(→Financial value of Demand Side Reduction)
(→Value flows in energy system and in smart meter roll-out – scaled to ‘Bristol scale’)
|Line 85:||Line 85:|
The net present value ('present' meaning 2012 as that's when the analysis was done) was calculated to be £4,840 million.
The net present value ('present' meaning 2012 as that's when the analysis was done) was calculated to be £4,840 million.
== Understanding markets where value is traded (capacity, balancing etc) ==
== Understanding markets where value is traded (capacity, balancing etc) ==
Revision as of 11:55, 27 July 2015
- 1 Value flows in energy system and in smart meter roll-out – scaled to ‘Bristol scale’
- 2 Understanding markets where value is traded (capacity, balancing etc)
- 3 Understanding value created by smart energy response and management of system at city scale (and how that will change over time)
- 3.1 General stuff about value of smart meters
- 3.2 Value of dealing with variable demand through a smarter energy system
- 3.3 Demand Side Measures
- 3.4 Time of Use (ToU) Tariffs
- 3.5 Virtual Power Plants
- 3.6 Smarter settlement
- 4 Understanding potential financial value of using smart energy data in other services (e.g. health improvement – thermal safeguarding etc)
- 5 Energy supplier smart meter roll-out plans and potential for securing integrated city-wide approach
- 6 Potential business models for city-wide approach
- 7 Innovation and research activities and funding sources for smart energy data/city development
- 8 Summary
- 9 Investment requirements and potential sources
Value flows in energy system and in smart meter roll-out – scaled to ‘Bristol scale’
The energy industry directly contributed £25 billion to the UK economy in 2013 (measured as Gross Value Added). This includes all fuels. The sector’s direct activities resulted in around £71 billion of value elsewhere in the economy (goods and services bought for energy companies' activities). In 2013, direct activities in the energy sector were the source of around £5.7 billion of tax revenue.
Using figures for Bristol's electricity and gas consumption as a proportion of UK consumption (and assuming this proportion applies to other fuels as well), the GVA directly contributed by the energy consumed in Bristol would be approximately £113 million annually. Gross Value added is revenue less inputs bought from other firms, and so is equal to profit plus employee pay plus taxes paid - essentially, the value added to the final product by the work of all the organisations along the value chain.
The Energy Value Chain
The energy value chain consists of fuel production, generation, transmission, distribution, and supply. I have not found any research describing the value added at each stage of the value chain. A partial view of this could be obtained by looking at Ofgem's Consolidated Financial Statements for the Big Six energy suppliers, which would cover supply and part of the generation market, and the financial statements of the distribution and transmission businesses.
Profits made at different points in the supply chain
|Domestic supply profit of big six, 2013||1,133|
|Non-domestic supply profit, big six, 2013||423|
|Total supply profit of big six, 2013||1,556|
|Generation profits of big six, 2013||1,240|
Similar data does not appear to be gathered for distribution. A quick analysis of the financial statements of four of the electricity distribution network operators for 2014 shows that profit margin is above 30%. A comparison with one gas distributor showed that their profit margin is 9%. It would be useful to understand more about how the electricity network operators are regulated and why this level of profit is allowed.
For transmission operators it is difficult to get comparable figures because National Grid publishes its results for all of its operations, which combines UK and US.
Value flows in the smart meter roll out
According to DECC's May 2012 Impact Assessment, the costs and benefits of the smart meter roll out will be as follows:
|Metering equipment and installation||6,100|
|Industry set up, marketing, disposal, energy and pavement reading inefficiency||1,230|
|Consumer savings: reduced consumption||4,390|
|Consumer savings: other||40|
|Supplier savings: avoided site visits||3,080|
|Supplier savings: reduced enquiries and customer overheads||1,040|
|Supplier savings: other||4,350|
|Carbon related benefits||1,200|
|Total benefits||15,689 (Difference due to rounding in figures above)|
Understanding markets where value is traded (capacity, balancing etc)
The energy market is composed of three main sectors: generation, transmission and sale. Traditionally, most European energy markets worked on the basis of payments being made to generators for the value of the energy they had produced and sold.
The Capacity Market
In 2014 the Capacity Market was introduced as part of the Electricity Market Reform which was legislated in the Energy Act of 2013. From this time, the market works slightly differently; suppliers are now paid not only for the electricity that they produce, but also for the capacity that they have promised they can produce. The Capacity Market is intended to ensure that there will always be sufficient supply to match demand. This is of particular concern currently as at the same time as demand for electricity is projected to rise, due to increased electrification of heating and transport systems, supply is set to become more unstable with an increased share of renewable technologies in the generation mix and many older, fossil fueled plants going offline. It is hoped that the certainty of revenue provided by the capacity market will remove some of the risk for investors and ensure increased capacity moving into the future. Capacity can be provided in either the form of power supply or in demand reduction, with a mW of power produced from a plant functionally equivalent to a mW of reduced power from demand reduction.
