Blog feature: Innovating and implementing a zero-carbon energy future

Securing a low-carbon energy future and accelerating the route to net zero remains one of the biggest challenges and priorities for the ESO and energy industry right now. While this is driving an increase in innovation investment, particularly across areas such as digital transformation and domestic flexibility, the UK target to decarbonise the electricity system by 2035 is fast-approaching.

Our uniquely central position affords an opportunity to continually innovate and collaborate with those who are helping lead efforts around sector priorities, such as net zero. It’s also why each year we refresh our Innovation Strategy, setting out our innovation priorities for the year ahead, evidencing our progress in the previous year and illustrating how projects are delivering benefits for the ESO, the wider energy system, and consumers.

View our 2023-24 Innovation Strategy to find out more on our refreshed innovation priorities.

ESO Innovation 2022-23: A year in review

Last year, we had 62 live innovation projects using NIA (Network Innovation Allowance) funding, and the SIF (Strategic Innovation Fund) where we were the lead network.

Ofgem awarded us a further increase in NIA funding for the remainder of the RIIO-2 control period, bringing the total allowance for innovation projects to approximately £47M over the five years from April 2021 to March 2026. 

We were awarded SIF funding to continue progressing CrowdFlex, a Virtual Energy System Use Case project exploring the role of domestic flexibility in grid management. The second phase (Alpha) of the CrowdFlex project focused on establishing a better understanding of system challenges and solutions around enabling consumers to act as a new source of flexibility on the network through domestic assets. 

We have recently received funding to lead another two SIF Round 2 Discovery projects; Scenarios of Extreme Events seeks to develop a proactive approach to identifying and analysing extreme, unexpected events and forecasting their impact on the electricity grid and wider energy system, and Powering Wales Renewably will see local government and network operators collaborating to identify innovation priorities to progress Welsh decarbonisation plans and increase renewable electricity hosting capacity, while contributing to the development of the Virtual Energy System for Wales. 

The 2023 Virtual Energy System annual conference held in London was an opportunity to share important updates on the ambitious, industry-wide mission to digitise the GB energy system, and how funding mechanisms, such as NIA and SIF, are helping to advance progress on this UK-first initiative. A dedicated team for the Virtual Energy System has been implemented across Stakeholder, Common Framework and Use Cases, and these three workstreams are being progressed as part of the 5-year vision for the programme. 

In July 2022, we hosted our annual Open Innovation Event, which had 60 proposals from across industry, academia and other innovators submitted, to address key areas of net zero challenges spanning Use Cases for the VirtualES programme, Network Modelling 2.0 and Strategic Innovation Fund Challenge Areas. At the in-person event, more than 60 attendees from ESO, proposal teams and other networks collaborated to rapidly develop five of the proposals and pitch these to an industry judging panel.

2023-24 Innovation Priorities  

As we look to the year ahead, our innovation priorities remain rooted in four primary drivers of change: decarbonisation, digitalisation, decentralisation and democratisation.

Zero Carbon Transition 

Accelerating solutions through innovation which enable new research and technology and the development and testing to ensure the transition to zero carbon is delivered in a timely way for the benefit for industry and consumers.  

Digital & Data Transformation 

Digitalisation remains a main priority us in underpinning the success of its ambitions.  

The development of new data intensive models and scripts addressing current and future system challenges over recent years means we are now faced with the challenge of processing the vast number of calculations resulting from such models. Digital and data transformation will now address this challenge, developing innovation projects similar to our Advanced Dispatch Optimisation project – which is helping us to understand what could be possible with existing, or new data and optimisation techniques, to improve the way actions are taken in the Balancing Mechanism.  

Whole Energy System 

This has been moved to now be the third highest priority, reflecting preparations for our new role as Future System Operator (FSO). As we become the FSO, we will be leveraging our unique position to collaborate with industry to find efficiencies and optimise across different vectors (e.g., gas networks and hydrogen producers) to transform the whole energy system. 

Future Markets 

Ensuring markets that are fit for purpose in driving ‘competition everywhere’ while achieving net zero carbon operation. We will be continuing to explore the long-term options for market design and whole system solutions needed to reach net zero.

Constraint Management 

We recognise that the cost to manage transmission system constraints continues to have an impact on consumers. This is why we will continue to develop innovation projects to support our Constraint Management Pathfinder. While the pathfinder has made a tremendous impact in cost efficiencies for consumers (£80m between April 2022 – Jan 2023), we still need to test a variety of innovative market-led solutions and technologies to ensure the most economical solution for consumers. 

System Stability & Resilience 

Lastly, as we transition energy operations to zero carbon, system stability will remain a key area of investment. As we move towards greener operation and synchronous generation capacity decreases, the system may become less stable. Our focus is to ensure the safety and resilience of the operations as we reach our energy target.  

Find out more about our Innovation projects