How to save energy: plug in a new gadget  

The big news in smart grids last week (yes - I'm woefully behind on everything lately) was the UK government's announcement of a plan to roll out smart meters to the entire population. I'll start with The Independent's view - How to save energy: plug in a new gadget.

Smart meters, which show electricity and gas consumption at a glance, are to be installed in every home in Britain by 2020 in an attempt by the Government to cut energy use.

A massive rollout programme, beginning in 2012, will see all the country's 26 million households fitted with 48 million new meters – 26 million for electricity and 22 million for gas – at a total cost of between £7bn and £9bn. Several million businesses will also receive the new devices.

The move, which was widely welcomed, means Britain will be the first country to embark on such a comprehensive overhaul of its domestic energy sector, replacing the old meters often hidden away in understairs cupboards, some of them half-a-century old, with a technological system which makes the true cost and rates of consumption of energy instantly apparent.

Smart meters feature a display which gives householders real-time information on their energy use – down to individual appliances – and thus a strong incentive to reduce it. This is something which will be increasingly necessary as Britain strives to cut its carbon emissions by 80 per cent over the next 40 years, in the fight to contain climate change. In April, the Government set an interim target of 2020 to cut emissions by 34 per cent, compared with 1990 levels – a goal the metering system will help to attain.

"The meters most of us have in our homes were designed for a different age, before climate change," the Energy and Climate Change Secretary, Ed Miliband, said yesterday. "We need to get smarter with our energy. Smart meters will empower all consumers to monitor their own energy use and make reductions in energy consumption and carbon emissions as a result."

As the meters communicate directly with energy companies, their introduction will also mean the end of estimated meter readings and therefore of inaccurate bills and overpaying.

There may be further cost savings: the average consumer is also likely to save two to three per cent off their energy use each year, and thus cut £25 to £35 off their bills. The cost of installing the meters is likely to be about £15 per household per year between now and 2020, but as much as £10 of that may be accounted for in cost savings by the energy companies; so if the installation cost comes in at £5 per household, energy bills are likely to fall by more than £20.

British Gas, which already has a smart meter trial under way in 50,000 homes and businesses, said the move would herald the biggest revolution in energy use since all the nation's homes were converted to natural gas in the 1970s.

The New York Times also has some notes - Britain Announces Broad Smart-Meter Plan.

Smart meters could fundamentally change the way Britons consume electricity, by allowing utilities to offer special rates for running energy-hungry appliances — like dishwashers and laundry machines — during periods when power is plentiful. That, in turn, could reduce total energy demand.

More judicious use of power would mean utilities “need to build less peak-hour plants that are usually gas-fired plants,” wrote Ms. Lewiner.

The meters also could encourage homeowners to install more solar panels and wind power devices on their homes because they would be able to see – in real time – the amount of electricity they are producing, consuming or selling to the grid.

“The meters most of us have in our homes were designed for a different age, before climate change,” Ed Miliband, Britain’s energy and climate change secretary, said this week. “Now we need to get smarter with our energy,” he said.

In fact, smart meters have been around since at least 1990 when they were introduced as way of making billing easier, according to Landis+Gyr, a British company that manufactures the devices.

“It’s been a long time in coming,” said Stephen Cunningham, the chief executive of Landis+Gyr for the Britain and Ireland, referring to the British government’s announcement this week.

Forecasts by Capgemini show that by 2012 between 25 and 40 percent of homes in Europe will be equipped with smart meters, compared to the current 6 percent.

The FT has a look at how much energy smart meters save - Do smart meters actually save energy ?.

A long-delayed UK government announcement on smart meters has finally been delivered - albeit with some detail yet to be filled in.

But will they actually lead to reductions in energy use?

The short answer is yes, but not in the way that you’d think.

Summarising the various studies into the impact of smart metering in homes is a challenge - the picture is somewhat confused. A 2006 study for Defra (the UK Government’s environment department) by the University of Oxford’s Environmental Change Institute suggests energy savings of 5-15 per cent. This is challenged by the Government’s own energy regulator, Ofgem, which back in 2006 offered a “conservative assumption of a 1 per cent reduction”, and which now recommends a Department of Energy and Climate Change (DECC) assessment of 2.8 per cent savings for electricity and 4.5 per cent for gas.

Why such variation?

The answer is that smart meters are only ever half the story. They supply real-time, accurate figures on a household’s energy use both to the consumer and to the supplier. Whether or not any energy is saved depends on whether the consumer acts on the information that the meter supplies.

Perhaps unsurprisngly, consumers will act if it saves them money. A Californian pilot noted that households reduced their energy demand by up to 5 per cent at peak times if that peak energy was three times more expensive than off-peak energy. In Ireland the ‘evening peak’ of energy usage was reduced by 10 per cent in a similar trial.