Decisions about the level at which capacity payments are set are made in capacity auctions, the first of which took place in 2014 for delivery of capacity from winter 2018/19. There are a number of stages in the process of acquiring capacity:
- Capacity forecasting - the amount of capacity required for a certain period is estimated by the government using a forecasted future peak demand
- Capacity contracting - the capacity is contracted for through a competitive auction process. This takes place 4 years in advance of its need.
- Capacity agreements - those successful in the auction enter into an agreement whereby they commit to providing a certain amount of electricity when required.
- Capacity payments - suppliers are paid for providing this service and if they fail to provide what they said they would they will incur a fine.
- Capacity trading - capacity providers are then able to trade capacity freely in the private market.
The auction process
The capacity auctions are carried out in a descending clock format with the following structure:
- A price is set for the amount wishing to be paid for capacity– bidders are given the choice as to whether they want to bid for capacity at this price.
- Initially, this means there are more bidders of capacity, than there is capacity required.
- The price is lowered – and capacity providers are asked to bid again (declaring how much capacity they are willing to provide at that price).
- Process continues, with some bidders dropping out, or lowering the amount of capacity they are offering, as the price being offered decreases.
- Eventually, the amount of capacity required matches the amount being offered by bidders.
The final payments are made on a 'pay-as-you-clear' basis, meaning that everyone is paid the marginal price (the price of the most expensive offer accepted).
Criticisms of the capacity market
In the first capacity market auction the UK secured 49 gigawatts of generating capacity at a price of £19.40 per kilowatt. This amounts to a total cost of almost £1 billion which will be footed by energy consumers with an increase of £11 on an average bill.
Of particular concern to critics is that the capacity market will only act to provide support to pre-existing fossil fuel powered stations. The results of the 2014 auction show the majority of contracts were given to existing power stations, with only one new power station winning a contract. Demand Side Response (DSR) providers won less than 1% of the capacity, which will ensure that it continues to play a small part in the market (currently DSR contracts only 1-1.5 gigawatts in the market, compared to a generating capacity of 80 gigawatts).. This is of particular concern as energy reduction has been found to be three and a half times cheaper per MWh than generaiton and transmission of energy from conventional fuel sources.
Catherine Mitchell has suggested that a flaw in the capacity market is its assumption that fossil fueled generation is required to provide back up for renewables on a GW-for GW basis. This has been proven to be unnecessary, and can be solved largely through the increased use of DSR, which will be facilitated by the introduction of smart meters and half-hourly settlement (see below).
Balancing and Settlement
Electricity is fundamentally different to most commodities that are bought and sold: it is being generated continuously and must be used immediately as it cannot be stored. Calculating payments for the use of this electricity on a continuous basis would be impractical and so for the purpose the electricity market electricity use is broken down into half hour chunks known as settlement periods. For each settlement period in a day generators and suppliers must submit predictions of how much electricity they project that they are going to either produce or require. These predictions are generally submitted far in advance of the settlement period taking place and long term contracts are formed. However, there is also the option for day-ahead trading and contracts are allowed to be negotiated right up until an hour before the settlement period begins. This cut off is known as the Gate Closure, and occurs every half hour. When the gate closes, the market participants will inform the National Grid of how much they intend to produce/consume in a particular settlement period and during the half hour period they will aim to produce/consume as close to this amount as possible.
In reality, errors in forecasting, problems with production and transportation or the occurrence of unforeseen events mean that imbalances go generally exist between the expected and actual consumption of electricity. Balancing and settlement are two processes that deal with this imbalance. The process through which balancing and settlement occur is laid out in the Balancing and Settlement Code (BSC) which was introduced in England and Wales in 2001 and in Scotland in 2005. The process is administered by ELEXON.
Balancing deals with these imbalances in the real time, ensuring that lights stay on and avoiding power surges. The National Grid maintains this balance through a continuous process of buying and selling energy through offers (to increase generation or reduce demand) or bids (to reduce generation or increase demand)(they may also balance through ‘Ancillary and Commercial Services’ and ‘Contract Notifications Ahead of Gate Closure.)’ 
Settlement occurs after the end of the settlement periods and redresses financial imbalances that may have occurred during that time. At the end of the period the amount of electricity that has been used by suppliers and produced by generators is measured, and compared to the amount of electricity they said they would use/produce. The calculations for the value of settlement payments are repeated several times over a 14 month period, generally becoming more accurate each time as more data and details are received. This is necessary as half hourly meter readings are only mandatory for those with consumption over 100kWh and so there is a time delay before data is received.
