What will Smart Grids mean for Energy Users? Jon Bentley London, September 15 th 2010 IBM Global Business Services | CBI Energy Conference
Lets first remind ourselves of Why? we need Smart Grids 2. Affordability keeping price rises to a minimum (2011+) 3. Emissions keeping within 2-4 o C (34% by 2020, 80% by 2050) 1. Security keeping the lights on (2016/17 – 2022/25)
Which means we need these Outcomes? from Smart Grids? 1. Demand managing down consumption increases 2. Efficiency reducing unnecessary consumption and loss 3: Generation reducing emissions from / dependency on fossil fuels 4: Cost avoiding the need to build (even more) new capacity 5: Price reduced volatility from global (gas) markets
So How? are Smart Grids expected to help? 2. Losses managing the network more efficiently to reduce distribution & generation losses and costs 1. Information informing consumer choice and influencing behaviour by showing them what they use 3: Incentives using price signals to increase perceived energy value and shift the shape of the demand curve 4: Automation providing tools / services to make it easier for energy users to manage their energy 5: Control direct demand management by utilities / ESCos to limit demand / shift time of day usage 6: Optimisation balancing increasingly variable and distributed generation and demand
A Technical definition (slightly abridged) <ul><li>“ A Smart Meter is an advanced meter that records consumption in intervals of an hour or less and communicates that information at least daily via some communications network back to the utility for monitoring and billing purposes. Smart meters enable two-way communication between the meter and the central system” </li></ul><ul><li>Wikipedia </li></ul>
A Goals-based definition <ul><li>“ Smart metering is designed to provide utility customers information on a real time basis about their domestic energy consumption. This information includes data on how much gas and electricity they are consuming, how much it is costing them and what impact their consumption is having on greenhouse gas emissions." </li></ul><ul><li>European Smart Metering Alliance </li></ul>
Ofgem – Smart Metering prospectus 2010 <ul><li>“ Smart grid can be defined as “an electricity network that can intelligently integrate the actions of all users connected to it - generators, consumers and those that do both - in order to efficiently deliver sustainable, economic and secure electricity supplies” </li></ul><ul><li>Electricity Networks Strategy Group </li></ul>
Reality check 1: We need to be clear on What? is a Smart Grid Smart Meters Intelligent Homes & Appliances Smart Grid Intelligent Network
Reality check 2: We need to be clear on When? we will get it Smart Meters: 2012-2020 2016? Smart Home: 2012? 2015+? Smart Grid: 2020+? Intelligent Network: 2015-2020?
Smart Meters are the first step in a wave of change across the energy system Smart Metering Improving billing accuracy Reducing operational costs Providing meaningful consumption information Reducing overall and peak demand Accelerate electric vehicle adoption Enabling more micro-generation Supporting implementation of smart grids Improving efficiency of industry processes Proactively managing customer debt Utilising electric vehicle storage capability Integrating intelligent devices and appliances for demand management Enabling increased use of intermittent energy supplies Services beyond the meter Operation of “virtual power plants”
Achieving these changes requires much greater engagement with customers Smart Metering Providing meaningful consumption information Reducing overall and peak demand Accelerate electric vehicle adoption Enabling more micro-generation Proactively managing customer debt Utilising electric vehicle storage capability Integrating intelligent devices and appliances for demand management Enabling increased use of intermittent energy supplies Services beyond the meter Operation of “virtual power plants” Increasing customer… …behaviour changes … investments … collaboration
What should be the Impact? on energy consumers? Near-term Gradual increase in energy services and tariff structures sustained reduction in emissions, demand pattern shift, willingness to “co-create” change with utility Roll-out High consumer engagement with information and tools behaviour change, reduced usage, lower bills and GHG emissions, closer relationship with energy and utility In 5 years? New technology-based utility / customer business models automated demand, EV and microgen management, willingness to allow utility control for mutual benefit
What could be the Impact? on energy consumers? Near-term Choice in terms of tariffs, time of use (ToU) pricing, energy saving services higher bills for those that don’t engage? Mistrust? Roll-out Impact depends on consumer engagement with the information provided zero for a large number of people? Ambivalence? In 5 years? Dynamic ToU pricing, programmable usage, utility-managed demand & microgen management reduced usage and (relatively) lower bills at the sophisticated, educated, wealthy end of the market?
2 Key Lessons from other Smart Metering trials and programmes 2 Customer interest and engagement typically fades and information-driven change is in any case limited (6-10%) – so automation and price-signals are needed to drive and sustain increased benefits, which requires greater levels of trust and customer participation 1 Customers can – and do – seriously derail Smart Meter programmes when trust breaks down
Take the customer with you – build trust Design for future solutions - implement in steps Co-create solutions that work for customers - share value [email_address] www.ibm.com/think/uk Copies of this presentation are available on request