CIR Strategy

We asked:
What segments within energy saving for the built environment result in big reductions in energy use? How big are these priority opportunities? What do the markets look like structurally and who are the players in the supply chain? What is the role of ICT?

How will electric vehicles be integrated into smart cities and how quickly and deeply? How big are these opportunities? How will the energy companies of the future work with customers industrial, commercial, residential? How is the government planning to revolutionise the delivery of energy efficiency? And if we understand these areas, what are the market barriers to them? What should we do: act as role models? Lobby for logical sets of actions by others? Do nothing or wait-and-see?

Delivering heat is the top use of energy in the UK. Of this, in terms of carbon emitted per person per year, space heating is the largest single contributor, making up half the total. That total is slightly more than the total carbon emitted from passenger-km.

How do we achieve 80% reduction? Plenty of examples of role models are there, and known. People have put on lots of jumpers and built passive house. But these are relatively few and far between still. The question is how how do we get the whole country to change? Some barriers are: resource constraints (money, materials, tradesmen, etc), achieving what was planned or promised and delivering value. On this last, the speaker did not see moving backwards, i.e. constraining peoples’ lives as a way ahead. We must deliver comfort and freedom as people wish, but at the same time do it at much lower carbon.

The heat database was shown as a distribution: 8m households in the UK giving data on energy use. It was absent obvious, strong correlations between energy use and the physical attributes of the household or the social status of the occupants. This meant a tough task to move the mean, median and mode of the distribution to lower levels. The speaker showed how an optimal balance of demand and supply technologies deployed to achieve the 80% reduction in CO2 from 1990 levels was a sweetspot that could save the UK tens of billions of pounds. While people now spend £1200 on energy on average a year, one needs to spend between £20,000 and, say £70,000 on energy saving technologies to achieve these reductions on average. Spread over 40 years even (if such were possible) this would still represent a proportion of the energy bill itself corresponding to between 42% and 146% both of which are probably unpalatable to the vast majority of householders. But on a more optimistic note, this represents a huge opportunity for suppliers in more upbeat and urgent conditions.

Looking at the turnover rates of various markets, the appliances area, like smart phones and gadgetry is extemely fast, whereas that of network-facing billing and metering, the energy and utilities, companies is very slow. The worst outcome for everyone is that the fastmoving ICT companies and consumers end up shunning this market because the energy companies seem to conservative, risk-averse and slow-moving.

Even something that delivers real value to houses, like central heating, has taken 50 years to get it into most houses. Having said that, an optmistic note on infrastructure: when we have made a decision to make a switch, e.g. to natural gas, it has happened very quickly. You can mobilise and change infrastructure quickly and then you live with it for a long time.

We need to look at the whole supply chain: find opportunities, have customer contact, analyse and plan, IS, inventory, off-site, distribution, on-site, QA, monitoring and control. But the rate limiting factor is probably the awareness, and agreement of householder to do what is needed to the house.

Remaining opportunities for efficiency improvements in houses were limited. The undone work on windows, insulating lofts and walls ranged from 12-22% of them – the majority have been completed.

The question of scale is interesting for the CIR Conferences series, particularly HEAT and Smart Grids & Cleanpower which cover the two ends of the scale from building up to national infrastructure. Factors such as operating effectiveness through capital efficiency through finance availability vary with scale. This is another thicket of complexity for us to work through for the optimal approaches.

So in the long run, what do we do as a nation to implement the large energy efficiencies now made law out to 2050? There are an infinite number of combinations of things we could do. We know we can achieve the 80% reduction targets to that year. The sustained value is critical and the affordability. And who are actual making these choices? At the householder level, car companies know a lot about who in the house makes the choices on cars and why. This is not so regarding the investments needed in energy systems for households and buildings generally. We need also to understand the supply chain and limiting factors around delivery rates of solutions, and indeed quality or reality of those ‘solutions’. On scale, many small improvements doesnt always add up to a few big things.

