allow people to work with their energy retailer – or another market participant – to secure additional income from being flexible in terms of their electricity usage. 

As well as being financially rewarded for their flexibility, this would reduce the amount of money required in the future to build new grid networks to support electric vehicles, local electricity generation and heat-pumps.

It is the latest creative idea from SP Energy Networks which has driven industry change in Active Network Management, by using smart technology to make more efficient use of the network systems.

Chief Executive of SP Energy Networks, Frank Mitchell, said: “Project Fusion will create a world-leading, smart energy, online platform which will allow customers to trade their electricity supply and demand capacity.

“The project is at the heart of making more effective use of existing electricity infrastructure and ensuring we keep customers’ bills down and their lights on. 

“This is critical as we move towards an electric future in the transport and heat sectors to meet the challenges of climate change and make our society cleaner and greener. 

“It will also be an important part of ensuring any necessary future investment in our network is minimal and meets customers’ demands. And it is a good example of the type of support and forward-thinking that we need from Ofgem if we are to meet the increasing demands of a low carbon society.”

SP Energy Networks has already raised the issue of a need for regulation change with Ofgem, to allow electricity network operators to invest ahead of demand to ensure future consumer needs can be met.

It is anticipated that if Project Fusion is successfully rolled out across the UK, it could result in over £200m of savings in electricity bills by 2050.

Colin Taylor, SP Energy Networks Director Processes and Technology, said: “The decision by Ofgem to support Project Fusion by providing £5.1m of funding is very welcome.

“Flexibility is key to the management of the electricity network of the future and SP Energy Networks is leading the charge. This funding will allow us to press on with what we consider will be the model for the future marketplace for electricity supply and demand.

“Being flexible with how we use and produce electricity will mean the power generated and delivered continues to meet customers’ demand but without the need for ever bigger power stations.”

He added: “Project Fusion is an exciting new way of helping to deliver that flexibility – one where customers that sign up and get involved will be able to secure income by selling their flexibility – while still providing a reliable and secure electricity supply.

“We will now work with all the partners involved in Fusion to get the project up and running as soon as practical.

“This is a very exciting innovation project which I believe will have a large impact on how we control electricity supply and demand in the future.

“The aim is to create a new competitive marketplace where communities and customers can take control of the demand and supply of electricity in their areas. The test will be in making sure the system is simple so that there is opportunity for everyone to get involved and to save money.”


Notes to Editors

  • SP Energy Networks (SPEN) is the licensed Electricity Distributor (DNO) for Central & Southern Scotland and for Merseyside, Cheshire, North Wales and North Shropshire. It has 30,000 substations (one substation for every 100 customers), 40,000km overhead lines (once around the globe), and 70,000km underground cables.
  • SPEN also operates the Transmission Network in Central and Southern Scotland. It takes electricity generated from power stations, windfarms and various other utilities and transports it through its vast transmission network, consisting of over 4,000km of overhead and 320km of underground lines. It has 129 transmission substations in its network that helps to manage extra high voltage electricity supplies.
  • From 2015 to 2023 SP Energy Networks plans to invest approximately £5 billion into the electricity network.
  • Project Fusion will see SP Energy Networks partner with Fife Council, the University of St Andrews, Imperial College London, DNV-GL, PassivSystems, OrigamiEnergy and SAC Consulting. The total investment in the project will be £5.67m.
  • For information on Ofgem’s decision visit https://www.ofgem.gov.uk/publications-and-updates/network-innovation-competition-amended-project-direction-fusion
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