MD2332 E-FLEX

Type of decision: 
Mayoral decision
Code: 
MD2332
Date signed: 
26 July 2018
Decision by: 
Sadiq Khan, Mayor of London

Executive summary

The Greater London Authority, in partnership with Cisco International Limited, Cenex, E-Car Club Ltd, Nuvve Ltd, Imperial College London and Transport for London has been successful in its grant funding proposal to Innovate UK (part of UK Research and Innovation) for Innovation in vehicle-to-grid (V2G) systems: real-world demonstrators.
E-FLEX will create a scale demonstration of a functioning V2G market. The project will look at how V2G technology, electric vehicles (EV) and energy services can be used by fleet owners and operators to cut energy bills and reduce energy use. It will also aim to: financially reward electric vehicle charging flexibility (e.g. lower or shift electricity use to another time of the day)¬, provide demand response services to local and national electricity grid operators (e.g. to better match the demand for power with the supply at times of critical need, i.e. peak times of the day) and contribute to a smarter, cleaner energy system for London.

This project contributes to delivering a number of Mayoral aims and objectives:

• For London to be a zero-emission city with clean transport and clean energy;
• To develop clean and smart, integrated energy systems utilising local and renewable energy resources;
• To investigate the potential for demonstrators where Londoners can help manage London’s energy demand;
• To undertake demonstration projects to improve London’s energy systems.

Decision

That the Mayor approves:

1. receipt of a conditional grant income of up to £373,209 from Innovate UK, to be claimed on proof of expenditure; and
2. expenditure of up to £373,209 from 2018 to 2021 to pay for both a full-time project manager and electric vehicle charging infrastructure (including the conversion of £199,999 of revenue grant income to capital grant funding for charging infrastructure).

Part 1: Non-confidential facts and advice

Introduction and background

The Mayor wants London to be zero carbon emission by 2050. To help achieve this aim the London Environment Strategy has set the policy objective to develop clean and smart, integrated energy systems utilising local and renewable energy resources. This objective will, in part, be delivered by demonstration proposals which improve London’s energy systems and investigate the potential for Londoners to help manage London’s energy demand.

Working with The Office for Low Emission Vehicles (OLEV) and Innovate UK, the Department for Business, Energy and Industrial Strategy (BEIS) are providing funding of £20 million for innovative projects that develop future vehicle-to-grid (V2G) products, services and knowledge. The V2G demonstrator trials must happen in real-world environments at scale. Projects in this competition should last up to 3 years. They should range from total project costs of £1.5 million to £7 million. Projects must be collaborative and business-led. For larger projects, they expect to see participants from across the value chain, such as energy companies, vehicle manufacturers, hardware manufacturers, service providers, local authorities and other infrastructure providers.

Electric vehicles offer the opportunity of flexible mobile energy storage & supply. V2G is a system where plug-in electric vehicles, such as battery electric cars (BEV) and plug-in hybrids (PHEV), return electricity to the power grid (with consent from their users) or reduce their vehicle
charging rate to better match the demand for power with the supply¬. This is usually in return for a financial reward or other benefit.

Cisco and its project partners including the GLA, have been awarded an Innovate UK grant worth £3,664,687. The GLA’s grant is £373,209. The project partners will use the grant to complete a real-world demonstrator of a V2G system by January 2021.This will identify the potential for Demand Side Response (incentivising and enabling energy consumers to lower or shift their electricity use at peak times by using smart energy technologies, payments and tariffs) in electric vehicle fleets. The project will address the challenge of how to create a market mechanism that allows these rewards and benefits to be realised exploring business cases for EV and grid operators and energy users.

E-FLEX is a project being undertaken in partnership with Cisco International Limited, Cenex, E-Car Club Ltd, Nuvve Ltd, Imperial College London and Transport for London. The project partners will:

• Design use case requirements and technical/business model designs for trailing V2G.
• Secure fleet sign-up (circa 200 vehicles).
• Install and prepare charging Infrastructure for vehicle to grid.
• Design the V2G market trial.
• Build the market models and software that allows V2G demand side response.
• Test schedule flexible energy trading (fixed time of day).
• Test dynamic flexible energy trading (responding to price signals at unknown time of day).
• Complete impact assessment.
• Complete dissemination of project impacts, commercial exploitation of business models & support open market innovation in V2G applications.

The GLA will be responsible for:

• Identification and recruitment of public sector and commercial fleet owners and operators that could participate in the demonstration project;
• Grant funding (subject to additional decision forms) fleet owners and operators to purchase V2G electric vehicle charging infrastructure up to the value of £199,999 from the grant income received;
• Providing Mayor of London policy insights, advice and ensuring the project delivers London Environment Strategy and Mayor’s Transport Strategy policies and objectives; and
• Support dissemination of the project results/impact and commercial exploitation of the business models developed.

The GLA’s funding of £373,209 will be used to cover the revenue cost of a full-time project manager (grade 9, fixed term contract, from August 2018 – January 2021) and grant funding of the capital cost for electric vehicle charging infrastructure (circa 70 charging stations).

Cisco International is the accountable body to Innovate UK. All obligations in the consortium agreement will be managed through the project governance arrangements stated in the consortium agreement.

Objectives and expected outcomes

Outcomes

The project will contribute to:

• Delivering a zero carbon London by 2050 with smart flexible energy systems;
• Cutting electric vehicle owners’ and operators’ electricity bills and reduce their energy use;
• Financially rewarding fleets who use energy in more flexible ways; and
• Allowing electricity grid operators (National Grid and UK Power Networks) to better manage their networks by using flexible ways to manage demand at times of critical need (i.e. peak times of energy use).

Objectives

• Identify and detail with key stakeholders, potential services and products that the end-to-end V2G market could demonstrate (use-cases). This will form the basis of the market demonstrator requirements to be trialled.