Public sector having trouble raising finance – how will we see cashflow to renovate buildings. 80% of buildings we will occupy in 2050 are standing now. So retrofit is going to be important. What is an energy performance contract? This is a contract that acts for a set of buildings, whose energy usage rate is guaranteed by the ESCO. In public sector language, it is a spend-to-save scheme, you are buying future energy performance. Practically, the EPC is a 4 stage process. Stage 1 is a desktop audit, checking which buildings can be retrofitted and estimating savings. Stage 2 qualifies this and the qualification must be close to the audit claims. A 30% saving cannot reduce to 3% at stage 2. Stage 3 is the implementation and stage 4, the guarantee. The energy saving can be converted to a monetary amount saved and this in turn can be used to pay the staff of the ESCO, forming a real partnership. LDA has set up a framework called REFIT to do large public sector energy saving contracts. Anyone in the public sector can use this framework. There are 12 ESCOs available to choose from to carry out projects. EPC should be off-balance sheet, funded by service not assets. They can be funded in 3 ways: write a cheque for cash; go to public works loan board; use a bank loan or asset finance. None is ideal. The EPC should find out the savings during and after the EPC programme, cost of kit and service. This ratio gives breakeven and ROIs and other financial measures. But these are difficult to prove upfront. But if the ESCO will guarantee the EPC then banks and lenders generally may be happy to lend against the projects. Sophisticated lenders may be able to hedge both energy costs and carbon emissions.

A number of pilot projects are being run around the UK.

In summary, the objective is normally to finance on the P and L or revenue account (public sector).

Electronics can also be part of the energy efficiency solution. Electronics are moving into a wide range of new areas: sensors and monitoring, and others. There is a broad move towards the internet of things, where objects are connected to the internet and each other. This move seems inexorable. This means more energy use in buildings coming from more gadgetry. But this can be mitigated in a few ways at chip design level. It can be mitigated by efficiency improvements to motors. It can be improved by devices running or standing by at much lower or zero power. And as things take on shared use, the hardware has more chip commonality and can be reused.

Electricity is very inefficient, it was claimed. 12.4% of fuel use is in its delivery. 28.7% of fuel is wasted in electricity losses. And more than 50% of electricity is used in motors.

Moving to smaller, more efficient computers, i.e. from desktop to laptop to netbook, will improve energy efficiency considerably.

Data centres could be improved to obtain an 87% reduction in emissions through virtualisation, smart cooling, storage and CPU.

Poor design exists especially around TVs, game stations. There is also scope for saving around how these are used.

All in all, it will be a tough battle to reduce energy usage absolutely as demand increases for devices and connectivity. Those increases can be reduced through energy efficiency. Companies in the field of electronics design will surely thrive as they introduce more efficient technology. Culture change will not be their priority, even with a squeaky clean CSR policy. Leaders at the conference in this area certainly appeared to be taking seriously the problem of mitigating the energy demand increases at the small scale level.

1.5 billion meters in the world now. No single company can build the smart grid. It is an effort by a partnership of companies. Interoperability will be very important: we must make sure it not a silo; it should have more than one use.

We are to build in many wind farms to the grid. What happens when there is no wind? We need to build the new grid for intelligence, avoiding needing to build so many new power stations. Intelligence also in energy management, and within the generators. So we need to be able to look at the whole system.

The whole system needs to be smart, not just smart in silos.

Changing demand patterns is really important, but there is no agreement on how to do that. It is a political question as much as a logical one where costs vary to manage demand and supply.

The stick of tougher regulation and compliance is the practical result of political will. But how is this fairly set?

Microgeneration in houses and districts and peer to peer trading of loss-free electricity obviously mean consumer participation in the delivery chain.

The CIR Conferences will continue to focus on new service and business model opportunities.

The Smart Grid will also be an innovation platform for a world of companies kept out of the undynamic grid of today.

The new business models have been talked about above around EPCs. This will lead to more monitoring and control of consumption and cost of energy in an atmosphere of heightened corporate sustainability and responsibility policy.

In the new ecosystem of energy management, you have regulators defining prioritisation; you have renewable generators, who want to produce power when it is windy (or sunny), power that we must maximise; you have the DNO who want to make sure their network is robust and secure – a critical aspect; and you have the energy retailer that wants to buy cheap and sell higher the electricity. What energy retailers do wont particularly affect the grid directly. It was argued that the above creates tensions as well as technical challenges, which implies the need for regulation done well, with understanding of the whole picture and connected to long run goals.

