If the UK is going to do its bit for the planet by reducing energy consumption we are going to have to get smart. There needs to be a revolution in the way electricity is transmitted and distributed, and the backbone of this change will be the smart grid.
Late last month, the government announced long-awaited plans to introduce technology that could serve as the foundation for such a smart grid system: the nationwide rollout of smart meters to the UK public. The plan is the most ambitious yet in any country and aims to install some 53m smart meters in 30m homes and businesses by the end of the decade. Such a scheme is a necessary stepping stone towards a smart grid.
"Smart grids will play a key part in our move towards a greener, low-carbon future, one that will enable us to enjoy greater energy security while reducing carbon emissions and combating climate change," says the energy minister, Charles Hendry. "By giving us more intelligent control of electricity networks, they will help enable some of the exciting changes we could be seeing in our everyday lives in the not too distant future."
For decades the UK has had a one-way system, where energy from power stations is delivered to the home, with the ability to ramp up production to meet demand at peak times. This system is known as "fit and forget" and has served us pretty well. But within the next 10 years it will no longer be fit for purpose.
The government's low-carbon roadmap calls for a decline in power generation from coal and greater development of wind power and nuclear energy. Added to the mix will be thousands of homes and businesses generating their own energy.
At the same time, demand for electricity will soar through the mass introduction of electric vehicles and electric heat pumps. According to National Grid, the average home will use 7-7.5 kWh of electricity in 2050, triple the amount used today. "The low-carbon economy will have very significant implications, with both ends of the supply chain becoming much more complicated," says Rachel Fletcher, a partner on electricity and gas regulator Ofgem's smart grids team.
In future, distribution networks will need to allow electricity to flow two ways, to incorporate renewable energy coming on to the network at different voltages and from disparate sources. Sophisticated monitoring systems as part of a smart grid will allow the network to match demand with supply in a far more efficient way.
Fletcher says Britain's energy sector will have to spend up to £200bn over the next decade to ensure the lights stay on, including £32bn on networks alone. "One of the reasons there's so much excitement over the smart grid agenda is the recognition that there may be solutions to our low-carbon energy needs that don't involve us having to build as much new [generation] capability."
Richard Smith, future transmission networks manager for National Grid, agrees demand management is vital. "In the smarter energy world, demand will need to move and follow supply. A large percentage of generation in the future will be wind and nuclear, which are not as flexible as thermal [coal and gas]. To be able to move and flex demand at the other end will be hugely useful." The key to this is smart meters, devices in homes and businesses that will provide energy utilities and consumers with real-time information about energy use, and allow power companies to reward those who shift their consumption away from high-use times.
Gathering momentum
Tim Lovejoy, head of energy, for T-Systems in the UK, says: "We can expect to see momentum on smart meter rollout really pick up now that the Department of Energy and Climate Change (DECC) has provided the clarity needed for the industry. Also, it has taken steps to ensure that early adopting consumers won't be disadvantaged."
The Labour government set a target for smart meters to be fitted in every home and business in Britain by 2020, but the coalition government has moved this deadline forward to 2019. How consumers will respond to smart meters, however, is not clear and is one of the questions Ofgem hopes to answer using its £500m Low Carbon Networks Fund. One of the first projects, the £36m Low Carbon London project, will test the impact of a flexible tariff system on users of 5,000 smart meters and 1,300 electric vehicle charging points in the capital.
David Openshaw, head of future networks at UK Power Networks, says 25,000 electric charging posts are planned for London by 2015, with huge implications for the city's electricity grid. "If we could manage that so drivers recharged their cars overnight, or before they actually need to use them during the day rather than at 9am, we could avoid putting pressure on the grid during the peak," he says.
Low Carbon London will test whether agreements by a group of consumers to cut their energy usage at peak times could be traded in the electricity market. One solution might be to let energy retailers turn off customers' appliances remotely at peak times in exchange for lower tariffs.
Rick Hanks, senior partner at Accenture, which helped the DECC and Ofgem devise the smart grid strategy, says many of the building blocks required to construct a smart grid are in place. In December, Ofgem introduced a new regulatory model, called RIIO (Revenue = Incentives + Innovation + Outputs), to encourage innovation and investment. Last month the DECC set out the technical detail of how smart meters will operate. A government white paper will outline plans to reform the electricity market. With these new regulations, and the innovative Low Carbon Networks Fund, Hanks says the UK is positioning itself to become a world leader on smart grids. "Two years ago we were in catch-up mode. Now we are on the right track."