• Develop and refine a marketplace trial design in response to fleet owner/operator consultations.

• Prepare the fleet and facilities (charging infrastructure, V2G software) that will demonstrate the new marketplace design.

• Install and prepare charging Infrastructure for vehicle to grid.
• Creating models and mechanisms upon which the marketplace trial (and business case) can be built.
• Develop the technical specification, system build and testing that underpins the operation of the market.
• Bring together the essential elements to perform a scheduled flexible energy trading demonstration by using a fixed price to lower or shift electricity use to another time of the day using V2G charging and electric vehicles.
• Assessment of the impact of the new market design and enhanced business case for V2G.
• Identify future commercial opportunities, promote the project and generate interest in extended demonstration and market applications, supporting scale up and roll out across London.

Equality comments

The GLA will ensure that (as part of its on-going legal responsibility to have due regard to the need to promote equality, in everything it does, including its decision-making), barriers are removed that may prevent those with protected characteristics benefiting from the project. The project will require the partners to identify those protected groups who could benefit, determine whether barriers exist and measures to remove those barriers. The partners will estimate the numbers involved for each relevant characteristic.

The GLA Environment Unit commissioned an Integrated Impact Assessment (IIA) on the draft London Environment Strategy. This evaluated the social, economic, environmental, health, community safety and equality consequences of the strategy's proposed policies to ensure they are fully considered and addressed. A post-adoption statement showing how the IIA influenced the final strategy and Equality Impact Assessment (EqIA) report has been published.

Other considerations

Key risks

 

Category

Description

Impact

Probability

Impact

Risk Index

Owner

Treatment

Mitigation

Technical

Lack of technology

interoperability between hardware charging types & backend systems

This would prevent market

demonstrator as participants

breakout into isolated tech-specific trials. Project fails to

demonstrate open market concept.

2

3

6

Nuvve

Contingency

Option to undertake technical interoperability

work if necessary

Benefits

Too few fleets signup to participate in the demonstrator.

Subscale demonstrator, cannot

demonstrate full wholesystem

benefits, limits demonstrable

Return on Investment (RoI)I, and prevents full

commercialisation.

3

5

15

Cenex

GLA

Contingency

Cenex and GLA (supported by all partners)  will use their network of fleet owners (including GLA Group and EV Taskforce) to sign up fleets  throughout prestart and phase 1 of the project. 

Consortium will track new V2Gvehicle models as they come to

Market – increasing the size of potential fleets..

Commercial

Commercial benefits unrealised/revenues

too low.

Low RoI for future V2G opportunities for fleets, limiting

commercialisation options.

3

3

9

Imperial

Reduce

Market design must capture all the possible benefits, including those from on going

electricity market reform.

Management

Multipartner project leading to

poor coordination, delivery, timescales & grant claims missed

Slow delivery, delays and

overruns.

3

2

6

Cisco

Reduce

Weekly & monthly calls/meetings. Escalation

paths available for timely issue redress. Project

management methods tailored to ensure delivery,

combining Waterfall & Agile methodologies.

Environment

Adoption rates insufficient to

reduce emissions when extrapolated.

Project fails to demonstrate

decarbonisation impact.

2

3

6

Cenex

GLA

Reduce

Market design will ensure that shifting and reduction of energy demand is when carbon grid intensity is high.

 

           

4.2       The Mayor wants London to be zero carbon by 2050. To help achieve this aim the London Environment Strategy has set the policy objective to develop clean and smart, integrated energy systems utilising local and renewable energy resources. This objective will, in part, be delivered by demonstration proposals, such as this, which improve London’s energy systems and investigate the potential for Londoners to help manage London’s energy demand.

Financial comments
    1. Mayoral approval is sought for the acceptance and expenditure of the conditional grant offer of

£373,209.  The grant will be from Innovate UK to fund the GLA’s role and responsibilities in the E-FLEX project. The GLA will be paid by Innovate UK through grant claims process after actual expenditure has been incurred.

 

5.2      The expected spend profile of this grant is detailed in the table below

 

Financial year (Start August 2018 to January 2021)

Revenue £

(staff costs)

 

Capital £

Expenses £

Total £

2018/19

44,056

199,999

2,128

246,183

2019/20

66,084

0

3,192

69,276

2020/21

55,070

0

2,680

57,750

 

165,210

199,99

8,000

373,209

 

    1.      As the table above shows approximately £200,000 in 2018/19 is expected to be capital grant paid by        

the GLA to fleet operators/owners (recruited once the project has started) for the purchase of V2G charging infrastructure. The income will be claimed by the GLA from Innovate UK on delivery of agreed work detailed in the project plan.

 

5.4       A capital grant funding agreement will be prepared by the GLA with input from TfL Legal and TfL Procurement. The funding agreement will be modelled on similar agreements used by GLA Environment, ensuring that liabilities, financial and controls management is appropriately handled.

Activity table

Activity

Timeline

Expected Delivery Start Date (date of Grant Offer Letter received by Cisco

from innovate UK)

1 August 2018

Expected public announcement (based on other Innovate UK projects)

September 2018 

Develop trial design & fleet sign-up

January 2019

Design use case requirements & reference designs

February 2019

Design the market trial

April 2019

Build the marketplace

May 2019

Install and make ready charging infrastructure for vehicle to grid.

October 2019

Schedule flexible energy trading

December 2019

Test dynamic flexible energy trading (responding to price signals at unknown time of day)

October 2020

Complete project impact assessment.

December 2020

Complete dissemination of project results, commercial exploitation of business models & support market open innovation

December 2020

Delivery End Date

January 2021

Final evaluation start and finish

January 2021

February 2021

Project Closure

February 2021


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