Gas Network Innovation Strategy March 2018 Development of the Gas Network Innovation Strategy 2 Gas Network Innovation Strategy We (Cadent, National Grid, Northern Gas Networks, SGN, Wales & West Utilities) have worked together as part of the Energy Networks Association (ENA) Gas Innovation and Governance Group (GIGG) to develop this Gas Network Innovation Strategy. This document will be revised and reissued every two years, next due in 2020. We published a draft version of the strategy in November 2017 for stakeholder comments. A formal consultation on the draft ran from 1 November to 22 December 2017 1 . During this period we engaged stakeholders across a number of forums, including presentations and a joint interactive session with the Gas and Electricity networks at the LCNI conference 6-7 December. Feedback from this session was directly fed into the strategy, alongside responses via the survey questionnaire and several response letters. The ENA Gas Innovation & Governance Group consists of representatives from the innovation teams in the following companies: The stakeholder consultation on the draft strategy was crucial to its development, giving all interested parties an opportunity to review the draft strategy and provide valuable feedback. The views of the wider industry have been carefully considered and have helped shape the final strategy. In total we received 25 responses to the stakeholder consultation. A full summary of the responses received from stakeholders during the consultation period is available at: http://www.energynetworks.org/gas/ futures/gas-innovation.html “The views of the wider industry have been carefully considered and have helped shape the final strategy.” 1 The Stakeholder Consultation Document was available online at http://www.energynetworks.org/gas/ futures/gas-innovation.html from 1 November to 22 December 2017. Gas Innovation & Governance Group Foreword 3 Gas Network Innovation Strategy The publication of the gas and electricity Network Innovation Strategies is the latest chapter in Great Britain’s energy network innovation success story. Since funding was first introduced in 2007, Great Britain’s energy networks have developed a world leading reputation for innovation. A variety of transformational projects has enabled network companies to deliver greater efficiency, improved performance and respond to the challenges and opportunities presented by the decarbonisation of our energy market. Innovation projects allow network operators to better understand how to integrate new technologies into our energy networks, help them identify new opportunities for their use and speed up their wider adoption. They also reflect our commitment to build an efficient, smarter, cleaner energy system fit for Britain’s homes and businesses. The current RIIO price control mechanism, which includes the Network Innovation Allowance and the Network Innovation Competition, has been key to driving success forward. Continued support for innovation has been vital to embedding a culture of innovation within our energy networks so that innovation is a permanent fixture in the network landscape. Smart network solutions connected through the Low Carbon Network Fund alone have already enabled close to £1bn of cost savings for customers within the electricity sector. This progress is part of a wider, fundamental change to the way our network infrastructure operates that is now taking place which is driven by new technology. Across the country, innovation will help network companies to enable new markets and provide new opportunities for consumers to have greater control over their energy bills. Projects have the potential to develop a truly world-leading, Whole Systems Approach that brings the way our gas and electricity networks work more closely together. This will be crucial as we find new ways to meet the UK’s carbon budgets, because if our power, heat, transport and waste sectors are all interdependent, then so must the solutions to their decarbonisation. Our role is to deliver the integrated energy infrastructure that Britain needs to underpin those essential pillars of our economy. “Projects have the potential to develop a truly world-leading, Whole Systems Approach that brings the way our gas and electricity networks work more closely together.”Foreword 4 Gas Network Innovation Strategy Common themes Electricity themes Gas themes Reliability, replacement, maintenance and repair New technologies and commercial evolution Low carbon and environment Emergency response Future of gas Safety and health Network improvements and system operability Security Innovating to benefit customers These Strategies set out the areas of focus where network companies are looking to provide value to customers from the innovation projects they are undertaking and how they will share the lessons learnt from those projects with other organisations. This transparency is key to ensuring that network companies continue to focus on areas for innovation investment which can deliver most benefit to the wider energy system in the most effective way possible. Network companies cannot deliver this innovation alone. We want network infrastructure to act as a platform for new energy technologies and services that will put Great Britain at the forefront of the