Blackout warnings must be a wake-up call

National Grid’s creation of a demand flexibility service, as part of package of measures to secure supply this winter, may eventually be seen as a pivotal moment in the creation of a flexible energy system. Steve Cunningham, chief executive of Geo, argues that concern over blackouts could propel forward work on establishing easy and attractive ways for consumers to turn down their energy use.

As the evenings draw in, the usual fears that we may have blackouts this winter are beginning to make headlines. While for many years these headlines were just speculation, this winter even National Grid ESO (Electricity System Operator) has warned that due to Russia’s invasion of Ukraine we are likely to face a challenging winter. But the ESO, government and the regulator are rightly putting the risk of rota disconnections into perspective, with Ofgem’s chief executive Jonathan Brearley saying recently “we do not think a supply emergency is likely.”

One reason why this is unlikely is that the ESO is taking steps to reduce energy demand, when required, by 2 GW through its new Demand Flexibility Service. The service is intended to incentivise consumers and businesses to reduce their use of power or to reschedule it away from peak times.

When we look back at this proposal from the system operator in a few years, it may well be seen as a pivotal point in the creation of a more flexible energy network; the point at which we reached a collective understanding that, if we are going to deliver this truly flexible network, we need to give consumers an easy – and attractive – way to turn down their energy use.

UK households account for 27% of the country’s total energy demand, but to date they have had very little incentive to care about, let alone get involved with energy flexibility. Not taking the opportunity to fully involve them at this turning point would be a missed opportunity.

Britain’s smart meter rollout gives us the vehicle to make that change at minimal cost. The rollout has the opportunity to leap a generation or two in technology and substitute useful, but very conventional in home energy displays (IHDs) with the latest generation of Home Energy Management Systems (HEMS). These low cost but very capable systems do everything that the current IHDs do, but also provide customers with the key to unlock the benefits of a more flexible energy system. By providing homes with real-time information and control, they allow consumers to take charge of how and when their homes use energy.

Unlike basic smart metering systems, HEMS let families set simple preferences for how existing appliances in their home respond when energy gets cheaper, helping them to take full advantage of the changes being proposed by National Grid.

At a touch of a button, these intelligent, low-cost systems can use consumer preferences, smart meter data and information from the Grid, to shift household demand away from peak times. They offer a user-friendly, mass market way to respond to National Grid’s appeals for consumers to reduce energy demand, letting millions of consumers benefit in the process. They are the gateway to a world where the ESO could quickly, and automatically, call on millions of homes to turn down demand in return for cheaper electricity.

This approach will help ensure the security of Britain’s energy supplies, making the best of renewable energy sources when they are most abundant and optimising fossil fuel generation when power is scarce. And because turning down demand is cheaper and more environmentally friendly than bringing on fossil fuelled plant to make up any shortfall in generation, it has the benefit of being reducing harmful emissions.

And the savings are not just in electricity; HEMS can offer big savings on gas bills as well. Again, by using smart meter data, this time linked to low cost smart thermostats, HEMS can help existing gas boilers to heat homes much more efficiently, saving 10 – 15% on the average heating bill. They can also automatically turn down the heating when the house is empty, saving a further 5% for the average home. The gas saved from reducing home heating demand frees up wholesale gas for electricity generation in the UK or beyond.

To put that into context, a modern gas power station would turn the gas saved by an average UK home using a HEMS combined with a low cost smart thermostat into enough electricity to meet about 30% of that home’s electricity needs, all with no downside for the consumer.

If we are going to capitalise on the potential of giving customers an easy way to engage with the energy system, then we need strong leadership from government and the regulator. Given the impact of the energy crisis on the retail market, suppliers need to be sufficiently incentivised and rewarded under the price cap, so they can deploy HEMS at scale to deliver a more secure, greener and affordable future for the customers they serve.

Failure to do this would mean we would not get the full value out of the £12 billion Britain will have invested by the end of the smart meter programme. More importantly, without the capability that HEMS could and should be delivering, it will take us much longer to develop the more flexible energy system we need to deliver net zero, lower energy bills and ensure energy security for our country.