There are currently 29 million customers for whom HH (half hourly) settlement is impossible that are instead settled on a NHH (non half-hourly) basis. In order for the settlement process to take place, however, it is necessary to be able to generate a value for each HH period. This estimation is done by assigning each customer to one of 8 profile classes. A small subsection of those in each profile class randomly selected to be monitored on a HH basis and this data is used to generate average load profiles detailing the times of day at which electricity is generally used. The load profile is then used to allocate an individual's annual consumption to HH periods. Thus, the settlement over a longer period will be accurate, but the timing of the day when electricity consumed will only be estimated in line with the load profile. Customers are settled for any differences between their estimated and actual energy usage every quarter, or in some cases even less frequently, as it relies on the energy company to manually check the meter reading.
Understanding value created by smart energy response and management of system at city scale (and how that will change over time)
General stuff about value of smart meters
Implementation of a smarter grid and smart energy response will impact all of the market players in the energy value chain.
The cost of installing 53 million smart meters in British households will be paid for by consumers and has been estimated to be £215 per home. Overall, latest estimates by DECC suggest that the roll-out will cost £10.9 billion and bring in benefits of £17.1 billion between 2013 and 2030. This equates to a benefits of £1.60 for every £1 spent. 
Supplier savings (FROM SMART METERS), calculated in the government's impact assessment 
|Area of savings for supplier||! Value (gross benefit)|
|Avoided site visits||£3.1m|
|Reduced volume of calls and customer service overheads||£1.2m|
|Reduced cost to serve ppm customer||£1.1m|
Value of dealing with variable demand through a smarter energy system
The amount of energy that is required at any particular time is variable, depending on the time of day and the time of year. Electricity use peaks at certain points, namely in the early evening and morning and in the winter months. In order to deal with this there is a capacity margin, so the available generation is greater than the expected demand, which allows this variability to be absorbed. The capacity margin was 14% in 2012, but in 2015/15 is expected to fluctuate between 2% and 8%.
Demand Side Measures
Demand side measures seek to reduce demand for energy at peak times and can be grouped into three categories:
- Demand Reduction - reducing consumption of energy through efficiency measures
- Demand Side Response (DSR) - shifting consumption from peak to non-peak times
- Distributed Energy Resources (DER) - making use of low carbon energy sources at the household level or connected to local distribution networks
The three measures should be viewed as complimentary and they all serve the basic service of reducing peak demand. Ofgem has calculated that reducing peak electricity load by 10% could save between £550 million and £1.2 billion per year.
Currently, demand side measures do not play a particularly prominent role in the energy market, with only 1-1.5GW of demand side reduction capacity currently contracted for in the market.In the future, although the base load in the energy market will continued to be supplied by large scale generators through the national grid, it is expected that demand side measures may play a bigger part. Demand Side Response (DSR) refers generally to the situation in which a consumer adjusts their consumption in order to shift their energy use away from peak time.DSR can also be used as mechanism to balance the market in real time. Currently, a serious flaw in the efficacy of DSR is that (most) customers lack incentive to shift consumption, as prices for electricity remain stable between peak and non-peak times. Some ToU tariffs do exists, such as Economy 7 and Economy 10, which are both examples of static time of use tariffs in which the peak and off-peak prices are decided in advance.
Uses for Demand Side Reduction
Demand side measures can be utilised throughout the energy supply chain (figure x).
The technical potential of Demand Side Reduction
In 2012 the combined annual household consumption of the UK stood at 115TWH, and currently the average household consumes 3,800kWh of electricity per annum. DSR of this consumption is particularly important, as although household consumption contributes to one third of annual energy consumption in the UK, it constitutes half of consumption during peak periods. Various studies have been done attempting to quantify the technical potential of Demand Side Reduction to reduce this level of consumption. Sustainability First used a model, the Brattle Electricity Demand Side Model, to assess what proportion of the UK's electricity load was feasible to shift or reduce. The model found that around a third of the load was possible to shift (with a smaller shiftable amount in summer, in proportion to the smaller peak load).  A figure of around a third (36%) was also found by McKinsey as the potential for reduction in total demand possible by 2030.
Currently, only 1-1.5GW of demand side reduction capacity is contracted for in the market.
