Insights

A new way of paying for our energy.

Read part 1 of this discussion series – Should we be rethinking CHP?

Read part 2 of this discussion series – Responding to changing energy costs

It’s been almost impossible to avoid the recent negative coverage around the Government’s smart meter rollout plan, which aims to see all houses in England, Scotland and Wales equipped with smart meters by 2020. Despite 11 million devices installed so far, during the past few weeks there have even been calls for the Government to extend the rollout by three years, citing around 3,000 consumer complaints.

It’s fair to say there’s a great deal of miscommunication surrounding the topic. In fact, all the negative reports we’ve seen so far have completely missed the most important reason for the smart meter rollout…

Knowledge is power.

In Part 2 of this series, we discussed the need for a different charging mechanism for domestic electricity consumers. This mechanism is ‘Time Of Use Tariffs’. Referred to as TOUTs, they essentially mean the price of electricity will go up or down depending on the capacity that’s available when we (as domestic consumers) need it. Put simply, when renewable generation is at its most effective and consumer demand on the grid is lower, the cost goes down. For example, with TOUTs, electricity would be cheaper than average in the middle of a windy night, but more expensive than average on a still, overcast evening at 5:30pm.

Why? Because it’s estimated that using TOUTs could provide up to an 18% reduction in residential peak electricity demand. This would reduce the pressure on our grid and therefore make it easier for us to transition to a fully decarbonised one.

TOUTs are similar to the variable electricity tariffs many commercial and industrial customers are already subject to, so this is arguably nothing revolutionary. However, what does require a real change is education: so far, we haven’t seen providers give consumers a proper explanation as to how a smart meter will benefit them in the long term. I’d argue there’s not a person in the country who would say no to:

1. Knowing the best time to use electricity (in terms of cost).
2. The option to use energy when its carbon intensity is lower and therefore reduce their overall carbon footprint, helping the country move towards a fully renewable energy model.
3. Making money without even trying, via automated storage and resale of electricity.

Industry progress.

Of course, there are a few developments that need to occur in tandem for the above benefits to be possible. It requires smart appliances that can communicate with smart meters and, for non-urgent uses (washing machine, dishwasher, tumble dryer, EV charging), only use electricity at the most economically-beneficial times.

What does this all mean for the built environment?

These devices are in their infancy but, once the potential savings are realised by consumers, it will catalyse progress in the industry. In turn, this will increase the business case for energy storage in buildings. Storage means energy can be stored when the price is lowest but still be available for the consumer to use energy whenever they wish; this is particularly useful during times of peak demand, when the price of electricity can be many times greater than other periods.

Already, the ability to know in advance the best time to use the grid is a reality:  www.carbonintensity.org.uk is a collaboration between MET Office, National Grid, Environmental Defence Fund, University of Oxford, and WWF. It provides forecasts for the carbon intensity of the grid up to four days in the future.

V2G technologies will see electric cars exploited to offer domestic storage without the need for a supplementary battery, even being used as distributed Demand Side Response (DSR) to buffer the grid at peak times. However, it’s important to note that the Government has been reducing the tax relief on electric vehicles, presumably in response to the grid not being ready for their fast-paced uptake. This reinforces how fundamental the smart meter rollout is – it’s vital a vital step towards electrifying transport on a national scale.

Read more about this exciting new electric world in Part 4.