Smart Metering: The Energy Revolution Happening in Our Own Home

Transcription

1 Smart Metering: The Energy Revolution Happening in Our Own Home The Department of Energy and Climate Change (DECC) recently issued the announcement that many had long been anticipating: as part of the government s drive to reduce the country s carbon emissions, smart meters must be installed in every UK household by Smart meters which display, store and transmit detailed data on energy usage between the supplier and the customer are the central component of a dynamic, flexible smart grid, which will dramatically change the way energy is produced, bought, sold and consumed. In simple terms, the smart grid is a network that uses IT to manage the supply of electricity efficiently. Unlike the current, rigid grid, it enables greater consumer participation, giving customers the opportunity to interact with suppliers and other participants on the grid. Not only that, but immediate information about energy use and pricing incentives provides a more tangible, monetary incentive to us all to change the way we use energy. Smart metering aims to encourage the customer to cut their carbon footprint by making them aware of exactly how they are consuming their energy, and, perhaps more persuasively, what that energy costs them. Of course, many of us already take part in car-sharing schemes, buy energy-efficient appliances and offset the carbon impact of our long-haul flights. So from a purely altruistic point of view, having a simple piece of technology in our homes that can help us cut carbon dioxide emissions sounds like a no-brainer. Yet reaction to the DECC announcement has not been universally positive: some are opposed to the concept of smart metering because of fears over costs, the security of their data and lack of choice as a consumer. Many people have voiced concerns that the initial costs of smart metering will be passed on to the customer at a time when the state of the economy is punishing those customers who ill afford their energy bills as it is. But in fact, smart meters are all about giving customers the tools they need to understand their energy consumption and therefore cut their bills. At their most basic, they act as an electronic version of customers usual utility bills, providing very immediate and transparent way to see exactly how much energy they are using and what it is costing them. And because it connects their meter with their supplier, it means that they can also benefit from receiving information on the tariffs that best fit their usage patterns and needs. The detailed data that will come from smart metering provides a more accurate breakdown of our

2 energy consumption, and this more timely and accurate data puts an end to some of the longstanding issues with current meters, such as estimated billing. But the accuracy and level of detail in the information is a further reason for resistance from some people, who are concerned about the security implications of having a smart meter installed in their home. Some fear that this open access to private information could make it easy for utilities companies to invade their privacy or to misuse or even lose their data. These concerns, which have hampered the smart meter rollout in the Netherlands, have not been lost on the UK s Department of Energy and Climate Change (DECC), which cites data protection and system security as crucial issues for the success of the rollout and operation of smart metering in this country. This is one of the foremost challenges facing the government in the battle for the smart metering hearts and minds of the public: securing buy-in and engagement from domestic customers is very dependent on the reliability and robustness of the infrastructure and technology that supports the new system. Without that buy-in, the smart metering programme will miss an important goal: if customers do not engage with meters, they are unlikely to reduce their consumption. With the country-wide roll-out approaching fast, the government and utilities will need to make a concerted effort to convey the message that smart metering is a safe and secure way to make cost savings as well as reduce the carbon footprint of the UK s homes. The final sticking point for some is that the compulsory nature of the smart meter roll-out could take away freedom of choice for consumers. After all, we ll get a smart meter whether we want it or not, so why assume that we re likely to have any choice in what happens to our data? In fact, choice is likely to be a key feature of the smart metering market as smart meters become a compulsory fixture in every home across the UK.The smart metering roll-out is opening up a new frontier for utilities companies and for their customers. This unobtrusive piece of technology will start to change the relationship between the customer and the supplier: with increasingly detailed data on our energy usage and better visibility on exactly where our money is going customers will be better positioned to challenge suppliers to improve the products they provide and help them save money. Smart meters give suppliers another way to differentiate themselves in what is set to become an increasingly crowded and competitive market, with enormous scope for them to tailor their range of products and services to increase value to customers and encourage them to get the best out of energy saving. It will allow them to provide easier ways for customers to save money by helping them reduce wasted energy (for example, as a result of unused

3 equipment), cut peak-time usage with a minimum of effort and optimise their use of dual-fuel energy. Utility companies will need to take on board the idea that different groups of consumers will use their smart meters in very different ways and will want different products and services based around the smart meter. This means that in order to attract and retain customer loyalty, they will need to segment their customer base, perhaps by demographic, location or usage level. This move towards increasing segmentation is likely to be one of the principal forces underpinning the evolution of the market. It will also drive the creation of more specialised smart meters catering for diverse sectors of the population, with different levels of technological functionality based on need, and on the degree of involvement that the customer chooses to have with their smart meter. People who are fully engaged with cutting their costs and optimising energy-saving measures within their home will demand much greater functionality than someone who is happy to let the smart meter quietly do its work to improve billing accuracy, but has no real desire to interact with it. Similarly, a visually impaired user will have specific requirements in terms of the display. All these factors will encourage energy companies to work on developing customised products that deliver exactly what their users require of them. Effective customer segmentation by the utilities - supported by the right technology for the job will be crucial to the success of the smart metering roll-out. The meters must be robust enough to support the higher levels of functionality that many consumers will demand and to carry the security standards that allay some of the fears over privacy and data security. As a country, we need to cut greenhouse gas emissions by 34 per cent on 1990 levels by 2020, and by at least 80 per cent by This commitment has tangible implications for every one of us, and the presence of a smart meter in our homes is perhaps one of the most obvious. But having this technology is not the end of the story: it s just the start. If we want to make smart meters work for us and, ultimately, for the environment we need to engage with them as a tool to help us change the way we look at our energy consumption. It s all about changing the way we think and the way we behave when it comes to energy. These changes will require a small effort on our part, but the impact they will have on our carbon footprint and on our pocket is empowering, and cannot be ignored. HOW IT WILL ALL PLAY OUT... It is The roll out of smart meters has begun and the market for associated home energy products, in areas such as microgeneration (using solar PV, wind or combined heat and power boilers), demand control and energy storage, has begun to expand.