Financial value of Demand Side Reduction
The NPV of DSR measures between 2017 and 2034 has been estimated to be £0.7 billion. Utilization of DSR has the potential to avoid, or at least delay, some of the projected £110 billion needed to upgrade the infrastructure of the UK electricity network over the coming decade. If a 9% reduction in demand was realised by 2030 then this would also equate to the requirement for 4 less power stations.  Green Alliance point out that the government is already factoring in a 9% reduction in demand by 2025 (compared to a baseline scenario) into its decarbonisation targets. This equates to avoidance of building of 6 CCS coal or nuclear plants and a saving of expenditure of £70 billion from 2010 to 2025. If demand reduction is increased to 16% in line with EU targets this avoided spending would rise to £125 billion.
A study by the Brattle Group in 2009 looked at the potential savings from DSR that could be unlocked by smart meters in the EU. Total savings were estimated to be €6 billion per annum in a high adoption scenario and €1.2 billion in a low adoption case. The savings were broken down into the following key areas:
- Avoided capacity costs - €4.7 billion p.a in high adoption scenario, €1 billion p.a. in low adoption
- Avoided energy costs - €589 million p.a in high adoption scenario, €107 million p.a. in low adoption
- Transmission and distribution costs - €535 million p.a. in high adoption scenario, €107 million p.a. in low adoption
It is difficult to estimate how domestic consumers will respond to the presence of an in-house display (IHD), however, a study has compiled results from various pilot projects taking place across Europe. This report by the European Smart Metering Industry Group (ESMIG) covered 450,000 consumers and concludes that when there is an IHD energy savings of 7-8% could be expected, and without one then 5-6%. (NEED TO REVIEW ALL THIS)
|Market Actor||Interest in DSR||Value of DSR||Any additional notes|
|Generator||Reduced generation costs||Ofgem estimates reduced generation costs of £129m - £536m.Report for DECC estimates operational cost savings of up to £170m|
|System operator (National Grid)||Balancing services|| £383 million (total value)
National Grid spends £80m a year on frequency-response contracts to generators (figure from 2004) - this service could be replaced by aggregated effect of millions of appliances.
|Transmission operator||Avoided electricity transmission network capacity||£800 million per year |
|DNO||Avoided network investment||Ofgem estimate savings of network investment of £14m to £28m . Estimates given for average annual value of potential avoided distribution network capital expenditure from DSR of £40-£60/kW/pa.|
|DNO||Reduced network charges||Distribution use of System Charges (DuOS) represent 18% of average electricity bill and pay for cost of receiving electricity from NG and feeding it into homes. Charges are greater at certain times of day. 10% reduction in these from avoided cost actions (deferred or avoided investment) could give 2% benefit in terms of end bill.|
|DNO||To minimize customer outages|
|DNO||Use of DSR to manage network constraints.|
|Supplier||Reduced capacity requirement||Reduced investment in OCGT (peak generation) and CCGT. Most beneficial scenario modeled for DECC found reduced need for 3.2GW of CCGt and annual savings of £266m|
|Supplier||Avoided imbalance charges|
|Supplier||Avoided energy related costs (e.g. purchase of cheaper off-peak electricity)||Ofgem calculated daily wholesale cost savings of between £0.4m and £1.7m.|
|Consumer||Bill savings||Report by DECC predicted savings of £10 per household between 2025 and 2030 if evenly shared, and £90 per household if only shared among participants.Same report concluded when ToU tariffs were used though not participating ended up with higher bills.|
|Aggregator||Contract DSR services from customers and supply to the NG and to distribution networks.|| A single site customers worth £2-3,000 per year
A multi-site customer worth >£1-2 million per year ||
Current participation in DSR:
- Supplier - little participation
- System Operator - most DSR currently contracted by SO. NG procures balancing services from large generators.
Time of Use (ToU) Tariffs
Variable rate tariffs can be used as an incentive to force consumers to use cheaper, off-peak electricity. Shifting loads of domestic customers at peak times is particularly valuable: domestic consumption makes up a third of consumption overall, however makes up a half of demand at peak times. These tariffs can be split into three categories: • Static time of use - There are two or more periods defined in the day which are charged at different rates, but the rates remain constant. Eg. Economy 7/10 • Dynamic time of use - Different prices are charges in different periods of the day, however, the rates are not constant and may fluctuate on a daily basis • Direct load control - customers pass over some control to operators to cycle heating systems on and off within agreed levels. Currently, a mere 13% of the population is operating on a time of use tariff; the government is estimating that an additional 20% of the population will move to static time of use tariffs by 2030, post-smart meter roll out. Research by University of Cambridge shows that: 5% of total domestic demand comes from stand-by devices which could be switched off; 6% from wet appliances (dishwashers, washing machines) whose use could be shifted to an off-peak period; 9% from cold appliances which could be cooled below the necessary level during off-peak times, allowing them to be switched off during peak times but to maintain an adequate temperature There is significant potential value in shifting these loads. For instance, it has been estimated that 1.3GW of dynamically controlled refrigeration would be sufficient to reduce the need for £80m of expenditure by the national grid on frequency response contracts. (2004 figures)
Virtual Power Plants
 Despite the vast potential of both DSR and of DER there are significant barriers currently damaging their potential to impact on the energy mix. For instance, the UK electricity network infrastructure is designed for receiving large inputs from fossil fueled generation plants and are not equipped to deal with the bidirectional flow of electricity. Additionally, most DER does not produce a 50/60Hz voltage output, which is the utility frequency of the National Grid. Thus, to realise the full value of this resource the grid must get smarter.
