A net zero future that revolves around smarter energy
No business leader will have missed the term ‘net zero’ – by which I mean reaching zero greenhouse gas emissions, with a balance between the carbon we emit and that which we remove from the atmosphere – in the past few years. Reaching Great Britain’s 2050 net zero targets requires decarbonising all sectors of the economy.
In fact, the recent Net Zero Week highlighted this challenge and changes we can all make to help reach emissions targets.
In future we will be moving to energy system, there will be millions of new electric devices, like heat pumps and electric vehicles which need to be powered. At the same time, that power will be derived increasingly from variable output renewables, such as wind and solar power.
This is both a challenge and an opportunity for creating a smart and flexible energy system. What does this mean in practice? It means that when electricity is available – when the wind is blowing – it will be cheap. And vice-versa if the weather is still and cloudy. A flexible energy system is one where the demand for energy follows the available cheap supply.
From an end-user perspective, this means turning up demand when renewable electricity is plentiful and cheap and turning down when it is scarce. The rationale is that if we can maximise the use of
cheap renewable electricity when it is available, then everyone’s bills are lower as we are making the most of what we have.
Getting smart about energy
This flexible energy system is often referred to as “smart”. There are economic benefits to a smarter and more flexible energy system. The Department of Business Energy and Industrial Strategy thinks a smarter, more flexible energy systems could reduce energy system costs by £10bn per year by 2050. This means achieving zero-carbon targets and at the same time, lower bills for all homes and businesses compared to a less smart energy system.
Where do these savings come from? A smart energy system is one that best utilises all the available energy resources. This means getting the most out of what we have on both the supply and demand side and not building too much electricity generation and grid infrastructure. Put simply, utilise what we have and don’t build what we don’t need.
How do smart energy systems work?
Smart energy systems integrate monitoring, dynamic pricing and actuation (ability to turn devices on and off). The monitoring element relates to data on what is happening in the energy system in real time.
This means having sensors and measurement of electricity generation, the electricity grid (over which electricity is transported from sites of generation to end users) and the demand for energy.
In our homes and businesses, smart meters are the most obvious example of the smart energy systems. These meters tell the energy system about the demand for electricity in real
time.
Knowing about the status of the electricity system in real time means that the pricing of electricity can become more dynamic. By this, I mean that the price of electricity for homes and
businesses could vary depending on whether electricity is abundant (low price) or scarce (high price).
Or indeed if there are problems in the electricity grid meaning it is difficult to transport electricity from one place to another. Dynamic pricing is about encouraging the right behaviour
so that energy is provided at the lowest cost.
Actuation is the ability to turn devices on and off, potentially remotely and automatically with the appropriate consent, in response to a signal. This could be a bit of kit that protects the grid in the event of a problem or it might be a device that turns itself on or off depending on the price of electricity – for example, a home electric vehicle charger. It sounds complex, but it doesn’t have to be.
This smart energy future might sound like it means a more complex relationship between people and energy, however, this isn’t likely the case. In my research I have shown that it this smart energy system is an opportunity for energy businesses to get to know their customers better.
The rollout of smart meters, combined with other sources of data, means that energy businesses can understand what their customers want, need and value in terms of their energy usage. This provides the opportunity for energy suppliers to tailor the service they offer.
What could tailoring mean in practice? Well, for me, a somewhat lazy energy geek with solar panels on my roof and a battery in my cellar, I might want to trade energy with my neighbours.
However, I don’t want total exposure to all the complexity and risk, so I might want my energy supplier to enable me to dabble but do all the complex stuff on my behalf.
At the same time, my neighbour might want a totally different proposition. Maybe they want their energy supplier to help them on a zero-carbon journey. For example, installing a new zero-carbon electric heating system and (potentially) automating its operation to follow electricity cheap prices so that my neighbours stay comfortable and pay the lowest price for the energy.
So rather than paying for the energy, they are buying comfort as a service.
The point is that now we are starting to have the data available to understand what people in homes and businesses want and need in terms of their energy requirements and preferences. A smarter flexible system doesn’t have to be more complex, in fact it should become much more about your and your relationship with energy.
The energy supplier of the future is one that understands you and your needs and provides you with a tailored package to suit you. Your future relationship with energy is only as complicated as you want it to be.
At Net Zero Week, we celebrated the potential to make our relationship with energy smarter, simpler – and ultimately, to be part of the solution to the climate crisis.
Dr Jeffrey Hardy is Senior Research Fellow from the Grantham Institute, Imperial College London. Smart Energy GB is the campaign for a smarter Britain.