Smart meters continue to play a pivotal role in the smart grid. They will give near real time meter reading, not needing visits. This leads to more accurate forecasting and billing which energy provider like, as perhaps do most consumers. Extra home energy information can lead to strongly lower consumption, again given the new customer involvement. But it also enables time-of-use pricing, much more detailed than as in Economy 7. Pricing could vary hourly for example. Customers could run programmes to analyse this data automatically, and to automate their choice of demand response. This would last long after they might become used to the novelty of home energy data from monitoring and metering.

In modern design product lifecycles including for smart energy, an area of growth for product design work, the product is making first contact with the customer (perhaps a utility company) much earlier in the process, for extended trials. They will buy in large numbers. This means developing and making a demonstration in a single design iteration that works like the real thing, through rapid development with a multidisciplinary team. Rapid can mean 3-4 months. This is a case of understanding the route to market and developing an approach to suit this route.

It is contended by some and not others at the HEAT conference that you can change consumer/customer behaviour.

There must be benefits to consumers in the this evolution which seeks to decarbonise energy and provide security of supply for the long run.

TOU tariffs, demand response and microgeneration all have the potential to make life more complex and overall worse for the consumer. This would be bad for the market. So we must strive to unravel that complexity and stay focused on consumer benefits. We repeatedly overestimate the appetite of the mass market consumer for screens and technology.

Visibility of pricing, through alerts for example, and automation could work in favour of TOU price choices.

Consumers do not think about consuming energy, they think in concrete terms of appliance use. And motivation without empowerment leads to frustration. With empowerment, action follows. Being social animals, motivation comes from role modelling and reputation, and from collaboration.

Homeworking and the obligation of large companies to report carbon emissions of employees has meant companies are able to help consumers know more about their footprints and what to do about it.

People are not going to be moved towards utilities web portals for their energy data. This is only one of many places and not the favourite.

Consumer behaviour change goes through in three stages: reveal, reduce and renew. We reveal through ‘usage shock’ and better tariff options (diagnostics). Then we reduce by establishing active behaviour change around smarter use, turning things off or down, more efficient appliances. And finally, through self-generation the bills and emissions can come down yet further.

In Holland smart meter roll out was rolled back as a result of not taking consumers along and informing them properly: It is vital to put consumers at the centre of our thinking.

Energy information is dull. We must watch out for schemes for behaviour change that do not help the energy situation and lead us down yet more wrong paths. This may seem good for business in the short run, but ultimately it is not going to help business either.

There is a shift to DC: web, lighting – everything above the waist. Design is an issue and one cuts out a lot of losses by keeping to a smart DC network with variable power.

Distributed storage sent back to the grid doesnt make sense, but DC storage and use as DC does.

Provide energy through a DC connected energy harvester. Retain the energy and provide power to a smart DC network.

Channels to market for SME tech providers include energy retailers, retailers, installers, and possibly government and own-brand websites direct.

In a talk entitled: The challenge of retrofitting homes for low carbon, the government, DECC, appears to have taken on board that retrofitting will be key, rather than new builds, which are relatively easily legislated in for much higher efficiencies on a timeline. We note in passing however that that aspect too is unlikely not to miss targets in the next 6-10 years.

Governments are said to be good at setting long run targets, such as to 40 years maturity, since they probably wont be in power when the time comes. But the 80% cut versus 1990 emissions for 2050 is a landmark piece of legislation. The legislation is coupled with binding interim targets called carbon budgets. These are total levels of carbon capped within 5-year periods from now 2008 onwards, when the Climate Change Act was agreed. Then the long run target law is coupled with an accountability framework: a committee that has access to government officials, in meetings and through auditing.

In 2006, carbon emissions had fallen 3% versus 1990 levels. So a further 77% to go over the 44 years from 2006!

Electricity generation was the highest contributor, followed by domestic transport, then residential and commercial heat and in similar amounts, industrial heat and processes. Taken together residential, commercial and industrial heat is the highest segment.

In the residential segment (heat), since 2008, the government claims that the levels of emissions have come down by 5% and to 2020, the target is to fall another 29%.

In houses, there are three ways to fill the gap: reduce energy needed through insulation, better heating systems and controls; producing low carbon heat through solar thermal and heat pumps; and finally: behaviour – attitudes and enabling technologies.

