Post on 20-May-2018
Investing in Energy & Water
Infrastructure
6.00pm Welcome: Imran Sheikh, Ingenious Clean Energy
6.10pm Introduction: Michael Sippitt, Forbury Investment Network
6.20pm Energy infrastructure – Tony Woods, Managing Consultant, Ricardo
6.40pm Water infrastructure – George Taylor, Chief Technology Officer, Isle Utilities
7.00pm Panel and Q&A, run by Clive Hall, Rushlight Events and augmented by:
Imran Sheikh, Ingenious Clean Energy
Stephen Plumb, Director of Water, Kier Group
8.00pm Networking
Investor Briefing on Energy
Infrastructure
Tony Woods
Managing Consultant
Thursday 3rd December 2015
4 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
• Ricardo Energy & Environment – Who we are
• Structure of the electricity industry in Great Britain and
Key Players
• Innovation in regulation – investment opportunities
• Challenges to networks
• What is a Smart Grid?
• Technical innovation mechanisms
• Where is the power sector going?
• Further Opportunities
• Risks
Overview
5 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
• A global, multi-industry consultancy for engineering, technology, project innovation and
strategy
• Revenue £258m
• Over 2,700 staff working in 21 offices worldwide
• Strategic acquisitions and business reorganisation; Vepro and Power Planning
Associates, Lloyd’s Register Rail and Cascade Consulting.
Ricardo PLC
6 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
• Internationally-renowned consultancy
• Heritage of world-leading scientific/technical capability
• Providing analysis and solutions for major environmental challenges
• Client base of international governments and businesses
• Headquartered at Harwell Science Park, near Oxford
• Over 450 scientists and technical staff
• Part of Ricardo PLC
Ricardo Energy & Environment
7 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
“The electricity system is in the midst of one of the most
significant periods of change in its recent history”
Ofgem, 2015
• Traditionally - Large power stations transmission system
distribution system
• Changing power sector
– Increasing number of small power stations, often connected
to distribution networks (Distributed Generation or DG).
– Changing generation mix increase in renewable
generation.
Structure of the Electricity Industry in Great Britain
• The system is no longer a “waterfall”
system, with electricity flowing from the large
power stations in one direction towards
customers.
• Instead, electricity flows are more
unpredictable.
8 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
Generators
8
Transmission Owners
Aggregators Distribution
Network
Operator
Retail
System
Operator
Key Industry Players
Regulator IDNO
9 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
Innovation in Regulation and Policy – leading to investment
opportunities
Feed in Tariffs (FITs), Renewables Obligation
Certificates (ROCs) and Contracts for Difference
(CfD)
Offshore Transmission Owners (OFTOs)
Image from: Transmission Capital Partners
Independent Distribution Network Operators
Competition in Transmission (CATO)
and Competition in Connections (Distribution)
10 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
Low Carbon Transition
Closure of large coal plants and
increased renewable generation
High uptake of Distributed
Generation in response to incentives
System Operator challenges –
Intermittency and Inertia
Electrification of heat and transport
(timeframe?)
Changing consumer demand – Electric Vehicles and Heat Pumps
Increased data from and visibility
of Low Voltage networks
Challenges to Electricity Networks
BIG DATA
LOWER
SYSTEM
INERTIA
INTERMITTENT
GENERATION
CHANGING
DEMAND
AND PROFILES
12 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
DECC: Digest of United Kingdom Energy Statistics (DUKES)
Contribution of renewable energy to electricity (TWh)
13 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
Low Carbon Transition
Closure of large coal plants and
increased renewable generation
High uptake of Distributed
Generation in response to incentives
System Operator challenges –
Intermittency and Inertia
Electrification of heat and transport
(timeframe?)
Changing consumer demand – Electric Vehicles and Heat Pumps
Increased data from and visibility
of Low Voltage networks
Challenges to Electricity Networks
BIG DATA
LOWER
SYSTEM
INERTIA
INTERMITTENT
GENERATION
CHANGING
DEMAND
AND PROFILES
14 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
What is a Smart Grid?
"Smart Grid" is today used as a marketing term, rather than a technical
definition. For this reason there is no well defined and commonly accepted
scope of what "smart" is and what it is not.
IEC (International
Electrotechnical Commission)
Integration of
Users
Themes:
Increased
monitoring and data
communication
A more active network -
and consumers
Maximise use of
existing assets
Increased
decentralised control
15 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
Network Operator incentives for innovation
• Low Carbon Networks Fund (LCNF) Tier 1 and Tier 2
• Network Innovation Competition (NIC) and Network Innovation Allowance (NIA)
– Gas and Electricity
– Transmission and Distribution
• Energy Systems Catapult – Initially funded by Innovate UK, to stimulate innovation
Technology Innovation Mechanisms
16 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
• New ways of addressing the need for network capacity
– Storage
– Demand Side Response and innovative tariffs
– Use of local generation
• Investment in infrastructure
– RIIO-ED1 and RIIO-T1 capital programmes
• Ofgem’s position paper on Flexibility
– DNO to DSO (Distribution Network Operator to Distribution System Operator)
– Clarifying the role of new market players – aggregators and storage providers
– Evolution of distribution charges (longer term)
• National Grid’s System Operability Framework 2015
– Development of new system services
– Increased co-ordination between transmission and distribution networks
– Increased flexibility from generating plant
Where is the power sector going?
