£500m for Distribution Network Operators (DNOs) to try new technology to provide security of supply and try new low carbon technologies.
The Low Carbon Network Fund (LCNF) offered two tiers of funding. Projects were able to recover some of the costs from customers through their electricity bills.
Tier One - allowed DNOs to recover a proportion of expenditure incurred on small scale projects.
Tier Two - annual competitions to help fund a number of projects with £64m of funding.
DNOs explored how they could facilitate the take up of low carbon and energy saving initiatives. LCNF projects provided valuable learning for the wider energy industry and other parties.

Projects were monitored so the learning that emerged from these projects helped to understand its impact on the current regulatory framework.

- Opening Up the Gas Market (whether gas that was currently not compliant could be distributed safely)
- BioSNG Demonstration Plant (converting household waste into grid compliant gas)
- Voltage Control System Demonstration Project (the effectiveness of Static VAr Compensators for Distribution Networks)
- Seasonal Generation Deployment (explored solutions to reduce the impact of increasing peak demand).

Analysis looked at the business as usual readiness of each technology: scale of 5 (strong evidence against) to 4 (strong evidence for)
- Strong evidence for enhanced network monitoring
- Strong evidence for use of flexible demand in a number of areas
- Some challenges to deployment of storage

Resources needed

Up to £500m funding from Ofgem. The First Tier allowed DNOs to recover a proportion of expenditure incurred on small scale projects. The Second Tier of the Low Carbon Network Fund provided an annual competition for an allocation of up to £64 million to help fund a small number of flagship projects.

Evidence of success

LCNF has enabled innovation projects to be undertaken in a ‘safe’ environment; with the technologies explored often building on previous knowledge or learning acquired through
The LCNF has succeeded in encouraging DNOs to innovate and has served to move the level of innovation within the DNOs from a ‘low’ base to a ‘moderate’level.
DNO businesses have evolved since the introduction of the LCNF by expanding their Future Networks Groups.

Difficulties encountered

Many barriers seemed to be the result of governance constraints. Some felt that Active Network Management and Demand Side Response wouldn't be possible without the LCNF as the start up costs were so high and the risks were high as these new technologies hadn't really been widely tested.

Potential for learning or transfer

Success of LCNF was largely down to the amount of work that was carried out under the Innovation Funding Incentive (IFI). IFI had the flexibility to lay the building blocks of solid innovation, with the Low Carbon Network Fund using these building blocks to create well-constructed demonstration projects that had a foundation built upon well researched innovation and in this sense LCNF has succeeded.
LCNF has invested in a broad range of innovation work and delivered savings to the customer. Real examples of this include the development and proving of Active Network Management which can be seen by its rollout across GB network operators and the successful launch of the ANM good practice guide. To continue this success, it is imperative that network operators are allowed the flexibility to pursue high risk/low TRL projects that will further the UK’s dominant position as an innovation leader and continue to deliver real benefits to the customer and evaluated as business as usual.

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Main institution
Leicester City Council
Leicestershire, Rutland and Northamptonshire, United Kingdom
Start Date
March 2013
End Date
March 2015


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