The way government looks at reaching this target, is to break down the achievement of the target into segments: policies, zero carbon homes, smart meters, and ‘whats left?’ It then tries to predict the effect of these areas of action in terms of contribution to the target. Existing policies are supposed to produce 60% of the target. Zero carbon homes a very small amount of 3%. Smart meters about 6%. New policies of Green Deal, the Future Energy Company Obligation including the Renewable Heat Incentive are supposed to produce the remaining 30% of the needed reductions to 2020 in this segment.

Looking at the usual graph of approaches to reductions ordered by cost effectiveness, solid wall insulation and lofts and cavity walls, those that remain to be done, seem to be a logical area to focus on. There are 10m, 7.5m, and 2.3m further lofts, cavity walls and solid walls to insulate respectively.

There are barriers to delivery, as noted before, that government is aware of. These are barriers that exist even when money can be saved in taking action.

From a consumer survey by government, some people, 20% of households, are aware but just not interested in loft insulation. Does this mean 80% are engaged and likely to go ahead? And many people are overestimating costs without checking the reality.

Will the Green Deal policy, in development now, to be completed late 2012, really be a Game Changer? This will try to plug the information and awareness gap with marketing and co-ordination. The idea is to get high street and utility brands on board. Brands that people cannot avoid being aware of. They will sell energy efficiency products and provide energy efficiency advice. There will be independent surveys to individual households. Then finance: Green Deal Finance will provide all or a good chunk of the money needed upfront. The construction industry and building trade generally has a fairly bad reputation. The government is keen to make sure this does not hamper the roll out of greener buildings. There will be accreditations so that people can show that they are qualified to install a given set of measures. The financing is designed to be taken from savings in the energy bill of the householder who has installed the measure. This will mean the bill will not go down as much, or not at all for a time, but this is still better than not having carried out the installation.

For those who or technologies which cannot obtain the Green Deal Financing, there is an additional piece of legislation, the Energy Company Obligation, which causes the energy companies to subsidise installations. Theoretically, all consumers would then be covered for all reasonable types of installation.

The Green Deal applies to non-domestic buildings as well. In this segment it is much more focused on electricity use. Business sector emissions amount to 214MtCO2, of which electricity causes about 100 MtCO2.

The CRC applies to less energy intensive industries, such as universities and supermarkets etc.

At the other end of the scale, of the nearly 5m organisations in the UK, 99% are SMEs, about 2m operate out of domestic premises (so dont be embarrassed if that is your business!)

CIR Conferences looks forward to meeting you again at Smart Grids and Cleanpower 2011 23-24 June Cambridge, for the followup conference. (see http://www.cir-strategy.com/events/cleanpower and http://www.cir-strategy.com/events/SGCPCall.pdf

Summary of Smart Grids and Cleanpower 2010

Foreword

This summary is based on comments made by speakers and sometimes other participants at the conference 24-25 June 2010. It may not everywhere be coherent, but each sentence should carry the weight of an expert opinion. Some statements may be contradict each other! All lines are to be taken in this context. We have tried to remove names of companies and obvious plugs for products or services, though the originators of some comments will be straightforward to deduce.

Conference summary

This is an interesting conference because a lot of people are talking about smart grids and this event considers the move from the slower world of utilities and energy to a pace of change like that in telecoms and internet: the energy efficiency play and how we understand and begin to focus more on the end consumer.

Smart grids defined: the blind and the elephant

The phrase smart grid is often not well understood among consumers,
but even among industry players the idea is still nebulous.
The smart grid involves flow of power or material in more complex
ways than before, encompassing dispersed microgeneration and generation at
levels above micro through to full power station scale. It also means charging
structures and even disconnects that differ from past grids.

Smarter in the smart grid means being better at managing power generation and transmission.

Part of the picture involves the smart meter. Smart meters should be readable remotely, give pricing and consumption information, manage consumption, give fault details, to name some new capabilities.

Definition of the smart grid: a grid in which the usage and generation of all users is integrated intelligently to provide efficiently secure, economic, and low carbon electricity supplies.

The smart grid is the internet of energy. There will be dynamic ICT features.
We need to be able to monitor energy usage in real time, and send information back to those who can increase or decrease supply, so that outages are avoided. This can’t be done when you
have a static grid and are not reading meters continuously and acting upon the forecast data intelligently.

There is crossover between smart grid and meters. We will be using more energy not less.
Since the number of devices in the home has been and is forecast to continue to accelerate, the total energy consumption in the home is forecast to rise. The increase in energy efficiency and lower energy consumption per new device doesn’t appear to be able to keep the overall energy consumption from rising in any medium term projection.