17 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
• Innovation projects developing into business as usual solutions
– Active Network Management
– Power electronics for distribution
– Superconducting cables
• Emerging business models
– Storage providers
– Demand management as part of energy service contract
– Third party aggregators
• New system services required by National Grid System Operator, to access enhanced
capabilities from generation
– Enhanced Frequency Response procurement
– Review of provision of black start capability
Opportunities
Ofgem Position Paper: Making the electricity system more flexible and delivering
the benefits for consumers
“The energy sector is changing. Generation is becoming more distributed and variable, and
consumers are benefitting from new ways to monitor and manage their energy use. There are
opportunities for new business models and technologies to emerge, and for existing
businesses to develop, to deliver better services for consumers.”
18 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
• Political risks
– Changes to incentive mechanisms (Feed-in Tariff reductions, ROCs scheme closing
early for onshore wind)
– Climate change incentives – COP21
– Other policy developments (not supporting Carbon Capture and Storage (CCS),
desired increase in gas-fired power plants)
– Domestic gas and multi-vector interactions
• Consumer behaviour
– Rate of uptake of Low Carbon Technologies (Electric Vehicles and Heat Pumps)
– Willingness to participate in demand side response / realistic level of engagement
• Technical risks
– Developing and new technologies – e.g. Storage and Carbon Capture and Storage
(CCS)
– Developments in transport
Risks
19 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
• Significant changes in the power sector are resulting in challenges…and opportunities
• Infrastructure investment required in transmission and distribution networks…
– Competitively Appointed Transmission Owners (CATO), IDNOs, etc.
• …but investment in “copper” alone will not suffice
– New ways of addressing capacity challenges
– Innovation and Smart Grid projects – maximising the use of existing assets
– Emerging business models
– New system services required
Summary
22 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
Present Capacity
DECC Statutory Security of Supply Report 2014
23 © Ricardo-AEA Ltd Ricardo Energy & Environment in Confidence
• As of end of March 2014, the UK had a total of around 77.6 GW of installed electricity
capacity connected directly to the transmission system, including available
interconnection capacity.
• In addition to transmission connected capacity, there is an estimated 11 GW of
electricity capacity connected directly to the distribution network also known as
‘embedded’ generation.
• GB also has the means to import from and export to other countries; the equivalent of
just under 4 GW of capacity can be transmitted to and from France, the Netherlands
and Ireland.
Water Infrastructure….
Existing Infrastructure….
Decentralised – Wastewater, Water
Competition
Waste water
Clean Water
Future challenges…..
09/12/2015 isleutilities.com 26
SMARTWATER Improved Customer Service
– Financial and well as reputational drivers for improving service…
– Competition
Better Asset Management
– Understanding of assets – data and analytics
– Better view of investment requirements
Numerous Demonstrations
– E.g. SMARTWATER4EUROPE, EU Funded Project
09/12/2015 isleutilities.com 27
Image from SW4E Website
Understanding condition….
416,000 kms of water main
369,000 kms of sewer
Current sewer replacement rates mean sewers have to last over 1000 years!
Good asset management requires that companies understand where and when to replace and the associated risks.
Improve resilience....
09/12/2015 isleutilities.com 28
But what if we don’t replace pipes?
Decentralisation
– Drinking Water - alternatives
– Waste Water - alternatives
09/12/2015 isleutilities.com 29
Competition….
Commercial Customer
– March 2017
Domestic Customer
– Could be in place by the end of this parliament
Upstream
– Could be in place by the end of this parliament…
09/12/2015 isleutilities.com 30
Wastewater – or Recycling….
Energy recovery
– Combined heat and power
– Thermal Hydrolosis (THP)
– Alternatives….
Nutrient recovery
– Phophorus – finite resource
Heat recovery (and cooling)
09/12/2015 isleutilities.com 31
Water – resources
Growth and climate change contributing to future supply demand deficits in part of the country…
– Water efficiency
– Metering
– Water trading
– Alternative sources – reuse, desalination, reservoirs, water transfer schemes
09/12/2015 isleutilities.com 32
UK Water Industry Research (UKWIR)
Three Big Questions….
How do we achieve zero leakage by 2050?
How can we achieve zero uncontrolled discharges from sewers by 2050?
How do we maintain 100% compliance with drinking water standards by 2050?
09/12/2015 isleutilities.com 33
WWT Innovation Conference 2015….
Managing and Monitoring SMART Networks
Technology game changers
– Nanotechnology – filters
– Robotics – inspection technologies
– Smart – phone applications
Energy from Waste
09/12/2015 isleutilities.com 34
Investing in Energy & Water Infrastructure
Q&As panel:
Tony Woods, Ricardo
George Taylor, Isle Utilities
Stephen Plumb, Kier Group
Imran Sheikh, Ingenious Clean Energy