One important step in the creation of a smart grid is the creation of micro grids, with VPPs at their hearts. A VPP (virtual power plant) lies at the centre of a microgrid (figure x) and aggregates the power production from the various DERs and DSR providers connected in that micro grid. VPPs may also consist of an aggregation of microgrids (as shown in figure x). The VPP may then operate as a single and flexible resource on the energy market or sell their services to the National Grid as a system reserve. The smart grid as a whole will consist of a number of connected microgrids. Microgrids also open up options for more local management of energy supply and demand, with the microgrid capable of operating as an 'island' only exporting or importing electricity from outside when local supply is not enough to meet demand.
A recent report by Navigant Research looked into the global market for VPPs, and concluded that their total worldwide capacity was set to increase from 4,800MW in 2014 to nearly 28,000MW in 2023 - a five fold increase.Cite error: Invalid
refs with no content must have a name By 2020 the market is expected by Navigant Research to have a value of $3.6 billion.
A significant example of a VPP is found in Germany where 36 wind, solar, biogas, CHP and hydropower generators are operated as a single power plant and supply power 24/7 to around 12,000 households. The VPP concept has caught on particularly well in Germany, where there is a large amount of renewable capacity.  The Swedish power company Vattenfall have 100,000 houses under their VPP control.
In the UK Flextricity aggregate DSR in order to provide reserve capacity for the National Grid. NPower offers a service called SmartSTOR which uses the Flexitricity grid to communicate with electricity generating and consuming equipment on domestic and industrial sites and to turn them off and on as required to manage demand.
Although an increasingly electrified transport system will place an increased burden on the UK electricity market, the prevalence of electric cars will also provide an opportunity for DSR. Cars are parked 95% of the time  and so each electric vehicle will represent a distributed storage device. V2G describes drawing power from parked EVs to supply the grid in times of need, whilst G2V involves using times of surplus to charge up the EVs. There will only be significant value in this resource if the vehicles are avaialble at the right time and can supply a large enough power load. The IEA assumes that each PHEV (Plug-in Hybrid Electric Vehicle) will have a capacity of 8kWh and each BEV (?) will provide a higher 30kWh capacity. IEA analysis has also suggested the use fo V2G alongside G2V could lower the baseload by 10%.
Combined Heat and Power (CHP)
The potential of CHP in controlling outputs of electricity and heat make it a valuable resource in DSR. Micro-CHP plants's outputs can be aggregated and used during periods of shortfall in electricity production in the form of a Virtual Power Plant (VPP). Statistics from DECC for 2011 to 2012 showed that there was 6.1GW of CHP capacity in the UK which accounts for 6.4% of UK’s total electricity needs.
Demand sides measures are generally focused on the idea of getting customers to shift or reduce their demand by providing incentives for them to manually do so. The possibility of the existence of smart devices connected through the 'internet-of-things, however, presents an option for devices to be automated and for control to lie with a third party. In this situation consumers would buy smart devices, connect them to the internet through wi-fi and register their device with an aggregator. Consumers would then be paid by the aggregator for any DSR that their capacity provides through the aggregator remotely altering its usage.
The government roll out which aims to have smart meters in all homes by 2020 presents significant opportunities for reforming the settlement process. The Profiling and Settlement Review Group (PSRG) ran between 2010 and 2015 to review how to adapt settlement and profiling processes for the use of smart meters.
