EVALUATION

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AN INDEPENDENT <strong>EVALUATION</strong> OF THE LCNF quantitative benefits of the project trials do not outturn as expected when they are rolled out to the actual network. Finally there is also uncertainty regarding the estimates submitted by the DNO, and while we have attempted to address this through clarification, discussions with the DNOs – and through our own experience and expertise – it is clear uncertainty still exists. And so it is important that the quantitative benefits are viewed with this uncertainty in mind and are not considered projections. The estimated quantitative benefits should be considered in the wider context of the LCNF and alongside the qualitative benefits outlined in Section 4. It is our view that reducing the uncertainty surrounding these quantitative benefits should be a key priority of future governance arrangements. Ofgem may wish to review the reporting requirements associated with any future innovation funding. For example, there may be benefit to be gained from an increased level of detail and frequency required for reporting on future innovation projects. One option might be to require more detailed regulatory reporting (e.g. Ofgem may wish to implement an approach similar to the RIGs 66 ). There may be complexities with this approach; for instance where non-DNO licensed companies are leading the projects. Additionally there may be benefits to be gained from more specific reporting after the project ends on the progress to adoption into BAU. For example companies could continue to report the progress of the ‘innovation’ on an annual basis. This could help to identify when the innovative solution is expected to be installed on the network which should provide more certainty on when the benefits should start to accrue. 66 The regulatory instructions and guidance (RIGs) are the main way we get information from the electricity distribution network operators. PÖYRY MANAGEMENT CONSULTING October 2016 713_Poyry_Report_Evaluation_of_the_LCNF_FINAL_Oct_2016_v700.docx 90
AN INDEPENDENT <strong>EVALUATION</strong> OF THE LCNF 6. REVIEW OF OTHER INNOVATION INCENTIVES – UK AND INTERNATIONAL A review of innovation incentives, in both UK and internationally, has been included in this evaluation to understand the UK funding opportunities for innovation in the electricity sector and also to seek learning from international innovation mechanisms. 6.1 LCNF and Innovation in GB There are a number of innovation and research funds and grants in the UK and a selection of some of the most relevant current examples are discussed in the following paragraphs. Funds and grants typically focus on different Technology Readiness Levels (TRL). 67 6.1.1 Innovation in the UK The Engineering and Physical Sciences Research Council (EPSRC) is the main UK government agency for funding research and training in engineering and the physical sciences. It invests more than £800m a year in a broad range of subjects, from mathematics to materials science, and from information technology to structural engineering. EPSRC typically looks to fund TRL 1 to 3 research in the identified themes. This funding is aimed at universities and students. The DECC’s 9 Energy Entrepreneurs fund is a competitive funding scheme to support the development and demonstration of state of the art technologies, products and processes in the areas of energy efficiency, power generation and heat and electricity storage. The scheme will only fund innovations between TRL 6 and 8. A number of screening projects are undertaken on each area to enable the projects with the most apparent potential to be selected for further development. The projects are monitored and can be easily halted if required. In 2013 Innovate UK, EPSRC and DECC set up the Energy Catalyst to encourage innovation to address the energy ‘trilemma’ of reducing emissions, improving security of supply and reducing cost. In 2016 the Department for International Development (DFID) joined as a co-funding partner. The Energy Catalyst does not fully fund the projects, and there are restrictions on what percentage of the project will be funded for different sizes of companies and research organisations. The fourth round of competition for innovative projects is being run during 2016. The awards are open to businesses, universities and research organisations and can be associated with technical feasibility, technology development and pre-commercial technology validation. The technologies supported by the Energy Catalyst are designed to address all three aspects of the energy ‘trilemma’. The overall budget for the fourth round competition is up to £19 million with some restrictions around the DIFD contribution (developing countries – transforming energy access) and Innovate UK contribution (timescales). 67 Technology Readiness Levels (TRL) are a method of estimating technology maturity. The levels are typically defined as in the Horizon 2020 programme: http://ec.europa.eu/research/participants/data/ref/h2020/wp/2014_2015/annexes/h2020- wp1415-annex-g-trl_en.pdf PÖYRY MANAGEMENT CONSULTING October 2016 713_Poyry_Report_Evaluation_of_the_LCNF_FINAL_Oct_2016_v700.docx 91
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EVALUATION

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