global low carbon transformation. Whether they are end-users, technology developers or service providers, network companies want to work with these innovators who have the best and the brightest ideas of how we can harness the potential of energy technology. These opportunities extend to communities and businesses across the country, ensuring that the economic as well as practical benefits are spread far and wide. As the pace of network innovation continues to accelerate, then so will the importance of this work. The publication of the first joint Network Innovation Strategies is an important milestone and we look forward to working with our innovation partners to ensure our network infrastructure, our wider energy system and our customers benefit from new technology and approaches. Huw Sullivan Cadent Chair, ENA Gas Innovation & Governance Group Phil Swift Western Power Distribution Chair, ENA Electricity Networks and Futures Group “These opportunities extend to communities and businesses across the country, ensuring that the economic as well as practical benefits are spread far and wide.”Contents 5 Gas Network Innovation Strategy 1. Development of the Strategy 02 2. Foreword 03 3. Introduction 06 4. Innovation Themes 11 a. Future of gas 11 b. Safety and emergency 18 c. Reliability and maintenance 23 d. Repair 28 e. Distribution mains replacement 33 f. Environment and low carbon 38 g. Security 43 5. Next Steps 47 6. Help us to deliver the Gas Network Innovation Strategy 48 7. Exemplar projects 49 402 NIA projects 13 NIC projects £193m invested in gas innovation Since 2013 “The strategy identifies the challenges and opportunities the gas transmission and distribution networks face, as the UK aims to decarbonise its energy system to meet climate change targets.”6 Gas Network Innovation Strategy Introduction The Gas Network Innovation Strategy has been produced by Energy Networks Association (ENA). ENA represents the ‘wires and pipes’ transmission and distribution network operators for gas and electricity in the UK and Ireland. This Strategy is for the gas network licence holders in Great Britain (Cadent, National Grid, Northern Gas Networks, SGN, Wales & West Utilities). This is the first version of the Gas Network Innovation Strategy. The strategy identifies the challenges and opportunities the gas transmission and distribution networks face, as the UK aims to decarbonise its energy system to meet climate change targets. It sets out the role that our existing gas infrastructure can play in meeting demand for power, heat and transport in a low-carbon economy. The strategy also seeks views from technology providers on the part they would like to see gas network companies play to deliver greater energy innovation in future. We are publishing this document to give the public, industry and other interested parties an opportunity to help us to drive innovation that could potentially benefit consumers. We also want to coordinate our activities as networks, share our learning and avoid duplication. Purpose of the Gas Network Innovation Strategy Gas Network Licence Holders7 Gas Network Innovation Strategy The Gas Network Innovation Strategy is structured around seven innovation themes. These were developed by the gas networks in setting out Innovation Problem Statements, the last edition of which was published by ENA in March 2017. It was developed by ENA’s Gas Innovation and Governance Group, with feedback from wider industry stakeholders. The Statements sought to set out problems that innovation projects could help to address, with a view to encouraging third parties to approach the networks with innovative ideas. This approach will now be integrated into the Gas Network Innovation Strategy. The themes as set out in the Problem Statements and adopted for this Strategy are: We use innovation to develop new solutions to problems which exist now, or which we anticipate we will face in the future. It helps us to improve our business processes. It supports use of technology. It strengthens the security of supply of gas to consumers and ensures that we deliver the services they need. Our innovation strategy is twofold. Innovation is key to the: • Future of gas • Safety and emergency • Reliability and maintenance • Repair • Distribution mains replacement • Environment and low carbon • Security Under each theme we explain the context, innovation requirements and the areas needing further development. The aim is to help our stakeholders understand our current needs, without restricting the ideas and technologies they propose. Examples of current projects are given in an appendix at the end of the strategy. Where possible, specific strategic aims for the next two years are identified. These are summarised at the end of the document, under ‘Next Steps’. • Continued operation of the safe, reliable and affordable gas network that consumers need, and to • Developing solutions for the step change to the low-carbon economy. We recognise that in a fast-changing world there are many uncertainties, particularly when looking as far out as 2030 or 2050. We can be clearer about near-term innovation opportunities and we will manage our innovation project portfolios to address future uncertainties. Structure of the document What is innovation? 