Settling customers on a HH basis
There are currently 120,500 sites which are settled on a HH basis, compared with 29 million customers who are not. Despite this, since April 2014 it has been mandatory for all meters in profile classes 5-8 (large commercial customers)to be capable of recording consumption on a HH basis and for this data to be capable of being read remotely. An amendment to regulation by Ofgem, P272, goes further than this and makes it mandatory for this capability to be used to settle these customers on a HH basis.P272 will come into force in April 2017. This decisions was based partly on a cost-benefit analysis of P272 carried out by ELEXON which concluded there would be costs of £35.1 million offset by benefits of £85.0 million. The PSRG also agreed for ELEXON to carry out a similar cost benefit analysis of the impact of mandatory HH charging and settlement for profile classes 1- 4 who represent domestic and smaller commercial customers. This report contained opinions from many stakeholders who were broadly in favour of the move, including the National Grid who stated that HH settlement was "necessary and complementary to delivering the UK’s energy needs and achieving renewable and greenhouse gas targets in an affordable and secure manner.” However, the PSRG felt the market was not far advanced enough for it to be introduced yet and concluded that there was not sufficient evidence to conduct a cost-benefit analysis. The advantages of HH settlement identified, included: • Easier forecasting of demand - using actual data rather than profiles would improve forecasting. It would also expose suppliers more greatly to the impacts of errors in forecasting. • Shortening settlement timescales - The comparison that takes places between the contracted and metered volumes of electricity used take place at set intervals called settlement runs. These begin around 3 weeks after real time, and the final run takes place 14 months after real time. Ability to remotely read data from smart meters would streamline this process. This could shorten the length of the whole process and remove the need for some of the interim runs. • Better matching of local supply and demand (Expand MA) • More effective DSR (discuss below). Currently, for NHH customers underlying costs relating to production, networks and balancing are all recovered across the whole of the NHH customer group (and suppliers) and so ...currently the option to reflect DSR of NHH customers in pricing does not exist
Understanding potential financial value of using smart energy data in other services (e.g. health improvement – thermal safeguarding etc)
The SHIMMER program aims to integrate money and energy saving advice with the smart meter system in order to help low income, fuel poor households to reduce consumption to an affordable level and to better keep track of their finances. The project received TSB funding aimed at projects making use of smart meter capabilities to create smarter homes. A smart meter is connected with an online interface which allows consumers to monitor their consumption, but also provides them with advice on benefits and budgeting, switching deals and energy saving. Initial pilot projects have suggested these systems could allow users to save between £200 and £3,500 a year, however only 18 homes were involved and so conclusions carry limited weight. Extensions of the system hope to incorporate an option to automate appliances to save money and to link the smart meter to an online bank account, allowing money saved to be fed into future payments.
The Hydra project was carried out by a consortium of leading industrial and academic institutions with additional match funding provided by the TSB and the ESPRC. The projects aim was to demonstrate the social and financial value of using smart meters to provide additional functionality to patients by allowing them to access health related data. The pilot scheme involved 13 homes who were connected via their smart meters to health centre staff.
This is an initiative, funded by the TSB, that aims to explore the value of creating an internet-of-things allowing individual people and councils to share information across and between cities. Hypercat enabled technologies have been trialed in Milton Keynes and London and are now being introduced in Bristol through the 'Bristol is Open' project. This will entail information from smart meters and about traffic and air quality being shared.
Mulheim's Into Metering
In the German city of Mulheim de Ruhr RWE launched a project in 2008, designed to give consumers information about the price of electricity in different periods of the day to allow them to make informed decisions on usage.
Energy supplier smart meter roll-out plans and potential for securing integrated city-wide approach
The Government expects that smart meter installation will accelerate sharply in 2016, when all the common standards come into force and the Data Communication Company (DCC) is live. The expectation is that around 20 million meters will be fitted in 2016-2018, with a peak in 2019 and finish in 2020. SMETS1 meters - piloted in the Foundation stage of the roll-out in 2014-2015 - will be replaced with SMETS2 meters that communicate via the DCC from 2016 onwards. Installation will begin with houses in urban and semi-urban areas as the location and housing density makes it easier to set up the communications infrastructure. Flats will come later, and high-rise flats will come last, starting in 2018. Roll-out to prepay customers should start at the same time as the full-scale roll-out programme.
In the UK 1 million domestic smart meters have been installed and over half a million smart and advanced meters installed in non-domestic settings (2% and 19.8% of total smart meters respectively for each group).
UK smart meter roll-out (July 2015)
Details of the smart meter roll-out is given in the table below when known.
