Case study (UK): Smart, flexible local energy systems

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Distribution Network
Generation and Wholesale Market
Supply and Retail Market
Transmission Network

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Watch on-demand: Delivering the flexible energy system of the future event – 29 July 2021

Local energy flexibility trials modelling how a smart local energy system may work are being run in Oxfordshire. A smart, local energy system uses grid flexibility to manage network constraints and provides routes to market and investment models for local generation. It’s the first-time innovation funding streams between the UK government’s Industrial Strategy Challenge Fund and Ofgem’s Network Innovation Competitions for network operators have combined. 

This case study is supplied by Charlotte Hewes, Stakeholder Manager – Oxfordshire Projects at GB electricity distributor, Southern and Scottish Electricity Networks (SSEN).

  1. The challenge

    With the reality of climate change and the need to decarbonise our energy system, relationships are becoming more complex between users and generators of electricity. There is an anticipated increase in demand for electricity for heating and transportation. 

    The challenge is how we meet this demand in line with net zero targets to optimise use of the distribution networks to better meet customers’ needs and encourage greater participation in the energy transition at a local level.

  2. The approach

    Project LEO (Local Energy Oxfordshire) is running flexibility trials based in Oxfordshire that model a potential ‘smart local energy system’ – a system that uses flexibility to manage network constraints and provide routes to market and investment models supporting local power generation.



    The project is a collaboration between academia (University of Oxford and Oxford Brookes), industry (SSEN, Nuvve, Piclo and EDF), community energy (Low Carbon Hub) and local authorities in England (Oxford City and County Councils). These project partners provide a diverse mix of technical, academic and community expertise. LEO is a Prospering from the Energy Revolution (PFER) programme, part funded by the Industrial Strategy Challenge Fund (ISCF). SSEN’s TRANSITION project, funded by Ofgem’s Network Innovation Competition (NIC), also forms part of LEO and it is the first time innovation funding streams have combined.



    The project aims to show how a local energy system can address the energy trilemma - equity, security, and sustainability - by exploring and testing different scenarios where evolving technologies, emerging market models and rates of customer adoption interact and influence each other.



    This can be demonstrated across three areas:

    1. Innovation in technology. The TRANSITION project is developing two key IT systems to understand marketplace interactions and provide forecasting and power system analysis capabilities. There is little knowledge of load flows at low voltage energy distribution levels, so we have installed 80 low-voltage monitors in Oxfordshire to provide us with minute-by-minute load-flow data. New assets we are using to help demonstrate flexibility include: Vehicle to Grid (V2G) electric vehicle charge points, the Ray Valley 19 MW Solar Farm (the UK’s largest community Solar Farm) and enhanced energy storage and flexibility potential.
    2. Innovation in markets. Aligned with the Energy Networks Association Open Networks Project, we plan to test two key services driven by network requirements: two services for peer-to-peer capacity trading and another to test interaction with the electricity system operator’s Short-Term Operating Reserve (STOR) flexibility service. Establishing the contracts, pricing, processes and rules around these services is a key part of the project, with markets running initially in month-ahead and week-ahead timeframes, moving to day-ahead by the end of the trial period. Alongside the key services, the routes to market and investment models for local renewable projects are being built to aid replication.
    3. Innovation with communities. For a smart, local energy system to work it needs to be driven by its users. Our five Smart and Fair Neighbourhood (SFN) trials will demonstrate how flexibility services can sit at the heart of a smarter, low carbon energy system in an equitable and fair way.

  3. Impact and outcomes

    The whole systems project is focusing on how to maximise the use of the energy assets so they can realise their potential to deliver flexible energy. These assets include roof top and ground mounted PV solar panels, hydro electric generators on the river Thames, and buildings owned by Oxford University and Oxford councils.



    As part of this work, we have:

    • Demonstrated the ability of Sandford Hydro-electric station on the River Thames to deliver energy flexibly. It does this by building up the water level shortly prior to the dispatch window and then releasing it, increasing energy generation.
    • Commenced installation of 10 Nuvve V2G chargers across four sites in the trial areas.
    • Demonstrated demand response at the Sackler Library. This has highlighted the challenge of work with buildings that have integrated and automated building management systems.

  4. Next steps

    In November 2021 we will be starting our flexibility market trials and our work is currently focusing on preparation for this, including:

    • Working with Opus One Solutions, a software engineering and solutions company, we are developing a Whole System Coordination (WSC) platform which alongside the Neutral Market Facilitator (NMF) platform, will allow management and operation of both the physical local distribution system and the flexibility market. The NMF platform acts as the marketplace for the buying and selling of flexible energy.
    • Development of commercial market models, engaging with potential market participants and industry. This includes decisions on price points including price floors and ceilings, and the provision of settlement.
    • In response to engagement feedback so far, we will develop routes to market that simplify and reduce participation risk, giving additional financial security to encourage participation. We will also work on creating a language that can be easily understood by non-energy industry participants.
    • Working closely with the Open Networks project, run by GB trade body the Energy Networks Association, to develop new arrangements and requirements to baseline and gain reliable data on patterns of typical consumption or generation. We will use this to help demonstrate delivery of a service. We will provide project participants with two options - either to provide a ‘historical baseline’ or a forecast called a ‘nomination baseline’.

Consumer benefits

The LEO project is informing policy on a ‘whole systems’ basis. It aims to accelerate the transition to net zero at a local level by:

  • optimising costs by deferring infrastructure reinforcement needs
  • introducing new revenue opportunities for generation and storage asset owners and investors
  • forming collaboration building blocks at a local level through interactions between distribution network companies, local communities, and councils.