We will need demand-side management (as well as demand response – see below). This will involve changing the load independently of the consumer.
It may mean addressing millions of devices in a space of less than 5 minutes.
This requires that the communications network can broadcast/multicast.

But smart grids are not just about smart meters, it is also about smart use of your networks and resources. Organisations need to meet power demand with less power generation. One can help them increase, for example, solar and wind integration features through a smart distribution management system, and in energy storage.

Smart grid market structure and market drivers

Who are the stakeholders in the smart grid market?

• Consumers;
• Governments;
• Utilities and vendors;
• Telecoms.

For governments the keys are security of supply, consumer cost and choice; and hitting CO2 reduction targets set.

For consumers rising bills, bill shock and environmental concerns. Consumers drive fantastic change through. The key ratio for them is cost of energy as a percentage of disposable income (basically). This is rising; what end users pay for electricity across industrial, domestic and others shows a sharp rise from 2003 onwards which has been tending to make the matter more politicised.

The consumer will become better informed, have more choice and become more motivated on cost and emissions. Smart metering means monitoring energy consumption and seeing how to cut bills; it also means accurate bill payments and avoiding visits to read meters; credits for sending back power to the grid from home generation, e.g. solar PV.
Smart meters can be made the consumer’s friend with good planning; there is a risk of increased complexity. There is a lot going on in the smart home over the next decade: online connectivity, smart appliances, smart meters, microgeneration, home energy storage, eVs. This has the potential to make the consumer’s life better more convenient simpler and cheaper.

For utilities, commoditised business and ageing infrastructure; business model; customer loyalty and ARPU; smart meter expectations. Smart meters mean managing peak loads, dynamic monitoring, peak pricing, load forecasting improvements, billing accuracy, CO2 reduction demands met, providing a better service: in short an opportunity and a threat to their market share.
Consumers and utilities interact very little at present, and they broadly do not monitor or manage energy consumption. Through what we are discussing here, we will usher in the ‘engaged consumer’.

For telecoms, agile players, finding the unique proposition, adding value and keeping customers, broadening customer relationships into new services.

Smart meters are the key to a single smart grid which has a dedicated spectrum and channels, according to Arqiva, DECC and others.
Cost of digging up infrastructure of from GBP 750mn to GBP 20bn
according to an Imperial College and ENA study quoted.
What is the benefit of smart metering? From GBP 480mn to GBP 10bn.

The wireless network is not believed able to get inside houses and control meters, therefore a dedicated, secure and reliable infrastructure is recommended. A single team or group should look after the network.
The network should be universal and the installation process needs to be very simple, avoiding repeat visits for maintenance and upgrade (over at least the life of the metering equipment to be installed.)

Smart grid business models, economics and value propositions

Business models for smart energy services can be segmented into walled garden and open models. The walled garden is secure and private but may require change of meter, may limit innovation and investment in it, and cause market distortion or slow roll-out. The open business model opens up the market, promotes competition and investment, but may have security and privacy issues. It may also not exclude walled garden models needed in some remaining areas.

Smart meters will drive the smart grid, but they are really just the beginning.

The suppliers of home energy management products and services can range from simple displays through to full home automation even when there is a lot of supplier pricing data to react to from the future, smart grid.

There will be energy services in homes that happen under the bonnet like engine management systems.
The controls can switch between entertainment or savings modes!
It still needs something in the home to give that information. How do you get the consumer to buy that equipment, just as they will pay for TVs etc? There may be a feeling that it should be free like Google.

Channel partners can help raise awareness: trusted brands.

The broadband market shot up when the telcos subsidised the GBP 40 connection fee and gave away the modems.
The barriers were removed. In turn, the energy and metering market needs hardware subsidies, easy installs and service bundling.

Installation should be simple and done by the customer, and data should be available anywhere.

New companies need to be where the customer is – online and open.

Smart phones are a major opportunity. Apps are great because they mean suppliers can get their DNA into a lot more places very quickly.

Coming from the telecoms gateway to the (smart) home, these companies, rather than trying to retail energy, could be exciting the customer with energy information about and control of their home, and thus increasing average revenue per user.

