Early Insights into System Impacts of Smart Local Energy Systems

Abstract: A whole-system, investment-optimising model has been used to examine the change in total cost of meeting demand for electricity when Smart Local Energy Systems (SLES) are deployed. Our assumption is that SLES, alongside their other features, enhance the flexibility of electricity consumption through demand-side response (DSR) and facilitate use of local energy storage. We find that with the flexibility of SLES present, variable renewables such as offshore wind can displace firm but more expensive low-carbon sources such as CCS. Considering a 100 gCO2/kWh emissions target in 2030, a 10% penetration of SLES could reduce total costs by {\pounds}1.2bn/year relative to no SLES, while at higher penetration of 50% SLES, savings increase twofold to {\pounds}2.8bn/year. Under a more stringent emissions limit of 25 gCO2/kWh in 2040, the savings rise to {\pounds}2.9bn/year for 10% SLES uptake and rise threefold to {\pounds}8.7bn/year at 50% uptake. These results hold for costs of enabling DSR of less than {\pounds}100/kW and it is not until an unlikely {\pounds}5,000/kW that the savings are nullified. The savings from substituting wind for CCS remain substantial even if the anticipated reduction of cost of wind in 2040 does not materialise. Cost savings from the flexibility provided by SLES are affected by realisation of domestic DSR through other means. A 20% uptake level of non-SLES DSR in 2040 still allows SLES to create cost savings of {\pounds}6.8bn/year at 50% penetration (a 20% fall from {\pounds}8.7bn/year).