|Supplier||Website||Smart meter activity|
|British Gas||www.britishgas.co.uk/smarter-living/control-energy/smart-meters.html||Currently rolling out. Initial screening on website to have a smart meter fitted. Must be in credit if have prepayment meter, have an accessible fuse box, not be in a flat, nor with E7 meter, nor if a smart meter is already there. Claim that 1 million smart or smart type meters installed before 2015.|
|E.ON||www.eonenergy.com/for-your-home/saving-energy/smart-meters||April 2015 number installed 380, 141. Recently announced trial for 30,000 smart PAYG customers offering reduced tariff on weekday evenings and weekends as an incentive to have a smart meter. Rolling out in 2016 and can register interest on website. For smart PAYG website says that there will be £35 per fuel per year off standing charge. Dual fuel has an extra £20 reduction, and £10 off for paperless billing. Choice of four tariffs, including fixed price tariffs with price alert emails.|
|EDF||www.edfenergy.com/for-home/energy-efficiency/smart-meters||Information available on website but no numbers of smart meters indicated.|
|First Utility||https://www.first-utility.com/help/My_Meter/__kA1D00000008PaQKAU/What-is-a-smart-meter||Information on website but no numbers of smart meters indicated. Upgrading existing customers when meter needs replacing.|
|Green Star Energy||http://www.greenenergyuk.com||Rolling out gas and electricity meters, with mass roll-out in 2016.|
|npower||www.npower.com/home/help-and-support/types-of-meter/smart-meters||No current roll-out. When do roll-out meters not compatible with microgeneration.|
|OVO Energy||www.ovoenergy.com/energy-plans/pay-as-you-go||Offers smart and smart PAYG. Phone app ready. Working innovatively with local authorities like Cheshire East and Plymouth on local tariffs.|
|Scottish Power||www.scottishpower.co.uk/energy-efficiency/smart-meters||Small roll-out in 2015, full roll-out 2016 when technology becomes available.|
|SSE||www.sse.co.uk/HelpAndAdvice/SmartMeters||Upgrading existing customers in phased roll-out with plans to upgrade all customers by 2020.|
|Utilita||www.utilita.co.uk/smart-meters/utilitas-smart-meters||Smart PAYG predominantly. 60% of their customers have a smart meter.|
|Utility Warehouse||https://www.utilitywarehouse.co.uk/help||No current roll-out.|
The potential for securing an integrated city-wide approach to smart meter installation
A 2013 DECC report highlighted the role that community groups can play in helping households during the smart meter roll-out. The need for trusted third party intermediaries has been noted as a key mechanism to promote and optimise customer acceptance and engagement with smart meters, and to overcome mistrust of energy suppliers. Community groups can help households with:
- awareness raising
- hand holding during and after the installation process
- providing practical assistance in using the smart meter display and energy behaviour change advice
- keeping an active smart meter profile to encourage ongoing use of the display.
They can also generate interest in local energy initiatives and renewable energy. Drawing on roll-out experiences from Australia, community groups can also act as independent voices responding spontaneously to local concerns and criticisms of smart meters.
‘Green’ groups are useful but should not be used exclusively. Energy professionals or single purpose groups can also convey energy messages effectively. Existing community energy networks can also play a key role to facilitate a city-wide roll-out (e.g. Transition Towns, Low Carbon Communities Network and the umbrella Communities and Climate Action Alliance). Over the longer term, data from smart meters could contribute to more accurate, regularly updated information on energy use and carbon emissions at community level.
To action greater community group involvement in the smart meter roll-out suppliers/another agencies would need to provide household-friendly information on smart meters to groups, and possibly templates and examples of the technology. Community groups could work alongside or partner with energy suppliers, agreeing roles and addressing organisational needs at an early stage in the roll-out process. Focusing on a partnership with one or two suppliers in a geographical area would be sensible. Alternatively groups could position themselves as impartial advisors and not work alongside a supplier, or work in partnership with their local authority or housing providers.
The long roll-out period offers challenges for community groups, in that supporting all households might be difficult. However this does give scope for demonstration programmes. Pilot programmes could offer opportunities for communities to bid to run projects to promote and explore uptake of smart meters in their area. Different roll-out activities could be tested, building on local knowledge, to determine successful methodologies and marketing approaches.
Besides community groups the other key players at city-wide level in relation to smart meters are local authorities and social housing providers. Local authorities can be useful for additional support/resources and local knowledge during the roll-out. They could take a more active stance, partnering with energy suppliers to provide locally-endorsed energy efficiency guidance during smart meter installations. Where possible, suppliers should share their roll-out plans with local authorities. Social housing providers could take on a key role by actively promoting smart meters, particularly to vulnerable householders.
In Florida during the smart meter roll-out a range of local opinion leaders and independent organisations were contacted and briefed, including the business community, local government leaders, the media, community advocates and public service providers.
There is little information on the role of private landlords in the smart meter roll-out. They are a key group given that many vulnerable customers live in private rented accommodation.
Finally, the House of Commons Energy and Climate Change Committee point out that greater participation of network operators in the roll-out can have significant benefits. Whilst recognising that at this late stage transferring the responsibility for roll-out to network operators is impractical, the Committee emphasised that improved regional installation and the resolution of interoperability issues could result by increasing their involvement, and that the feasibility of this should be explored.