Value is where the information is, how data converts to useful info. Telling a consumer that changing the temperature to a given level on the washing machine would save a given amount of money.

We are in the early market stages: we need to know what is home energy management.

The market is going to change alot. It is going to get more complex for the customer. Time-of-use tariffs, grid microgeneration and feedback and FITs etc are part of this. The utilities can help with this complexity, as well as new entrants and partners.

Everything, anywhere is good: a given customer will want to transact in a given way. If we do not provide this then they may disconnect. What are my priorities therefore? We should be putting effort into understanding and engineering the routes to customers because that is where the value is.

We have multiple touchpoints through the buying cycle.

What we are talking about here is changing behaviour:
the barriers to change are addressed in two ways: by product design and by services.

Segmentation tells us where the potential value is.

We’re in this interesting shift from producer-efficient supply chains, which bring down cost, over to customer-effective demand networks, which is about value generation and management.

We optimise how we spend our money by segment, offer, channel, by buying cycle stage.

DECC says that major changes to the way power is generated, transmitted and consumed are taking place now. The real value is in understanding the consumer.

Background and recent history

What has focussed attention on change towards the smart grid?

• Poor customer service perceived – the super-complaint allowed.
• Concern about security of power supply.
• Pollution connected to global warming.
• We are not alone (Other EU nations similar problems).

 

Billing accuracy improvements would need smart metering, which could cost more, argued the suppliers. A benefit of this is improved energy efficiency. But a public information campaign was thought to be cheaper than smart metering installations in achieving this. Still, the ball was rolling for smart meters.

The price shock in 2005 for gas did not alleviate by trading around the region as planned for (Russia-Ukraine issues; financial hedging issues). Prices went up by a factor of 5 and electricity went up as a result by a factor of 2.5. So the problem of energy security came to the fore. We need a much better and more flexible energy budget.

Surprisingly, of about 1000 TWh of electrical energy produced by the UK annually, about 60% is lost.

The grid includes the national as well as local area and private ones. Mean electricity consumption rate is about half a kW.

CHP, has been around for some time, and works well in terms of efficiency.
Heat doesn’t travel well and tends to work better on local scales. This fact may shape the grid in the future.

We hope to learn how to recognise good solutions as and when they become available.

Alarm bell of virtual power plants and virtual storage. This looks like the banking system in some ways!

The government-sponsored, powerful report from Nicholas Stern suggested strongly that the sooner you act on climate change and environmental degradation, the less it costs you (to do what you can to reduce human impact towards it). Is the energy supplier the right party to be helping us reduce energy use and emissions. But some of our bill is earmarked for reinvestment in work on greater efficiency and lower carbon economies.

We need a way forward that allows us all to participate in the planning. Without this there are greater risks of losing buy-in.

The keys to the smart grid are

• appropriate communications
• data security

. The three core aspects of the smart grid are

• improved performance
• new architecture
• new applications

to obtain the types of power transmission and distribution with smart metering needed.

Network storage is part of the solution.

What the smart grid equipment vendors are doing

A million smart meters deployed in USA with an investment of USD200 mn. (Ed. This implies an investment of $200 a smart meter).

Management of smart resources – smart crews. Logistics of installing many meters in short time. Software enables MRO and installation workforce to be smart and save 10-20% of costs while smoothing and destressing processes for users and workers.

We could upgrade infrastructure and layer new technology (internet) on it without compromising lifestyle.

Accurate billing and monitoring enables the supplier to save money.

The energy sector as having high growth in use of energy efficient electronic chips. Two-thirds of electrical power is currently wasted. Such chips can help reduce the energy loss section of increased energy demand and they are key to greening technology, especially in electricity. Efficiencies come from designs at the core, not just system level. Zero load should mean zero power.

$44 bn is spent on powering servers – energy efficiency in this, not just in direct smart grid tech is important.

Demand response

For demand response, you tell the customer what they are paying now and will be paying over the next hour or day or more for their power. Then, smart or any devices under watch, can be told to go on only when electricity is cheapest or cheaper.

On markets, an investment bank has said in 2009 that the Advanced Metering Infrastructure market will be worth $30bn by 2030, and that the demand response market will be worth $30 bn, and smart transmission and distribution will be worth $50bn. Today in 2010, all these areas put together are worth $20bn.