2 Gas Network Innovation Problem Statements, Energy Networks Association, March 20178 Gas Network Innovation Strategy Innovation is fundamental to developing key projects that drive benefits to our customers. Under Ofgem’s RIIO regulation model, the innovation stimulus consists of three measures: • A Network Innovation Allowance (NIA) – to fund smaller innovation Projects that will deliver benefits to Customers as part of a RIIO Network Licensee’s price control settlement; • A Network Innovation Competition (NIC) – an annual competition to fund selected flagship innovative projects that would deliver low carbon and environmental benefits to Customers; and • An Innovation Roll-out Mechanism – to fund the roll-out of proven innovations which will contribute to the development in GB of a low carbon energy sector or broader environmental benefits. There is more information about Ofgem’s model for regulating innovation here: https://www.ofgem.gov.uk/network- regulation-riio-model/network-innovation At the time of publication, Ofgem and the networks are actively discussing new measures to report the benefits from innovation. Across the GB energy industry there is a range of other bodies and funding platforms that are heavily involved in energy industry innovation. These bodies are funding, planning, developing and rolling out innovation projects. These bodies include Innovate UK [1] , Energy Systems Catapult [2] , the Industrial Strategy Challenge Fund [3] and the Engineering and Physical Sciences Research Council (EPSRC) [4] . Within the Gas Network Innovation Strategy we have described the way that we collaborate on and disseminate learning from innovation projects, recognising that to make the most of innovation we need to work with partners from across the energy sector and beyond. How is network innovation funded and regulated? Stategic aim 1 Work with Ofgem to agree an appropriate solution for measuring benefits from innovation, following proposals in Ofgem’s 2017 Network Innovation Review. “To make the most of innovation we need to work with partners from across the energy sector and beyond.” [1] https://www.gov.uk/government/organisations/innovate-uk [2] https://es.catapult.org.uk/ [3] https://www.gov.uk/government/collections/industrial-strategy-challenge-fund-joint-research-and-innovation [4] https://www.epsrc.ac.uk/funding/9 Gas Network Innovation Strategy This is a summary of the work we’ve done so far across all the themes of the strategy since 2013. It shows where we are focusing our innovation efforts under the NIC and NIA schemes. The tables below are based on data supplied by the lead network for each project. They also include projects that are electricity network-led and have gas involvement. We want to share as much information as possible about the work we’re doing on innovation, and to do so in the most effective ways possible. We do this in several ways. ENA’s Smarter Networks Portal (http://www.smarternetworks.org/) is where we collate all the insights and learning from our innovation projects. Each year we report against all live projects and each network publishes an Annual Summary Document in July. This outlines key achievements, lessons learned and focus for the year. These can be found on the Smarter Networks Portal as well as the individual networks’ websites. We also organise the Low Carbon Networks and Innovation (LCNI) conference (http://www.lcniconference. org/) on behalf of UK electricity and gas network operators. The purpose of the LCNI is to disseminate project learning, increase understanding of innovation taking place across the industry, and provide opportunities for greater collaboration. Some projects span multiple themes. In these cases, the lead network has decided which category best describes the activity. For example, Security is a new focus but has been an element of other projects, even if it is not the primary theme. The project values given are those recorded on the Project Registration Documents, which are indicative costs estimated at the start of the project. Finally, in addition to project learning being shared through media, marketing and at promotional events such as workshops and conferences each of our networks publishes information online about its innovation activities. For more detail on innovation in each network, please visit: • Cadent: http://cadentgas.com/ About-us/Innovation • National Grid: www.nationalgrid.com/ gasinnovation • Northern Gas Networks: https://www.northerngas networks.co.uk/ngn-you/ the-future/at-a-glance/ • SGN: https://sgn.co.uk/Innovation/ Innovation/ • Wales & West Utilities: www.wwutilities.co.uk/ innovation Innovation to date Sharing learning ALL NETWORKS NIA ProjectsNIC ProjectsAll Projects ThemeNumberValue (£M)NumberValue (£M)NumberValue (£M) Future of Gas 40£16.315£32.7445£49.04 Safety and Emergency 58£10.310£-58£10.31 Reliability and Maintenance 145£36.111£6.30146£42.41 Repair45£9.472£13.7047£23.17 Distribution Mains Replacement 65£27.870£-65£27.87 Security 0£-0£-0£- Environment and Low Carbon 49£18.345£21.1754£39.51 Totals402£118.4213£73.90415£192.32 NIA Projects NIC Projects £60m £40m £20m 0 Future of Gas Safety and Emergency Reliability and Maintenance Repair Distribution Mains Replacement Security Environment and Low Carbon GAS NETWORK NIA AND NIC PROJECT VALUENext >