Dr Jeffrey Hardy: a smart energy future that revolves around your business
A flexible energy system, often referred to as “smart”, is one that empowers businesses to take
control of their energy costs, but also provides wider national economic benefits.
The Department of Business Energy and Industrial Strategy thinks a smarter, more flexible energy system could reduce energy costs by £10 billion per year by 2050. This means lower bills for all businesses, and Britain getting closer to our zero-carbon targets.
Where do the savings come from? By utilising all the available energy resources, we can get the
most out of what we have on both the supply and demand side and not build excess electricity
generation and grid infrastructure. Put simply, with a smart energy system, we can utilise what we
have and not waste what we don’t need.
How do smart energy systems work? Smart energy systems integrate monitoring, dynamic pricing
and actuation (the 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. Smart
meters are the most obvious example, and the easiest tool to adopt, of a smart energy system.
These smart meters tell the energy system the need for electricity in real time, meaning more dynamic electricitz pricing. By this, I mean that the price of electricity for 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, while also providing business owners with the information they need to make their operations as efficient as possible. 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.
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, an electric vehicle charger.
It sounds complex, but it doesn’t have to feel complex
This smart energy future might sound like it means a more complex relationship between ourselves
and our energy, however, my research shows that this smart energy system is an opportunity for
energy businesses to get to know their customers better. The data shared from businesses and
homes with smart meters, helps energy suppliers understand what their customers want, need and
value in terms of their energy usage. This provides the opportunity for suppliers to tailor the service
they offer and for customers to choose tariffs that suit their needs best.
What could tailoring mean in practice? It means business owners are able to take control of when
and how they use their energy to keep their costs low, while also making better use of renewable
sources, by way of storage batteries, and self-generated energy, such as solar panels.
The point is that now we have the data available to understand what 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 will be much more about you and your business’ needs and relationship
with energy. The energy supplier of the future is one that understands you and your requirements
and provides your business with a tailored package that suits you, and that helps you save. Your
future relationship with energy will be exactly what you want it to be.
Smart meters are available for businesses and installations are now taking place across Great Britain.
Dr Jeffrey Hardy is a Senior Research Fellow from the Grantham Institute, Imperial College London