At either end of the transaction, the energy supplier will automatically send digital data to the consumer about pricing. The smart consumer will have programmed settings to act upon this information. The result will be the varied usage behaviour of the consumer. This is the theory! The sending of such data to the consumer may become mandatory in the coming years. In this scenario, the consumer can actually decide to reduce their own bill in various ways that could be automated, rather than by manually changing behaviours.

There is also the case where the supplier can actually dictate whether certain appliances can be used at certain times (hours of the day or night). This eventuality was actually not one of the original goals for the UK grid, but in any case, has been an area which energy-intensive industrial users have been familiar with for some time. This ability would also help the suppliers do forecasting, through tracking, iteration and intelligent-learning.

Further, the supplier would also be able to take automated prepayment or crucially, disconnect the consumer without their permission, on failure to pay. This latter obviously has political and social implications and will need more piloting and discussion.

Smart meters save energy by encouraging off-peak energy use, and by helping the consumer know which appliances use what amount of energy. Appliances will also be linked up.

There are fundamental drivers to the disconnect market: the smart grid depends on them.

Smart meter roll-out challenge

DECC will mandate a GBP 8bn roll-out of smart meters in all homes in the UK by 2020, starting late 2011.

Some early installment players are British Gas, npower and First Utility. These are set to reach several hundred thousand by the end of 2011.

In Holland, they tried to mandate the use of smart meters in the home and it failed. There was resistance and it was voted down. The plans must be trusted; the consumer must know what is going to happen with their data.

Funding for smart meters

Since 2001, private funding of $3.6 bn for smart meters. US stimulus of $3.4bn for smart grid initiatives. ENEL in Italy doing mass deployment now of smart meters. There are projects in the UK, France, Germany, Spain, Netherland; Taiwan, and to follow are: Brazil, China, India, Japan and the Philippines.

Getting new consumption off-grid through ‘DC micronets’

We expect high loads to be monitored and controlled in the home. DC micronets will become common, taking ‘offgrid’ parts of new consumption, such as lighting and electronics. These DC micronets will also drastically reduce installation costs for microgeneration such as solar PV. An example of a partial offgrid solution, is the home-office, whose lighting, computing power and other electronics could be provided for by a small, inexpensive solar PV with DC micronet installation.

DC has the advantage of not needing an adaptor. These are the heavy, often hot blocks that are attached to the plug cable. They can use up an extra 50% of the power being consumed. DC fridges were cited as using about 15% of the energy of DC-AC fridges (standard ones). There is potential to expand DC systems to incorporate more appliances as more power is produced and or efficiencies improve.

The point was made that this should lead to persistent change, or in the jargon, the Return-To-Drawer period goes to infinity, the end of the product life. The controls and advice on smart meters and new systems should have content, be easy to understand, reprogramme and should match lifestyle (have market focus).

Long-lasting batteries for energy storage could play a role in offgrid and or DC based solutions.

Standards for the smart grid

Are there too many or too few standards for the smart grid to meet? We need them to enable good markets and competition was contended. As of 2010 the telecoms and utilities worlds are not communicating very well in this area (and perhaps others).

As well as the Battle of the Gateways (to the home) there will be the Battle of the Standards which should enable not only the utilities to get a share of the market.

In the US, some 2000-3000 companies are involved in the smart grid at some level.
Standards are essential. If not you have more complexity. This shift is already a complex problem.
People want to sell equipment and services in all markets.

The energy suppliers have suggested that the internet is not reliable enough for some aspects of the smart grid.
There is a huge gulf between electricity and telecoms service providers.

The EU M/411 smart metering mandate is to recommend interoperability standards on smart meters, so that the consumer can know what their consumption is, but to ensure that smart meters in different markets work to the same standards. The timescale is to set this by September 2011.

The machine-to-machine standards which would operate on a generic platform does not yet have the buy-in of the energy service providers.

There is a new ITU focus group on smart grids; trying to produce global standards, and identify the impact on standards development.

Displays

Analogue displays more important than digital ones.
There are two kinds of displays – direct and indirect feedback.
Push displays: simple, direct feedback, always on – like the clock on the wall.
Pull displays: Indirect feedback – something has to pull you in to get that extra information to understand what is going on.

Try the so-what test on what info the display is giving you.

Field trials are expensive but important. Push displays looked at more than pull displays; nag factor of whether or not hitting targets. Backlights for displays important (being able to read them easily).

