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comment Smart energy

The government wants all UK homes to have new energy meters within the next seven years as the first step towards an integrated ‘smart grid’. This is to help ensure that our growing demand for energy can be met by future supply. This month Douglas Herbison, AMDEA’s chief executive, explores the options open to energy suppliers and consumers if ‘smart grid’ becomes a reality.


he UK is planning to install some 54 million new ‘smart’ energy meters between 2014 and 2019. To begin with, these new meters will only offer two advantages – remote access for energy suppliers (so no more meter readers) and an ‘in home’ display for consumers. The next objective is for energy suppliers to offer variable tariffs to try and persuade consumers to switch their energy use to different times so that demand is spread more evenly across the day (and night). The UK’s electricity supply relies heavily on power stations using fossil fuels. But we are reducing our use of gas and coal to protect the environment and decrease our reliance on imports. Nuclear power stations are either on or off, while renewable energy sources are unpredictable, be they small scale suppliers feeding their excess solar power into the grid on summer days or large wind farms supplying power on blustery days. Work on power storage innovation continues with ideas about water storage and enormous batteries, but current technologies cannot guarantee us the flexibility that we have at present. The UK’s National Grid can map our

patterns of energy use with a surprising degree of accuracy. With most people asleep during the night and a work pattern that is still predominantly 9-5.30 five days a week, early evening is the peak time for energy use in the home. Some 16% of the UK population currently uses existing variable tariff options –

storage heaters can be charged overnight while the electricity is cheaper. But the dream is continuous remote monitoring of energy use with the ability to vary supply for as little as a fraction of a second. Even refrigerators could incorporate a device to switch them off when energy supply is low and back on when it is higher (while still maintaining the required temperatures, obviously). This would enable us to match our energy demand and supply, avoiding the waste of surplus energy or the risk of power cuts. So there are two (conflicting) views of how the future should work. One version has each home with a central control device operating all the power-using functions – heating, lighting, cooking, recharging the electric car battery etc. The consumer could make choices based on variable tariffs. The other version has all electrical and electronic appliances being controlled remotely by the energy supplier so that demand can be varied to match supply. It is not clear if this version’s consumer would be compensated for an interruption since they would not necessarily be aware of it. It is also being suggested that rather than making regular payments for a continual supply of energy as we do now, and using it as we want/can afford, we might see ‘pay as you go’ options. Again the take-up might depend on whether this would mean a loss of power when your credit runs out or just a higher charge for energy not pre-booked. Another hurdle for the ‘smart’ dream is standardisation. An interconnectivity

16 The Independent Electrical Retailer May 2012

option that is not compatible with other products or other energy suppliers or other countries’ energy supply network is of little use. Considerable efforts are being made in standard groups internationally, within Europe and at national level to agree the standards that are a prerequisite for any ‘smart’ grid. But once we have both the technology and the standards, we still need consumer acceptance. Energy prices are expected to rise in the longer term. In the short term ‘smart appliances’ will inevitably carry a cost premium so there would need to be enough differentiation in the tariffs to persuade people to buy ‘smart appliances’. In the longer term this difference would have to be enough to provide an incentive for consumers to modify their behaviour and expectations. The challenge will be to persuade UK consumers, accustomed to energy on demand, that they need to think about how and when they use their appliances. ■

“In the short term ‘smart appliances’ will inevitably carry a cost premium so there would need to be enough differentiation in the tariffs to persuade people to buy ‘smart appliances’”

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