Greater Manchester Local Energy Market

About the project

The project developed a detailed design for a market platform – a market maker – that enhances how the energy market currently works by increasing visibility of energy activity and transactions, and lays the foundation for a full local energy market in future.

It also develops a greater understanding of the area’s energy system, including detailed local area energy plans (LAEPs) for each borough of Greater Manchester, and business models which can deliver value to end consumers, either as stand-alone products or in conjunction with the development of the GM LEM itself.

What did the project achieve?

• LAEPs delivered for each borough of Greater Manchester and synthesised across the whole of the city, showing pathways to deliver a net zero Greater Manchester by 2038.
• Detailed design of the market maker platform. This included three stages of development, starting with a model deliverable within today’s regulatory environment, and potentially leading to £40m/year energy system benefit with the potential for greater benefit and a £1m/year revenue stream for the platform operator.
• Three value-sharing propositions demonstrated to be commercially viable including a commercial heat as a service model, EV charging model, and domestic ‘type of use’ heat pump tariff.
• Roadmaps of regulatory and legislative change to deliver the upper end of local energy market (LEM) value.

Key lessons learnt

1. Delivering a carbon-neutral GM by 2038 could lead to the doubling of electricity demand and the deployment of 1 million heat pumps, and 1 million EVs.
2. By 2038, assuming delivery of the LAEP pathways and £1.9bn of capital investment, the GM LEM could deliver at least £40m in energy system benefits per year.
3. Four value streams have been identified: simple energy balancing, embedded flexibility, explicit flexibility, and participation and data sales. Of these, embedded flex – the system benefits deriving from the natural matching of supply and demand within a LEM – was the largest source of value for a LEM operator: likely 80% of potential revenue in 2038.

Next steps

• Develop and roll out GM LEM over three phases with first phase starting in 2023.
• Deliver value-sharing propositions by rolling out offerings to customers.
• Engage in detail with Ofgem, the Government, Elexon, Electricity North West and others to develop and implement the significant levels of regulatory reform required for later phases of GM LEM.
• Develop a strategic outline business case setting out the investment and approaches required to accelerate delivery of Net Zero and the controllable assets required to support a LEM.