Top-down, the low-hanging fruit for macro government issues around energy and emissions is energy efficiency in the home. How do we get there?

Smart appliances that, e.g., turn on automatically when the sun is shining for a home with PV will be ideal as the consumer doesn’t have to think or even do.

If a consumer’s consumption is trending much higher than usual at that time, then an alert and a suggestion as to what it might be, would be useful.

A simple dashboard that brings together all this for electricity, water and gas where used, is important: interoperability.

Big Retail and smart grids

A large retailer carbon footprint for its sphere of influence splits up into 3 contributory factors. The footprint of the supply chain is ten times that of the direct footprint. And the footprint of customers is ten times greater again than that of the supply chain, dwarfing the direct footprint. So the responsible thing to do is to work with customers on emissions and the environmental questions. It also helps with regulation and with energy security. And of course, it saves money. It is normal now for such a large retailer to state that it wants to lead in the transition to a low carbon economy.
Achieving this has three parts. They could aim to reduce direct footprint by 50% by 2020; to reduce supply chain footprint by 30% in the same time and to help their customers reduce their footprint by 50% by 2020.
(Ed. When we look at the relative importance in terms of emissions saved for these three areas, if the first, direct saving is worth 1 unit, then the supply chain aim is worth 6 units and the customer aim is worth 50 units. But putting one’s own house in order probably makes much of the second aim happen and some of the third, if the company is outgoing enough about its efforts in stores and in marketing.)

The overwhelming trend is that people / consumers are concerned about emissions and environment.
Overcoming the price barrier for green is key; the example large retailer sold more energy saving light bulbs in a week than it had done in a whole year when the price was artificially reduced to a low level.
The next barrier is information: carbon labelling can be important although this perhaps only speaks to the most engaged consumers as of now.

Meeting energy demand as a nation (or not…)

GBP 200bn needed in investment in energy infrastructure by 2020 for secure, affordable and sustainable supplies.
About 20% of this is needed for new energy network infrastructure.

New network energy companies need to be focused on resource productivity to support the Ofgem core mandate.

About a fifth of the consumer’s energy bill today is attributable to network costs.

The grid in its current form is now seen as not being fit for purpose.

‘It is likely that the UK will need around 30-35GW of new electricity generation capacity over the next two decades and around two thirds of this capacity by 2020. This is because many of our coal and most of our existing nuclear power stations are set to close. And energy demand will grow over time, despite increased energy efficiency, as the economy expands.’ UK Government.

Renewables in 2010 produce 5% of capacity and apart from tidal, which is a fraction of renewables, this does not replace base load anyway.

There is a disconnect between the capacity deficit, opening up to over 20GW in the late 20-teens and continuing to grow to over 40GW by 2024, and the statements of government confidence that all will be covered.

If you have planning permissions and funding etc for new nuclear, it would take somewhere between 5 and 10 years, but 10 years is safer, to bring significant power on stream.

We heard that EOn is planning new nuclear to be begun now for production start around 2017: 7 years.

If we got out of coal completely, it would be made up by China and India in 6 months, through their usage increases.

The government suggests we shall build 3000 windmills in the North Sea by 2020, which corresponds to one every day until 2020. But current installation rate is 1 every 22 days.

In the home, emissions fell by 4% between 1990 and 2005, despite home numbers and home electronics increasing their contribution to emissions by 12%. Targets are for a 20% reduction by 2020. But where is the evidence of increased effort in this direction?

The speaker suggested that keeping the power on nationally is a higher priority than climate change targets.

We can’t wait for CCS to be installed on new coal stations; the technology is not ready at scale yet.
Fusion experts at JET have said that there is no chance of a contribution from fusion before 2050.

Demand reduction across all sectors for 2050 targets will be essential.

Turning the theoretical emissions reduction targets into reality will require more than political will: it will require nothing short of the biggest peacetime programme of change ever seen in the UK.

This is a fairly bleak picture; in 2018 when we run into large scale brown-outs, it will have been the practical engineers, not the theoretical physicists, who will have to admit they were too quiet in the period before that time.

All the more reason to push forward strongly with consumer engagement at all levels, smart grids, smart homes, energy efficiency, and clean power.

Summary ends – we hope to see you on 3 December 2010 and 23-24 June 2011!