This shift in demand away from peak times does not tend to reduce a household’s overall energy use very much; consumers just shift their energy use to the cheaper hours. You might run your dishwasher overnight instead of just after dinner, but you will still run it. This is perhaps why Ofgem only came up with a 1 per cent saving.

So if households are still using almost the same amount of energy overall, how do smart meters help?

It turns out that by flattening the spikes in energy usage, overall energy demand drops. The reason is that many of the UK’s power stations are ‘always on’ to cope with peak demand. This is an inefficient system, because at off-peak times this energy production is wasted. Reducing peak demand levels and spreading energy use more evenly makes the system more efficient, meaning that the UK needs to build fewer power stations. General Electric, a which sells smart meter and smart grid infrastructure products, estimates that this process can reduce overall energy demand by 5 per cent.

It’s also worth bearing in mind the sums we are discussing here. Smart meters are estimated to cost from £30-£150, depending on how ’smart’ they are, and incorporating economies of scale from a mass roll-out. Assuming a 20-year life for the more expensive meters, this works out at under £10/year. Taking DECC’s assessment of energy savings (2.8 per cent for electricity, 4.5 per cent for gas), consumers would save £50/year on the average household bill. Energy companies will benefit too, particularly if they can reduce spikes in demand through variable pricing.

The conclusion? Smart meters will help to reduce energy demand in the UK, and make financial sense. But for them to have a real impact on the UK’s energy use, energy companies need to be allowed to introduce variable energy pricing, charging more for it at peak times to reflect their higher costs. Smart meters, conveniently placed in a kitchen or hall, will inform consumers that their energy has got more or less expensive, which will encourage them to change their behaviour accordingly.

Apparently, it is even possible to get your home to tweet its energy use to you. Which raises the prospect of a fad of compulsive energy saving. A million people following Stephen Fry’s energy consumption, perhaps?

And finally, The Register has a jaundiced look at the plan and suggests that the playing field is tilted heavily towards the utilities and not the customer - Gov 'smart meter' plans: Sky box in charge of your house.

The government actually announced plans for universal smart metering last October, but this week has brought us the detail of what Whitehall has in mind. The next stage is a public consultation, in which everybody gets a chance to sound off and - just possibly - get the plans amended. It might be quite a good idea for consumers to do so; thus far it appears that the energy industry's ideas have been listened to. By contrast user groups seem to have focused mainly on the costs of introducing the new kit, rather than what it will actually do.

The actual specs on what the "smart meters" will be like is found at Section 3 of this pdf. The government would like, in outline, to see the following things:

1) Capability for remote meter readings, meaning that energy companies needn't sent out employees to take readings.

2) Two-way communications "between the meter and the energy supplier or other designated market organisation". This would allow "remote configuration and diagnostics, software and firmware changes" - in other words the thing will work like a Sky or TiVo set-top box, under the control of its master authority outside the home.

3) Home-network abilities, allowing an in-home meter display and possibly the ability to watch one's meter reading on other devices such as computers, TVs etc.

4) The ability for energy firms to cut off supplies remotely. Gas meters would probably include a remotely-operable shutoff valve for this purpose.

5) Ability to measure "exported" electricity, as when a house sells 'leccy back to the grid - perhaps from a plugged-in electric car or other storage system. Similarly the meter must be able to work with microgeneration equipment so as to let people sell electricity to the grid.

6) The "ability to remotely [ie from outside the premises] control electricity load for more sophisticated control of devices in the home". The grid authorities already have some ability to "manage demand" - ie ration energy supplies - but they plainly want more tools to this end.

The government sees the meters being under the authority of a central body along the lines of the national grid, rather than by the power companies themselves. However, the central authority would hand off control of various functions to the suppliers, or implement them at the suppliers' request.

So far, it's very much a wish list for the energy companies. They get to lay off all their meter-reading employees, and very probably move to universal, fully automated, paperless billing. Administration attendant on losing or gaining customers, disputes over meter readings, or cutting off those who don't pay becomes hugely simpler for them. This removes a major part of their in-house costs - actual energy generation is usually handled by different companies, or different parts of the same group.

So what's in it for the consumer? ...

It might also be nice if, as a consumer, one could go into the marketplace and say "I'd like to buy my next ten/hundred units now, what prices are on offer for that" or "I'd like to have my next bunch of units at spot-plus-lowest-offered-margin" or whatever. That last would be particularly favourable if lots of wind or solar power ever gets hooked up to the grid - you could time your power use to windy or sunny periods, perhaps with the aid of your trusty electric car as a power reservoir, and so get a cheaper deal while reducing national carbon emissions.

That kind of thing would be what we consumers might call a smart meter. At the moment, though, the planned "smart meter" is actually more like a remotely-controlled set top box via which the national grid and the power companies can monitor - even take control of - your home. As consumers are going to have to bear much of the cost of it, we might rather request that it be a tool for letting us get some genuine access to the energy market.

You can let the government know your views here.