Out-Law News | 28 Feb 2014 | 3:05 pm | 4 min. read
The Smart Grid Forum (SGF), which is made up of representatives from electricity network companies, consumer groups, energy suppliers and other stakeholders to consider the technical, commercial and regulatory issues associated with the development of smart grids, said better use of technology could help consumers better manage their energy use and allow suppliers to more readily identify potential problems in their supply of electricity.
SGF defined a smart grid as "a modernised electricity grid that uses information and communications technology to monitor and actively control generation and demand in near real-time, which provides a more reliable and cost effective system for transporting electricity from generators to homes, businesses and industry".
"More efficient use of network assets helps reduce the need to invest in costly infrastructure and ultimately reduces the costs passed through to consumer bills," the SGF said in a new document outlining its 'Smart Grid Vision and Routemap' (59-page / 1.37MB PDF). "It is estimated that by 2050, smart grids will reduce the cost of additional distribution reinforcement needed to accommodate the connection of low carbon technologies such as heat pumps, solar PV and electric vehicles by between £2.5bn and £12bn."
"With accurate and real time technical information on supply and demand, and options for balancing supply locally (e.g Demand Side Response, storage), complemented by new commercial arrangements such as flexible connection agreements, network operators will be able to free up existing capacity and make better use of existing assets. This can help deliver faster and cheaper connections for businesses and generators and helps to defer or avoid the need for costly reinforcement of the wider network," it added.
The SGF also said that a move towards smart grids would allow for more renewable energy to be generated, stored and supplied to consumers "at a more local level". The use of smart meters within a wider smart grid system also has the potential to allow suppliers to tailor their tariffs more accordingly to incentivise consumers to use energy "away from peak times", it said.
Among the other benefits offered by smart grids is the ability to monitor for and mitigate against the risk of power shortages, it said.
"A more intelligent network that increases the visibility of real-time network use, as well as a means to control and manage the network more responsively, will improve the stability and reliability of the network," the SGF said. "This will assist in the timely and efficient replacement of equipment, reducing the risk of any localised power outages or interruptions and ensure that power is restored more quickly when faults do occur."
Technology and smart metering expert Chris Martin of Pinsent Masons, the law firm behind Out-Law.com, said the SGF report “rightly identifies the need to invest in the UK’s legacy electricity distribution infrastructure”.
"Developing a smarter grid that uses new information and communications technologies will be vital as we move away from legacy systems into a digital, more connected world in which the UK, and its major cities in particular, must embrace new technologies to remain competitive and make the most of dwindling and increasingly expensive natural resources," Martin said. "However, whilst the potential benefits are noted widely in the report, less is said about the cost of achieving these benefits. Ultimately, the cost of implementing smart grids will be met by end users. The SGF’s analysis suggests that by embracing smart technologies the necessary network reinforcement can be achieved more cost-effectively than by relying on conventional solutions alone," he added.
Martin said that the price consumers and businesses may have to pay in the short-term for helping the funding of a new smart grid system would be worthwhile in the longer term.
"This investment is needed, and the SGF’s Vision and Routemap is a welcome step towards delivering a fit for purpose energy network for the UK," he said.
In its paper, the SGF outlined a number of things that need to happen for smart grids to become a reality, among which was the introduction of smart metering in the UK which it said would be "a key development in the deployment of a GB smart grid". It said that there needs to be effective communication with consumers about how their management of energy use through smart metering can benefit them and serve a wider benefit of more efficient consumption.
The SGF added that the regulatory and commercial frameworks that will underpin smart grids development must both "incentivise innovation and efficiency and support new commercial arrangements, whilst protecting consumer and customer interests", said that the link between in-home appliances and smart networks needs "far deeper exploration", and also flagged the need for standards.
"Product standards are also a key element informing the direction of technology development," it said. "Whilst we have been engaged in international and European Standards setting bodies, we need to intensify our participation and raise our efforts in shaping these standards to ensure smart grid products will support our vision, align with EU and international expectations and boost our growing supply chain."
"The aim is the establishment of a framework of standards forming the basis for a smart grid for all residential homes, industrial buildings and associated buildings," the SGF said.
In a joint statement contained in the SGF's document, Energy Minister Michael Fallon and Ofgem chairman David Gray said: "Smart grids will enable new sources of energy and new forms of demand. They can help us keep the lights on at minimum cost to consumers, while creating jobs and enhancing growth. They can support our low carbon transition and create opportunities for consumers to play an active role in the energy system alongside generators, suppliers and network companies."
"Many of these smart grid benefits will be realised in the 2020s and beyond. But we must not wait until then to put in place the enablers for smart grids – physical, commercial and regulatory frameworks. While many of the benefits can be captured now, longer-term benefits will only be realised if we identify and start to overcome barriers today," they added.