How we can build a smart energy future
With a smarter energy system, we can empower consumers to make the choices that work for them as we move to Net Zero.
There are economic benefits to a smarter and more flexible energy system. The Department of Business Energy and Industrial Strategy think a smarter, more flexible energy system could reduce energy system costs by £10 billion per year by 2050. This means achieving zero-zero targets and lowering bills for all homes and businesses compared to a less smart energy system.
Where do these savings come from?
A smart energy system is one that best utilises all the available energy resources. This means getting the most out of what we have on both the supply and demand side and not building too much electricity generation and grid infrastructure.
How do smart energy systems work?
Smart energy systems integrate monitoring, dynamic pricing and actuation / demand-side response (ability to turn devices on and off).
Monitoring relates to data on what is happening in the energy system in real time. This means measuring electricity generation, the electricity grid, and the demand for energy. In our homes and businesses, smart meters are the most obvious example of the smart energy system. These meters tell the system about the demand for electricity in real time.
Knowing the status of the electricity system in real time means that pricing of electricity can become more dynamic. This means that the price of electricity for homes and businesses could vary depending on whether electricity is abundant (low price) or scarce (high price). Or if there are problems in the electricity grid meaning it is difficult to transport electricity from one place to another. Dynamic pricing is about encouraging the right behaviour so that energy is provided at the lowest cost.
Actuation is the ability to turn devices on and off, potentially remotely and automatically with the appropriate consent, in response to a signal. This could be a bit of kit that protects the grid in the event of a problem or it might be a device that turns itself on or off depending on the price of electricity – for example, a home electric vehicle charger.
It sounds complex, but it doesn’t have to feel complex
This smart energy future might sound like it means a more complex relationship between people and energy, however, this isn’t likely to be the case. In my research I have shown that this smart energy system is an opportunity for energy businesses to get to know their customers better. The rollout of smart meters, combined with other sources of data, means that energy businesses can understand what their customers want, need and value in terms of their energy usage, thus providing the opportunity for them to tailor the service they offer.
What could tailoring mean in practice?
Well, for me, a somewhat lazy energy geek with solar panels on my roof and a battery in my cellar, I might want to trade energy with my neighbours. However, I don’t want total exposure to all the complexity and risk, so I might want my energy supplier to enable me to dabble but do all the complex stuff on my behalf.
At the same time, my neighbour might want a totally different proposition. For example, installing a new zero-carbon electric heating system and (potentially) automating its operation to follow electricity cheap prices so that they stay comfortable and pay the lowest price for the energy. So rather than paying for the energy, they are buying comfort as a service.
A smarter energy system doesn’t have to be more complex, in fact it should become much more about you and your relationship with energy. The energy supplier of the future is one that understands you and your needs and provides you with a tailored package to suit you. Your future relationship with energy is only as complicated as you want it to be.
Independent expert opinion on future energy systems provided by Dr Hardy, through Imperial Consultants.
For more information about the benefits of smart meters, please visit smartenergygb.org.
This article was published in The Path to Net Zero, a special report to mark Net Zero Week 2022, with contributions from Anne-Marie Trevelyan MP, Alex Burghart MP and Kerry McCarthy MP. Read more here.
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.