Technology: Bulk-buying via smart meters
Location: Dumbiedykes, Edinburgh, with additional site in Glasgow
CARES funding: Local Energy Challenge Fund £821,200
Project timescale: June 2015 – May 2018
Tower Power was led by Community Energy Scotland working in partnership with Our Power, Energy Local, TMA, Glasgow City Council and City of Edinburgh Council. By offering a community-led alternative to standard customer and supplier relationships, it aimed to give the community control to negotiate cheaper energy and benefit from local, renewable energy generation.
Aims and objectives
Tower Power aimed to reduce the cost of energy bills for residents in multi-rise, high density housing by putting the community in control of energy supply and use. By enabling residents to bulk purchase power as a community, rather than buying power individually from suppliers, they would be able to reduce their energy costs.
In December 2015 Ofgem identified that there were 4.5 million prepayment electricity accounts in the UK, with a significant proportion of these households being economically vulnerable. Prepayment meters are expensive; Tower Power wanted to support these communities by enabling them to access fairer, lower prices and sharing in renewable energy generation.
Advanced smart meters were installed in homes, allowing residents to understand how to use their electricity when its cheapest. Data from the smart meters was sent to Tower Power, enabling them to use this information to negotiate buying energy in bulk from suppliers. By not using estimates, and by buying in bulk as a community, they would be able to negotiate lower prices and therefore cut residents’ energy bills.
Residents would also be able to maximise the value of electricity generated on site with the planned installation of solar panels on the roofs, reducing the need to buy in energy.
Outcomes and achievements
The project concluded in March 2018, having successfully completed several objectives. The full Tower Power report outlines these in more detail (see below).
An aggregation trial was completed, demonstrating the local balancing of energy for prepayment customers, and a communications module for a prepayment meter was successfully tested. An aggregation home hub that delivers Demand Side Response was also developed and worked to the standards required.
Technical and regulatory challenges faced during the project’s implementation meant that the scope of the project had to adapt several times before focusing on finding a metering solution that would allow prepayment customers to benefit from the model envisaged under Tower Power.
The project has done much of the groundwork needed for setting up one or more Tower Power type energy clubs which include prepayment customers. This includes information for communities that could be tailored for each club, recommendations on how to engage communities, a Community Services Company constitution and an online member dashboard. It also includes a business model framework that would be required by clubs to test feasibility and help in deciding on levels of tariffs to make it viable.
Lessons learned
The project addressed technical, social, regulatory, economic and project management challenges; some of these were expected, others were not. The full report, linked to at the bottom of the page, outlines these in more detail.
The project initially planned to install solar panels on the roofs of housing blocks at the Dumbiedykes estate. This element of the project, however, was withdrawn when they faced several challenges including the requirement to get permission from all owners (and in some cases, their mortgage companies) and the high cost of erecting scaffolding for installation. Despite exploring alternative arrangements, the costs for solar installation and the cost of loan finance meant that the returns were going to be too small and too risky in the context of wider metering challenges. Project partners therefore agreed to step back from this element in the project.
The project also identified the potential for some difficulty if partnering with smaller-scale energy providers. The cost of imbalance (fees paid when a supplier has bought too much or insufficient power), for example, could impact on the profitability and cash flow of smaller suppliers and it is advised that they put aside a credit for such a purpose. Also, because the Scottish Government’s Warmer Homes Discount scheme is only available to vulnerable customers of large energy companies, many smaller suppliers would struggle to create cost savings for such customers.
Finally, the project encountered problems when attempting to establish new partnerships with licensed suppliers, many of whom think there is little benefit to be gained because of the uncertainty and risk involved in taking on an innovation project. Furthermore, many providers are unable to provide the transparency required in terms of their pricing structures or business model to allow the economic analysis necessary to enable the business case development of this new model of supply.