Smart Energy – The Return To A Localised Energy System

Globally, our energy systems are undergoing major transformation as the control of how we produce, distribute and consume energy is being put back into the hands of local people.

Over the past century, the availability of cheap fossil fuels has led to the development of a centralised energy system. In the developed world our large power stations and extensive transmission and distribution networks have provided us with cheap reliable energy at the click of a switch. Energy has now become such a fundamental part of our modern industrialised societies that it is often argued that it should be included as one of the fundamental needs in Maslow’s famous hierarchy of needs.

However, the time has come for the system to change as fossil fuel prices continue to rise, new forms of energy generation grow, and use patterns are evolving. This has led to the point today where we are at the cusp of a paradigm shift in the energy system, driven by the ever-increasing development of distributed generation and use of energy.

“The transformation coming to the electric industry as technological innovation crashes over the utility landscape like a giant wave will leave dramatic change in its wake” (Carvello & Cooper, 2011)

The move from a centralised energy system to a decentralised one is already underway, fundamentally reshaping our entire system. This change is illustrated in the image below.

 

The implications of how we produce and distribute energy will be significant.

Not least is how we deal with managing the inherent complexity in a system which needs to actively balance supply and demand at the edges of what is currently a highly centralised system. A more active system is called for.

The good news is that this transition is occurring at the same time as the rapid innovation and convergence that we are witnessing in the communications and IT industry. Already, novel innovations are providing the tools to actively manage a system that will be a lot more complex but ultimately, has the potential to radically reshape how we engage with energy.

A Smarter, more Sustainable and more Inclusive energy system

The potential of a Smart Energy system to touch all parts of our daily lives and to transform our relationship with energy is something that cannot be underestimated. An interesting analogy can be taken from the move from an analogue to digital telecoms system. Back in the 1950s for instance, most people at the time could not have conceived this change would take place in the Internet and social media.

The move to an increasingly digital energy system will inevitably result in such large scale economic and social changes.

A fundamental driver for a decentralised energy system will be the exponential rise in the use of edge technologies, requiring an ever more reactive and balanced energy system. There are two key tools in the Smart Energy toolbox:

  • Demand response – shifting demand at peak times or when there is less intermittent renewable energy on the system

  • Energy storage – demand response can only ever do so much therefore storage will be a key driver to fill the energy gap at critical times and ensure energy is not wasted at times of excess production

Underpinning this is the communications, IT infrastructure and market mechanisms, providing the ‘Smart’ technological and market (delivering effective pricing signals) platform to ensure the energy system is kept in balance.

The social and economic opportunities

Technically, this challenge is fascinating. However,  a more interesting take is what this will deliver in terms of social and economic opportunities for local communities and businesses. The new Smart energy system has the potential to fundamentally disrupt the current paradigm of central control and the business models of the inevitably dominant players. We are currently at the start of a generational opportunity to rethink what a Smarter, more localised energy system could do for us.

What is clear is that the potential economic and social opportunities that can be realised through a local energy system are significant. For example the development of local energy markets could provide individuals and communities with the ability to produce and consume energy locally, becoming an active participant of their energy market. In doing so it might encourage and support local generation and the development of innovative energy models.

Examples of this include peer-to-peer trading, as well as the creation of local energy supply companies. In turn, this could lead to the development of innovative, socially-driven energy models where for example local communities can direct energy at times of excess free of charge to those in fuel poverty. A recent report from UKERC exploring different scenarios for Smart Grid development in the UK demonstrates the public felt that this community-led approach was by far the preferred option. The necessary community groundswell is already well underway through some pioneering groups such as the Wadebridge Renewable Energy Network.

In addition to the social benefits, the inherent complexity of the new system will grow as more innovative products and services are required to keep pace with the inevitable evolution of the system. This offers a significant opportunity to a wider variety of sectors to grow both horizontally and vertically to exploit the many market niches which will be created as the Smart Energy system picks up pace. Furthermore, smart systems will provide a more resilient energy supply to energy-intensive businesses. This will develop more sustainable services in an increasingly uncertain world.

However, such social and economic opportunities will only be realised if the appropriate market mechanisms, policy interventions and overall strategic understanding of the opportunity are embedded from the outset. To achieve this, we must ensure that the right support is given to communities and businesses to enable the development of the right type of Smart Energy ecosystem – one that delivers outcomes that will benefit everyone.

I will conclude by reflecting on two images shown here from the 1900s – one is of the US’s best selling car at the time, an electric car, the Columbia Electric Run-around, and the other is of a local energy supply company in the town of Wadebridge in the UK, these were the norm back then.