4 But how will different consumers buy and use these products? What advantages will they offer consumers? Bill is a trainee pharmacist who shares his house with 2 friends. Although they are conscious of their carbon footprint in theory, in practice the thing that really concerns them is the size of their electricity bill they only check their energy display and online record when the bill arrives. They have signed up to a cheap tariff that allows their energy supplier to pause their washing machine or dishwasher at moments of peak demand. The energy company had to check their appliances were compatible and sent them a special node to strengthen the wireless signal, but the installation was very quick and easy. Now, for most of the time, they forget about their tariff. Sometimes Liz, Bill s girlfriend, thinks she notices a difference in the length of time a wash cycle takes when she wants her favourite jeans clean for the weekend, but it s never stopped her getting out of the door on a Friday night. When the bill does arrive online, Bill sometimes checks how often their energy supplier is using their load control facility and is a bit startled to find it can be up to 8 times a week. Without knowing it, though, Bill and his housemates are also contributing to the stability of the National Grid in another way. Last year, their landlord purchased a new fridge which incorporates dynamic demand, allowing it to make automatic adjustments to the power it draws in response to the level of stress on the Grid. Bill s fridge is one of tens of thousands across the country, which between them provide a valuable dampening effect on fluctuations in supply and demand. Bill and his household are saving around 15% on their electricity bill by giving their supplier some limited control of their appliances. Mike and Rachel have three children, two dogs, two jobs, an allotment and a family enthusiasm for model aeroplane racing. So they re very busy, but also very concerned about living a lifestyle with a low carbon impact. They invested in solar thermal and PV panels three years ago, encouraged by the feed in tariffs available, and they have been selling some of their surplus power back to the grid on a regular basis throughout the summer months. Their solar system installer worked with their energy supplier to provide them with a controller and smart meter that tracks consumption in the house, the cost of importing electricity from the grid and the value of exporting their solar electricity. This lets them decide the basic rules of how they will use the energy they have generated: two options being consume it all on site or make as much money as possible from the sale of the energy. Once they have decided the basic ground rules the system takes care of the rest, automatically choosing to use locally or export.

5 They are now considering the purchase of an electric car for Rachel s business. Since she works from home, the car can charge on a sunny day and if it s not used, store electricity for their use or for sale back to the grid in the evening when energy is more valuable. But balancing the use of the car against its value as a storage facility is another complicated set of decisions that Mike and Rachel do not want to consider every time they decide to take the car. So they re happy to change tariff with their energy supplier to give them an upgraded smart meter and energy controller, which lets them set their overall strategy to balance running a normal life with reducing their carbon footprint and making the most money possible from the energy they produce and store. The new tariff and smart meter shares their preferences with their energy supplier, allowing the energy supplier to make estimates of the electricity that might available from Mike and Rachel s house. Mike and Rachel estimate that their household expenditure on hot water and electricity is 10% of the average for a household of their size. More importantly for them, they could reduce their carbon output by 60% if they use their electric car efficiently. George and Eileen are retired and live in a small house in a big garden. Their income is fixed so they are careful about their utility bills they ve invested some money in proper insulation for their home and like to keep an eye on the best energy deals available. At the moment they are on a tariff which rewards them for low consumption at key times of the day with a capped charge per month. Going over their consumption limits in the key times would be charged at a very high additional rate. Rather than automating their energy consumption, they prefer careful monitoring of their habits: their smart meter can disaggregate some of their energy use so their energy monitor can show them which large appliances are consuming energy and when. George has fitted some intelligent plugs to other appliances and they have now have a good understanding of where their energy gets used. They use this understanding to control their consumption in the peak rate hours, turning off unnecessary appliances and delaying activities like dishwashing or water heating. Some of their appliances have timer switches, but mostly they prefer to do this manually: they like to feel in control and be certain that things have been turned off. Using these methods, George and Eileen have been able to fix their energy bill for 2 years, well below the market rate. Even though they have bought a number of new electronic gadgets in that period, their energy budgeting has been so effective that they have come nowhere near their consumption limits.