The Case For A UK Smart Grid

The fundamental premise of the smart grid is very simple. Energy companies need more information about what is happening in the electricity network to be able to manage supply more accurately. Consumers need more information about their energy usage to reduce consumption and expenditure, and as a nation we need to use less energy if we are to meet our environmental targets.

Inevitably in these straightened times there will be questions about the cost of any capital investment, but smart metering and the smart grid will revolutionise how the UK generates and consumes power. Fossil fuel power stations are highly polluting and costly to build, and the cost of the energy they produce will keep rising as fossil fuels become more scarce and difficult to extract. The case for nuclear energy has not been helped by a number of high-profile incidents, perhaps most notably the Fukushima reactor disaster in Japan. We need another solution.

Cost savings

Currently energy is stored to meet periods of peak demand which is expensive and inefficient. Increasing the visibility of data will give energy companies the information required to better match supply and demand and will reduce the need for additional power stations which are used to supply peak periods.

The UK government’s target is for 50 million smart meters to be installed across the UK by 2018, but other European countries are well ahead of the UK programme. Italy, for example, has had smart meters installed in its 30 million domestic properties since 2005. In the years following the rollout, energy use fell five percent per year.

20-20-20

Environmental concerns are another major driver. The UK is a signatory to the European 20-20-20 targets designed to bring about a 20 percent cut in emissions of greenhouse gases, a 20 percent increase in the use of energy from renewable sources and a 20 percent decrease in total energy consumption. All of this has to be achieved by 2020. The UK government has decided that a smart grid with the capability to deliver efficiency savings by more accurately matching the supply and demand of electricity across the UK can play a major role in meeting those goals.

Ambitious? Yes. Impossible? Definitely not. Smart meters will give users a detailed overview of their energy usage which is expected to reduce energy consumption in the UK and bring down electricity usage and the cost of bills. Enhancing control and visibility are key to reducing energy consumption, and smart meters and the smart grid will increase awareness among end users about how energy is consumed.

Through the smart grid, consumers will have a mechanism for selling their own electricity generated from renewable sources back to the national grid, thereby increasing renewable energy usage and reducing greenhouse gas emissions in one measure.

Whenever data is mentioned, the question of privacy is never far behind. Questions have been asked of smart metering but the whole data ecosystem around smart meters and the smart grid has been designed from the ground upwards with privacy high on the agenda. All consumer data will be anonymous and held by an independent licensed third party, the to-be-formed Data and Communications Company (DCC). Utilities companies will receive only be able to access anonymised data from the DCC.

Design for the future

With consumers expected to pay for their own smart meters the emphasis in their design has been on making them inexpensive and future-proof so that consumers can easily switch suppliers without buying new equipment. This design should also reduce inertia and make the electricity market more competitive.

Our energy usage is already changing. Electric cars have yet to really hit the mainstream, but experts predict that sales of fully electric cars will double in 2013. Although these are still relatively modest numbers, the investment that the motoring industry is making in electric vehicles tells its own story. The future of transport will fundamentally change the way we consume electricity and therefore energy infrastructure needs to change too. When millions of people are charging electric cars overnight this will create a major challenge for energy suppliers, and the way they provide energy has to change in order to be able to service this demand.

Other European countries have demonstrated that smart meters are proven technology; nevertheless the smart grid is still an ambitious project. But changes in consumer demand and behaviour mean that the UK needs to adapt. Creaking legacy systems and estimated electricity bills belong in the past. An increased focus on renewables is important for the future of the planet. Energy needs to be cleaner, more transparent and more cost-effective. Consumers need to be empowered to better manage their electricity usage. Energy needs to be smarter.

Rahoul Bhansali is head of government, energy and utilities at global ICT management consultancy Hudson & Yorke.  He is working with Ofgem and the Department for Energy and Climate Change (DECC) on the UK’s smart metering programme.

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