For a good few millennia we chopped down trees and relied on solar power to give us energy, light and heat in our homes – nice and simple. The 1880s saw us harness electrical power and by the 1930s we had a centralised network of power stations. Since then we have been paying for our power based on a meter reading being taken once every few months by someone in a hi-vis jacket.
The current era of telecommunications we find ourselves in has completely changed the game for consumers, service users and providers alike. Routine tasks that used to take hours, or even days, such as booking a trip, banking and even sending your auntie in Australia birthday greetings are now being processed by your smartphone within a fraction of a second.
By the end of 2020 we should all have smart meters in our homes, allowing for the visualisation of real time energy consumption and usage patterns. But what can this offer, other than one of the big six energy suppliers being able to charge you more accurately and not having to bother to send the person in the jacket to read your meters? Why is it exciting? Good questions…
Well, wholesale electricity costs more during peak times, mainly because quick responding power generators are expensive to turn on to meet the peak demand. Many generators do nothing for most of the year and the cost of having them on standby is just part of our bills. On the other hand, electricity costs less during off-peak hours. Even more so with the rapid rise of variable renewable generation – the wind blowing a hoolie at 3am over Whitelee windfarm generating 539 megawatts of cheap renewable electricity while we are all tucked up in bed.
With a smart meter being able to record not just how much energy is used, but exactly when it is used throughout the day, it throws up the opportunity for ‘time of use tariffs’ to be introduced such as British Gas’ ‘free electricity on a Saturday or Sunday’. Variable costs during the day give us as consumers the option to save money by shifting consumption away from peak hours.
As a further twist away from the norm, with all the data on individual consumption being collected by the smart meter, it will also be possible to purchase power the same way we buy minutes, texts and data on our smart phones. This will throw a new breed of supplier into the mix, a recent example being easyEnergy (same group as EasyJet) setting up in Holland. There is also a lot of industry chatter about energy supply even being lumped in with telecoms packages. (I’d like a Sports TV package, 100Mb broadband and 300kWh off-peak electricity per month please!)
Throw in improvements in electrical storage, meaning energy could be purchased when it’s cheap then stored and used when it would be more expensive. Some companies are already exploring the ‘free’ battery option like Sunplug and Sonnenbatterie, and others are exploring what secure, infinitely traceable direct ‘peer to peer’ trading through blockchain technology could potentially offer. In a nutshell, we have a revolution in how we purchase energy.
But why is this important to us? Simple: by shifting when we use energy the costs of maintaining power stations to cover the peak reduces, as well as cuts other costs such as network infrastructure maintenance. According to a Carbon Trust report commissioned by the Department of Business, Energy and Industrial Strategy (BEIS) and OFGEM there could be between £17 and £40 billion cumulative savings for Great Britain to 2050. More importantly, from an environmental perspective, it means we can utilise more of our clean but variable renewable generation and phase out fossil fuelled power generation as much as possible.
However it’s not just buying energy that can change with smart meters and smart tech in our homes: every electrical device has a signature, essentially a pattern of consumption during its operation. So it’s not beyond the realms of the imagination to start paying for your washing machine per cycle instead of buying a whole new machine up front, or even using the regular signature of a kettle going on at tea o’clock to alert us to the wellbeing of an elderly relative hundreds of miles away.
The possibilities are exciting of course, but we have to be very careful that no-one gets left behind or suffers as a result of this rapid transition. Some people’s lifestyles will not be suited to a time of use tariff and we have to ensure that they are not penalised while everyone else benefits. Strong regulation will be vital, as well as ensuring that consumers understand the possibilities and potential pitfalls of our future decentralised energy system.
Part of my role here at Changeworks is to explore opportunities that the evolving energy system may throw up for us, as well as other organisations we work with. We are keen to ensure that the transition to new methods of purchasing and utilising electricity is as smooth as possible for consumers, by ensuring that we stay up to date and share the relevant knowledge.
If you’re a small to medium sized enterprise, or academic institution with a great idea or product to do with evolving energy systems, get in touch to discuss how we may be able to help you to deliver a successful project. What’s more, if you’re a forward thinking, proactive local authority or housing association looking to meet your energy efficiency and carbon reduction targets, we can help you too, so drop me an email.
In the meantime, keep your eyes open for ways you could implement changes at home to ready yourself for the electricity revolution!
Stephen Strachan is Changeworks’ Development Specialist – Energy Systems