Are smart meters an enabler for a flexible grid? Yes, says Engerati

Smart meters are key to unlocking demand side flexibility to manage peak demand.

Energy utilities across Europe are advancing their mandated smart meter rollouts and tens of millions of households there as well as elsewhere in the world can expect to have a smart meter installed by 2020.

Alongside these rollouts, utilities need to realise the business value of these programmes, both for their customers and for themselves.

In order to do so, Engerati believes it is absolutely necessary for the utility sector to transform smart metering into an engaging and compelling proposition for customers and leverage it to deliver grid resiliency.

End goals of smart metering should include providing customers with better visibility into their energy consumption, enabling demand response to reduce peak load and managing voltage to reduce energy consumption. 

As such, three key impact areas of smart meters identified by Engerati are implementing grid intelligence, empowering smart demand response,  and – the topic of this article – enabling a flexible grid.

Commercial and industrial demand side response

Generation is becoming more distributed and variable as consumers look to rooftop solar photovoltaics and other forms of local generation and energy storage. Electric vehicles with their significant charging requirements are becoming more pervasive. Smart appliances are growing in popularity.

As a result, both energy flows and energy demand are changing and becoming more variable and unpredictable, in turn requiring a grid with greater flexibility.

As an example of building this flexibility, UK system operator National Grid initiated Power Responsive as a collaborative stakeholder-led initiative in June 2015. The goal is to achieve 30-50% of balancing capability from the demand side by 2020.

The initial and continuing focus has been on industrial and commercial businesses to grow their participation in demand side response through awareness raising and engagement.

The categories of flexibility include demand side response by flexible load shifting, onsite generation and onsite energy storage and export of distributed generation and energy storage.

According to the Power Responsive guide, the smart meter is part of the basic equipment required for participation, monitoring the electricity consumption and verifying through the recorded data that a demand side action takes place.

Since the start of the programme, advances have included the rollout of advanced meters in businesses and the extension of mandatory half-hourly settlement, thus enabling more cost-reflective pricing, to these customers.

Paul Lowbridge, Power Responsive Manager, System Operator, tells Engerati: “From our experience engaging with large and medium demand users, we see that having access to half-hourly meter data is one of the key enablers to being able to identify the differing cost of electricity throughout the day, and therefore signal to users where value from being flexible with electricity usage will be.”

In a case study, David Jeans, Energy Manager for Kodak Alaris, comments on the challenge of creating an energy management strategy using “broad averages rather than accurate half-hourly market information”.

For participating companies, the rewards can be significant – up to £50,000/MW/year, according to Bill Pollard, Group Services Director at London consultancy Incentive Carbon Management.

Among the participants are water companies, which are major power users. United Utilities, for example, is offering several flexibilities and by 2020 intends to offer up to 50MW of demand side response.

The programme is now widening to include other forms of flexible technology such as storage, along with simplifying and easing access to the balancing products.

National Grid’s Future Energy Scenarios 2016 (currently being updated) projects in the most ambitious scenario a maximum demand side reduction from Britain’s C&I consumers of 5.7GW, which could be reached in 2026.

Time of use tariffs and smart appliances

In Britain, the main routes for businesses to enter the market are by providing services directly to National Grid, or by working with a commercial aggregator or another third party.

As for the residential market, aggregators of residential demand are emerging in Britain, such as Upside Energy. But the balance will be tipped for this sector with the wider deployment of smart meters and the availability of time of use (TOU) tariffs, which in turn will allow smart appliances to contribute to peak demand reduction.

In the Future Energy Scenarios 2016, for all but the slowest smart meter rollout and minimal engagement with TOU tariffs, the scenarios considered project reductions growing from 2020 onwards to around 1.1GW in 2030 and then levelling off to a maximum 1.5GW in 2035.

Caveats to these figures are uncertainties such as the profile of the smart meter rollout and the structure and timing of the TOU tariffs, which could significantly change how consumers could react to the tariffs.

Taken together with the projected C&I reduction – and with Britain’s peak demand during an average cold spell at about 60GW – these figures add up to around 10% demand side flexibility enabled by smart metering, indicating its potentially important role in the future management of the national demand.