It is clear that a more localised energy system existed 100 years ago and we are making our way straight back to it. So I hope what this shows is that there is nothing particularly new in where we are going, but what is new is the opportunity to develop a much smarter, more sustainable and more inclusive energy system than we have today.

The worlds most energy efficient village

The worlds most energy efficient village, and the next step on their journey – A Smart Grid of course
This is a great video which shows the potential of our smaller villages and towns to act as our future power stations, with the people in control.

UK Smart Grid Routemap sets out a Smart future for the UK

Yesterday saw the much awaited publication of the UK’s Smart Grid vision and routemap by DECC and the UK’s Smart Grid Forum.

The routemap sets out how a phased rollout of smart grid technologies that will reduce greenhouse gas emissions, curb increases in energy bills and enhance energy security over the coming decades, delivering economic savings worth up to £12bn a year by 2050.

The routemap sets out the potential of Smart Grid technologies to deliver a cleaner, more resilient energy system as well as to deliver 13bn of Gross Value Added and £5bn of potential exports by 2050, while creating about 9,000 jobs by 2030.

The report highlights the leading work of the UK through the £500m Low Carbon Network Fund and the setting targets to deliver smart meters to every home by 2019. It does, however highlight the challenges ahead, particularly in establishing an effective regulatory regime for a significantly more complex smart energy architecture.

Looking to the future the report sets out the need for a three-phase rollout of smart grid systems, with: –

• A “development phase” through to 2020 that focuses on completing the national smart meter rollout and establishing a supply chain for the industry
• A “rollout phase” in the 2020s that sees new smart grid infrastructure and energy storage systems deployed
• A “developed phase” in the 2030s that sees a fully integrated energy system established

So lots of challenges ahead, but equally what a fantastic opportunity.

Want to know more then download the Smart Grid Vision and Routemap

Consumers in favour of community energy and smart grids

A new report by the UK Energy Research Centre (UKERC) explores the emerging role of smart grids in the UK and presents a vision of the near future where energy use is monitored in real time, home appliances are automated, and Britain is powered by a network of community run energy schemes.

Findings from the research show that there is a real appetite for change, both from industry and the public, but the benefits of smart grids need to be clearly communicated and shared.

DSC04941 (600 x 408)

However, smart grids face a chicken and egg problem; there is little incentive to develop them until electric vehicles, heat pumps and renewables are more widely used, but increased deployment of these technologies will require smarter systems in order to maintain a reliable supply of electricity.

Key challenges must be overcome in preparing for the ‘smart’ revolution – such as low levels of public understanding of smart grids, misuse of data and concerns over energy suppliers remotely controlling home appliances, as well as more fundamental difficulties in predicting how smart grids will develop over time.

Developed using expert and public feedback, the research identifies four possible smart grid futures or ‘scenarios’; from a world dominated by gas with little smart grid development (‘Minimum Smart’), to one where renewables and electric vehicles are strongly incentivised and developed; leading to a consumer driven smart grid (‘Smart 2050’).

Project leader Dr Nazmiye Balta-Ozkan of the University of Westminster’s Policy Studies Institute, says: “The UK’s electricity grid is fast becoming outdated, as new technologies and new behaviours change the way we use and supply power. Our increased use of intermittent renewables and electric vehicles will require more intelligent ways of managing and delivering energy. But energy suppliers and the government need to be switched on to consumer concerns about this transition.”

“Smart grids could allow consumers’ to benefit from cheaper energy bills by matching tariffs to their usage patterns, as well as enabling more efficient use of energy and more effective integration of large amounts of renewables. However, policy needs to address the long-term issues around risk, innovation and investment, as well as equity so that vulnerable consumers are not disadvantaged,” she adds.

Of the scenarios developed, the least popular with the public was the ‘Minimum Smart’ scenario with just 8% support. The preferred option, with 53% support, was the ‘Groundswell’ scenario, which predicts a future where a significant amount of electricity is generated by households and through community led schemes.

Participants chose the ‘Groundswell’ scenario because it showed a strong commitment to renewable energy (cited by 68% of public participants) and offered the opportunity to decrease energy bills (cited by 66%).

Smart meters which can monitor and control energy usage at domestic level are widely seen by experts as being an important part of smart grid development. However, a lack of strong data protection and privacy measures (cited by 60%), as well as consumer apprehension about sharing energy data (cited by 49%), were seen by the public as the biggest barriers to future UK smart grid development.

There was also concern that those on lower incomes would not be able to afford smart appliances and that vulnerable people could be taken advantage of by companies, or miss out on potential benefits. Ensuring that the benefits of smart grids flow to consumers will play a key role in encouraging householders’ participation.

