SP Energy Networks, RIIO-T2 Business Plan December 2019 Submission Annex 6: Strategy for Innovation in RIIO-T2 SP Energy Networks, RIIO-T2 Business Plan Annex 6: Strategy for Innovation in RIIO-T2 CONTENTS 1 Foreword ............................................................................................................................ 7 2 OUR INNOVATION PORTFOLIO .......................................................................................... 8 2.1 Innovation Focus .............................................................................................................. 8 3 INTRODUCTION ................................................................................................................ 11 3.1 The Changing Energy Landscape .................................................................................... 11 3.1.1 Generation is changing……......................................................................................... 11 3.1.2 So is demand….. ........................................................................................................ 12 3.1.3 We Innovate…............................................................................................................ 12 3.2 Development of our strategy ............................................................................................ 13 4 Innovation Strategic Focus ............................................................................................... 15 4.1 Energy System Transition Challenges .............................................................................. 15 4.1.1 New requirements for reinforcement of our network in light of changing energy landscape 15 4.1.2 Replacement, operation and maintenance of assets for a resilient and sustainable network 16 4.2 System Security and Stability Challenges ......................................................................... 16 4.2.1 Reduced Grid Services ............................................................................................... 16 4.3 Challenges related to Black Start and Grid Dynamics ........................................................ 17 4.4 Increased Grid Dynamics and Interactions........................................................................ 18 4.5 Whole System Approach ................................................................................................. 18 4.5.1 Overcoming TO-DNO boundary restrictions and our vision of DSO ................................ 18 4.6 Integrating new technologies and enabling digitalisation, standardisation and cyber security 19 4.6.1 Digitalisation and standardisation................................................................................. 19 4.6.2 Cyber Security ............................................................................................................ 20 4.7 Improving the sustainability of our network and business processes and empowering our consumers ................................................................................................................................. 21 4.7.1 Achieving Sustainability............................................................................................... 21 4.7.2 Empowering Our Consumers ....................................................................................... 21 5 RIIO-T2 Innovation Ambition............................................................................................. 23 5.1 Innovation funding .......................................................................................................... 23 5.2 Using innovation to enable energy system transition ......................................................... 23 5.3 Enabling new and transformative innovation ..................................................................... 24 5.4 Enabling Whole System Approach ................................................................................... 24 5.5 Empowering our consumers and addressing consumer vulnerability .................................. 24 6 Innovation Expenditure & Benefits ................................................................................... 26 6.1 Our RIIO-T1 Innovation Portfolio, Investment and Benefits ................................................ 26 SP Energy Networks, RIIO-T2 Business Plan Annex 6: Strategy for Innovation in RIIO-T2 6.2 Our ambition for RIIO-T2 ................................................................................................. 28 6.2.1 NIA and Innovation Roll-Out ........................................................................................ 28 6.2.2 Strategic Innovation Fund............................................................................................ 30 6.3 Benefits Assessment ...................................................................................................... 30 7 C1 NETWORK MODERNISATION ...................................................................................... 31 7.1 T1 optimal grid design ..................................................................................................... 33 7.1.1 SP Transmission Led Activities .................................................................................... 33 7.1.2 Our RIIO-T2 Ambition ................................................................................................. 34 7.1.3 T1 RIIO-T2 Funding Request....................................................................................... 35 7.2 T2 smart asset management ........................................................................................... 36 7.2.1 RIIO-T1 Innovation & Roll-Out ..................................................................................... 36 7.2.2 Our RIIO-T2 Ambition ................................................................................................. 39 7.2.3 T2 RIIO-T2 Funding Request....................................................................................... 39 7.3 T3 New Materials, Processes and Technologies ............................................................... 41 7.3.1 RIIO-T1 Innovation & Roll-Out ..................................................................................... 41 7.3.2 Our RIIO-T2 Ambition ................................................................................................. 44 7.3.3 T3 RIIO-T2 Funding Request....................................................................................... 46 7.4 T4 Health & Safety Environment and Stakeholders ........................................................... 47 7.4.1 RIIO-T1 Innovation & Roll-Out ..................................................................................... 47 7.4.2 Our RIIO-T2 Ambition ................................................................................................. 48 7.4.3 T4 RIIO-T2 Funding Request....................................................................................... 49 8 C2 System Security and Stability...................................................................................... 50 8.1 T5 Grid Observability ...................................................................................................... 52 8.1.1 RIIO-T1 Innovation & Roll-Out ..................................................................................... 52 8.1.2 Our RIIO-T2 Ambition ................................................................................................. 55 8.1.3 T5 RIIO-T2 Funding request ........................................................................................ 56 8.2 T6 Grid Controllability...................................................................................................... 57 8.2.1 RIIO-T1 Innovation & Roll-Out ..................................................................................... 57 8.2.2 Our RIIO-T2 Ambition ................................................................................................. 60 8.2.3 T6 RIIO-T2 Funding request ........................................................................................ 60 8.3 T7 Network reliability and resilience ................................................................................. 61 8.3.1 RIIO-T1 Innovation & Roll-Out ..................................................................................... 61 8.3.2 Our RIIO-T2 Ambition ................................................................................................. 63 8.3.3 T7 RIIO-T2 Funding request ........................................................................................ 63 8.4 T8 Enhanced Ancillary Services....................................................................................... 65 SP Energy Networks, RIIO-T2 Business Plan Annex 6: Strategy for Innovation in RIIO-T2 8.4.1 RIIO-T1 Innovation & Roll-Out ..................................................................................... 65 8.4.2 Our RIIO-T2 Ambition ................................................................................................. 65 8.4.3 T8 RIIO-T2 Funding request ........................................................................................ 66 9 C3 Network Flexibility ....................................................................................................... 67 9.1 T9 TO-DNO Interface ...................................................................................................... 69 9.1.1 RIIO-T1 Innovation & Roll-Out ....................................................................................