Smart grids and new technologies
Low carbon and smart technologies should be seen as key enablers in terms of developing consumer responses that will make the retail price of electricity more competitive, according to Morgan Wild, a senior policy researcher with the Citizens’ Advice Bureau (CAB).
“Smart grids have a role to play in the future. However it is important that we understand how they can provide security of supply and value for money as we move to a low-carbon economy,” said Wild.
“In the UK, the current smart meter rollout programme should be completed by 2020, thereby enabling innovative tariffs and energy offers. In theory this should provide Distributed System Operators with more responsive ways of managing peak network demand for consumers in specific localities. The UK’s decarbonisation agenda aims to reduce carbon dioxide emissions by 34 per cent by 2020 and 80 per cent by 2050 compared to 1990 levels.”
Wild related the results of three specific trials, carried out with consumers in London and Bristol. The former assessed the potential impact of smart grids in the capital, under the aegis of Low Carbon London and the Customer-Led Network Revolution (LNCR) initiatives. The latter looked at the impact of solar panels within the domestic electricity market in the Bristol area. In all cases the climate change consultancy SE2 was commissioned to assess the consumer impact of these trials.
“The projects reflected the impact made by the Low Carbon Network Fund (LNCF). This is a £500 million fund managed by Ofgem to support innovation projects by Electricity Distribution Network Operators,” Wild explained.
The LNCR project involved 13,000 consumers, who took part in static time of use trial. It tested the Demand Side Response (DSR) for different consumer segments: consumers with smart meters, smart washing machines, air source heat pumps or rooftop solar. Shadow billing was in place to make sure no consumers were worse off.
The Low Carbon London initiative involved 5,600 households in a dynamic time of use trial. Consumers received a DSR signal 24 hours ahead of the tariff change via SMS or IHD. Again, shadow billing was in place to make sure no consumers were worse off.
The Bristol trial involved 100 consumers. It aimed to simulate the electricity network as it might be in 2030 with the high take up of electric vehicles. Between seven and 10 households were connected to same substation, using a system that ensured that they did not all charge at the same time. There was also collaboration with Bristol City Council to install solar PV in social housing. Batteries were installed, allowing customers to make best use of generation. The solar panel work confirmed that average spend on electricity halved from £20 to £10 per week.
The SE2 analysis indicated that, in terms of a network benefit, the Low Carbon London Trial confirmed a peak reduction between 5 per cent and 10 per cent. There was a stronger response in winter than in summer. From a consumer point of view, 60 per cent of CLNR participants saved money while demand in peak periods was up to 10 per cent lower than the control group.
However, households without dependents were more likely to respond to price signal than renters and those with dependents. Approximately 40 per cent of customers in CLNR missing out on benefits.
“Our aim is to ensure that smart grids are affordable, accessible, safe and fair for consumers,” Wild explained. He indicated that the LCNF trials have demonstrated that correctly implemented smart grid solutions can work for consumers and should deliver extensive benefits for future consumers.
“The data available from the demand side response perspective and electric vehicle trials confirm that consumers are largely benefitting from lower bills,” said the CAB representative.
“However, not all consumers are benefitting. All of the trials had some sort of safety net to make sure participants were not worse off than they would otherwise have been. This included shadow billing. However, this is not expected to be available if the trials moved to a business as usual footing.
“More work needs to be done to understand why not all consumers responded in a positive way. Perhaps they were they not engaged.”
According to Wild, there is evidence to suggest that some consumers are not benefitting because they have been excluded from the trials, usually because technological solutions were not available. These include pre-payment smart meters.
“However, for smart grid to work for everyone, solutions must be developed for all sections of society, not just the able to pay,” he suggested.
Wild added that the results of the trials indicate that electricity stakeholders need to think differently about who benefits most from innovative approaches such as these: the results from both projects show at best only a weak link between income and the response to time of use tariffs.
According to the CAB analyst, there is a much stronger correlation in Low Carbon London with size of household, although this has only been shown in terms of absolute energy shift (i.e. the amount of actual energy householders use) rather than relative energy shift (i.e. the amount of energy as a percentage of the total demand) which is the metric for CLNR.
“This needs to be better understood as it will feed into the way we consider demographic differences as the smart grid is developed,” he added.
Wild said that the value of open and honest, consistent and ongoing communications was another theme across all the projects.
“Electricity network operators are not set up to communicate with the public on a regular basis. They do not have strong customer relations because it is not business critical for them as things currently stand. As a consequence, operators will either have to shift their relationship with their customers and become more visible, or work with other delivery partners such as community advocates, energy suppliers or other third party intermediaries.”
He concluded: “Our work indicates that low income or vulnerable consumers do not benefit from smart technologies. The benefits currently accrue to higher income groups, because of the initial investment barriers.
“Our trials have identified two types of consumers, where energy is concerned: those who actively seek out the benefits which new technology can bring and those who are much more passive in nature.
“We also know that passive consumers when signed up to smart grids, will allow the technology to take control. This is why safeguards, such as shadow billing, are critical. Consumers must have guaranteed service levels or energy costs.
“Grid operators must communicate the benefits of smart technology on a proactive basis. Consumers increasingly access information by smart phones, but suppliers must not assume that everyone has this technology or internet access.
“Hard-to-reach consumers, by definition, take more effort to engage with, which takes more time and resource and is therefore more expensive. Nevertheless, it is important that these consumers are not left behind in the smart grid revolution that they help to fund through their energy bills.
“There is also strong evidence to suggest that electricity providers must be equally proactive with consumers when it comes to communicating the benefits of increasing energy efficiency levels. Participants in the various trials have responded well to systems with clear, easy to understand messages and graphics: the challenge ahead is that of simplifying systems further.”