The report also highlights the critical need for a long-term, cross-sector policy vision for smart grids, which is likely to significantly enhance investor confidence.

The main report can be accessed by clicking here

Energy saving in the workplace – the next big win?

As the price of energy rises it is increasingly hitting the bottom line of businesses. In an ever competitive world reducing the costs of energy is becoming an important factor for many businesses to keep ahead of their competition.

There are a growing mix of Smart Energy solutions which will allow businesses to use energy differently and even create new revenue streams through offering balancing services by switching non-essential equipment off during peak times.  DSC04996 (600 x 450)

Whist we will be following these changes closely, there is still a lot of low hanging fruit. With the biggest, ripest fruit being encouraging simple energy efficiency measures and behavioural change in the workplace.

A report published this week by Rexel UK reviled just how big that opportunity is, finding that:

  • Only 20% of consumers would say that they are energy conscious in the workplace compared to almost 50% at home.
  • Over 70% of consumers say they are concerned about wasting energy at home, only 43% worry about wastage at work.
  • Only 60% turn off the lights in the office compared to 93% at home.

This was also shown in a report published by the Carbon Trust last year which found that just 23% of employees have been asked to help save energy at work by their manager. It also found that whilst the vast majority, 92%, worry about the cost of energy at home, less than half are concerned about it whilst at work.

In this context there is a significant opportunity for employers to make a real difference to how their staff use energy in the workplace and give them the tools to not only reduce energy use whilst at work but to take these tools home with them and implement them in their own homes.  With a little support employers can reduce their bottom line as well as that of their employee’s energy bills, a double whammy for improving their productivity.

What is a Smart Grid?

The Smart Grid is just one part of a new Smart Energy ecosystem but it will undoubtedly be an integral one, through which, our interconnected homes and businesses will be able to play an active role within the wider energy system and market.

There are countless definitions of what a Smart Grid is but as with all definitions they are a bit dry. We thought we would point you in the direction of a couple of our favorite youtube videos which take on the challenge from two different, but equally entertaining viewpoints.

Enjoy!!

Transactive energy and the democratization of energy – two phrases we will hear a lot more of

Our energy system is changing. As we see the exponential growth of new ‘edge technologies’ it is becoming increasingly apparent that the traditional centralised power system will simply be unable to co-ordinate all these new devices. This simple fact means we are currently at the cusp of a paradigm shift in how we produce, distribute and consume energy.1

Smart Grid technology itself only offers part of the solution. The real solution lies in the technology enabling; electricity supply, delivery and demand to be managed through a market based approach – transactive energy. Transactive energy is a word we will hear a lot more of over the coming years as it is likely to be the driving force in the development of Smart Grids. There are two key reasons for this:

  • Firstly, a market based approach is essential to manage the complexity of a new Smart Grid
  • Secondly, consumers will increasingly demand it

The Smart Grid will allow the consumer to play an equal role in what has been a traditionally highly centralised market. This trend has big implications; the democratization of energy markets (this is not the last time you will hear this)

Moving to a Transactive energy market and ultimately the democratization of energy is not going to be straightforward. There will be technical challenges with interoperability and security. Perhaps a more significant challenge will be addressing how consumers deal this increased complexity.

However, whilst over the coming years we will see many articles citing these as reasons why things won’t happen. We are not so sure, as we are already seeing fascinating changes. Not just in the technological solutions, but also new social models being developed by our communities themselves. This combination of technological and social innovation will be the driving force behind this now inevitable paradigm shift in our energy futures.

If you want to know more keep following us also have a read at this article

New report from the Smart Grid Consumer Collaborative

The Smart Grid Consumer Collaborative has just released an excellent report outlining the latest findings and summarising much of their work on consumer awareness and perception of the smart grid.

The accompanying press release summarised the key findingsDSCF0013_2

“The key to understanding the latest trends in engaging and educating consumers in smart grid is understanding how to appeal to them in terms that will resonate,” said SGCC Executive Director Patty Durand. “In order to increase awareness of a consumer-safe, consumer-friendly smart grid to consumers, utilities and other smart grid technology providers must do a better job at engaging consumers and getting into a consumer-first mindset.”

The report highlights the key themes and takeaways from the research conducted by SGCC in 2013. The six key themes are:

  • Theme 1: Consumer awareness and favourability are stable over time
  • Theme 2: Segmentation drives performance
  • Theme 3: Utilities can use field-tested best practices frameworks to engage customers
  • Theme 4: Customers want smart grid “made real” for them
  • Theme 5: Consumers value clean energy
  • Theme 6: The smart grid offers real benefits that consumers care about

Follow the link to read the full report