Potential business models for city-wide approach
NOBEL (Neighbourhood Oriented Brokerage Electricity and Monitoring System)
The EU funded NOBEL project aimed to create a platform through which individual energy consumers were able to communicate directly with both small and large energy producers in the local area.Currently, a situation exists in which a certain amount of energy is procured for a given area, however, whatever portion of this energy is not used will be wasted. NOBEL works on the basis that if information can be shared constantly about the energy that is being produced and consumed then it will be possible to more efficiently balance supply and demand on-the-fly at a local scale. The aim was to to simultaneously reduce consumption through display of energy consumption data and also to promote greater use of local, renewable energy sources.
The pilot project took place in Alginet, an eastern Spanish village where 5,700 smart meters were installed.Cite error: Invalid
refs with no content must have a name
There were three forms of participants in the pilot: DSO (the local DSO - Alginet Cooperative), STPs (Standard Prosumers - basic domestic end users, who may produce as well as consume energy) and SEP (Senior Prosumers - an STP with additional energy management requirements e.g. heavy industry). Two online interfaces were used during the project to allow communication between the different market actors. There was one tool for the DSO to keep track of electricity use in the neighborhood and another allowing STPs to manage the efficiency of their electricity usage. The latter gives a platform for the DSO to communicate with STPs and offer incentives for dropping consumption. The result was a situation allowing standard prosumers to increase or decrease their energy consumption in response to signals and additionally to trade energy through an online marketplace.
The project resulted in savings of energy savings of 12.2% across the village and significant economic results for individuals who accessed better deals. It is anticipated that the energy brokerage systems piloted here could play a role as an aggregator in local smart grids, with a third party given charge to manage loads on behalf of individuals.
Power Matching City - Hoogkerk, Netherlands
This small demonstrator project involved 25 households installed with smart meters, half of which additionally had CHP and the other half had heat pumps. Subsequently, each house was both consuming and producing power. Central to the project was the 'power matcher' software which allowed linking of supply and demand and optimal use of resources.
Innovation and research activities and funding sources for smart energy data/city development
|What we know||What we could know|
|Value flows in energy system and in smart meter roll out - scaled to Bristol scale|
|Understanding markets where value is traded|
|Understanding value created by smarter energy response and management of system at city scale (and how that will change over time)|
|Potential financial value of using smart meter data in other services|
|Energy supplier smart meter roll out plans|
|Potential business models for city-wide approach|
|Innovation activities and funding sources for smart energy data/city development|
Investment requirements and potential sourcesThis section is not identified under any of the challenges - it will be covered later on, after the workshops. Maybe delete from here?
- DECC (2012), 'Electricity System: Assessment of Future Challenges - Annex'
- DECC (2015), 'The first ever Capacity Market auction official results have been released today'
- Evans (2015), Carbon Brief: 'Old coal and gas plants won largest share of capacity market, final results confirm'
- Ward, Pooley and Owen (2012), Sustainability First: 'What demand side services can provide value to the electricity sector?'
- Mitchell (2014), 'Britain’s dinosaur capacity market will worsen energy ‘trilemma’.'
- ELEXON (2013), 'The Electricity Trading Arrangements'
- Faruqui, Haris and Hdelik (2009), 'Unlocking the €53 Billion Savings from Smart Meters in the EU'
- (http://www.flexitricity.com/news.php?section=10&newsid=123) .
- http://www.meter-on.eu/file/2014/10/Meter-ON%20Final%20report-%20Oct%202014.pdf .
- Smart Energy GB website. Available at: http://www.smartenergygb.org/national-rollout/how-its-happening
- DECC (2015) Smart Meters, Great Britain, Quarterly report to end March 2015. Available at:https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/433643/Smart_Meters_Quarterly_Statistics_Report_Q1_2015.pdf
- Smart Energy GB website. Available at: http://www.smartenergygb.org/get-a-smart-meter/energy-suppliers
- DECC (2013) Role of Community Groups in Smart Metering-Related Energy Efficiency Activities. Research by the Energy Saving Trust. Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/166432/Role_of_community_groups_in_smart_metering-related.pdf
- Smart Meter Central Delivery Body (2013) Engagement Plan for Smart Meter Roll-out. Available at:http://www.smartenergygb.org/sites/default/files/engagement-plan-1213.pdf
- Which (2015) A local approach to energy efficiency. Available at:http://press.which.co.uk/wp-content/uploads/2015/03/EE-PDF-VERSION-FINAL-V4.pdf
- House of Commons Energy and Climate Change Committee (2015) Smart meters: progress or delay? Ninth Report of Session 2014–15. Available at: http://www.publications.parliament.uk/pa/cm201415/cmselect/cmenergy/665/66502.htm