Leading network operator, Scottish and Southern Electricity Networks (SSEN), has joined together with key local and industry partners to launch Project LEO (Local Energy Oxfordshire), one of the most wide-ranging and holistic smart grid trials ever conducted in the UK.

The launch follows confirmation that the £40 million project, which will test electricity network flexibility models and markets across Oxfordshire, has received an award of £13.8m from the UK Government Industrial Strategy Challenge Fund.

An industry-first, Project LEO will explore how the growth in local renewables, electric vehicles (EVs), battery storage, vehicle-to-grid (V2G) technology and demand side response can be supported by a local, flexible, and responsive electricity grid to ensure value for consumers and opportunities for communities and market providers.

The project aims to replicate and trial aspects of the Distribution System Operator (DSO) models being explored by industry, government and the energy regulator via the Energy Networks Associations Open Networks Project. It will balance local demand with local supply in a real-world environment, helping to test markets, inform investment models and, ultimately, assess the benefits of flexibility to the energy system.

The £13.8m of funding from the Industrial Strategy Challenge fund, managed by Innovate UK, is supported by £26m of private funding from the project partners. This includes SSEN's Project TRANSITION, which received funding from Ofgem's Network Innovation Competition (NIC) Fund, the objectives of which are closely aligned to Project LEO.

Project LEO will bring together significant local, academic and industry experience and expertise, with partners including:

• Leading social enterprise, the Low Carbon Hub, to manage and develop a portfolio of local energy generation and demand projects, informing investment models;

• Leading academics from the University of Oxford and Oxford Brookes University, who will collect and analyse data sources to deliver a model for future local energy 'whole system' mapping and planning;

• Oxford City Council and OxfordshireCounty Council will provide key infrastructure and local investment projects, including intelligent street lighting, EV infrastructure and responsive heat networks.

• Marketplace Operators Origami and Piclo, piloting new business models, via innovative market platforms, to deliver local energy trading, flexibility and aggregation;

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• Nuvve Corporation, a global green energy technology company, will provide V2G technology, smart charging and bidirectional EV charging stations; and

• Energy supplier, EDF Energy bringing customer focused innovations and energy services to residential, industrial and public customers.

The Oxfordshire area was chosen for the project location due to the levels of constraint on the electricity network in the area, the active and developed community energy partners and the progressive approach of both local authorities.

The project is expected to run for three years and is seen by SSEN, its partners and wider industry as one of the most critical developments to date in the transition to Distribution System Operators. Its findings will be shared collaboratively across industry, academia and with policy makers and regulators, helping inform and influence the energy system of the future.

LEO is one of four projects that has received funding support from Innovate UK.

Commenting on today's funding announcement the Energy and Clean Growth Minister Claire Perry MP said: "Oxford is set for a smart energy overhaul with these projects aiming to meet the city's energy needs through greener, low carbon technologies. Backed by government funding, this has the potential to completely change the way people go about their daily lives – from going to work on an electric bus to using the heat rising from the earth to heat your home without gas. These projects are an example of our modern Industrial Strategy in action, helping companies and consumers seize the opportunity of the global shift to a cleaner, greener, more flexible energy system."

Commenting on the ground-breaking trial, SSEN's Head of Future Networks Stewart Reid, said: "We are delighted that the UK Government has provided the final piece of funding for Project LEO, this will provide crucial research and learnings, accelerating the transition to new local energy systems and the move to a smart, flexible, low carbon future. The electrical network and communities of Oxfordshire create the perfect environment for all the project partners to understand the value of new markets, technologies and solutions. Importantly for SSEN it will allow us to understand how we will need to change to facilitate these new markets and solutions while still delivering energy in an economic, reliable, fair and sustainable manner. As is the case with most trials there will be challenges along the way and many expectations to be set and reset, however throughout the project we seek to find early successes which we can start offering throughout our network along with, inevitably some solutions that will be put in the "lesson learnt" box. We are really excited to be partnering with such a broad range of industry experts, collaborating together to help inform the energy system of the future."

Leader of the Oxfordshire County Council Ian Hudspeth, said: "Oxfordshire is going through a period of unprecedented growth with more homes and more jobs which bring new demands to the county's infrastructure. For Oxfordshire's communities to continue to thrive now and into the future some radical and innovative thinking is needed. That is why I am proud that Oxfordshire County Council is yet again an important partner in such a forward-thinking project. We are already helping to deliver transport options for the future such as driverless cars, as well as using new technology to enhance the lives of our residents and give better to access to our services. Making sure that there is a sustainable system to supply the energy for these things is therefore crucial."

Professor Malcolm McCulloch, University of Oxford said: "We are excited that this revolutionary project is happening in the UK. It will lead the world in developing new value streams from local energy assets using local markets. This project will transform new thinking in the future of energy systems to a reality and will crystallise large scale investment. This will enable a significant deployment of clean energy resources in Oxfordshire and enable end users to have a lower cost, secure energy supply."

Barbara Hammond MBE, CEO of Low Carbon Hub, said: "We are delighted to be a partner in this innovative Oxfordshire-wide collaboration. Climate change is a global crisis that needs local solutions. By bringing together collaborators from a wide range of disciplines, Project LEO will give local communities the opportunity to help shape a new energy system that's good for people and good for the planet."