The UK electricity market is undergoing a significant evolution. The traditional model of linear, one directional, power generation, transmission, distribution and supply is giving way to more diverse, dynamic and complex system.
There are three driving forces behind this evolution that is reshaping our energy landscape:
Decarbonisation - the UK's Climate change commitments are causing a paradigm shift in the way electricity is generated - phasing out of coal fired generation and taking up more renewables
Decentralisation - we'll need to use a mix of energy sources that includes a higher penetration of renewable generation and storage across the network, including at a micro level in homes and small businesses.
Digitisation - new data and communication networks that will radically transform the way our energy is consumed, bought and distributed.
Having a flexible, diverse, lower carbon and intelligent energy system will make Great Britain more resilient to energy market fluctuations in an uncertain world.
Firstly, a future energy system will need to be flexible with how and when it consumes, produces, and stores energy, so that the power available always matches the amount we use. System flexibility has, and will continue to be, a key component of a future energy system due to the rapid deployment of renewable and decentralised power generation.
Secondly, a future energy system will need to be integrated. Integration will be required to connect and balance a diverse range of measures such as demand side response, distributed/bulk energy storage, flexible network technologies and emerging flexible generation technologies. Achieving integration will require a data and communications technology infrastructure that allows a diverse array of technologies to be enabled and used to their potential
Finally, future energy systems will need to be sophisticated and intelligent. By deploying sophisticated data and communications technologies into our energy infrastructure diverse generation and storage technologies will be enabled. Consumers will also be become more active participants in the electricity market, and new retail business models will flourish with greater autonomy.
Smart meters and the network they operate on are a core national infrastructure that will play a key role in supporting the transition to this new flexible, energy system. Through the deployment of a sophisticated data and communications infrastructure, smart meters will create opportunities for new services and business models which benefit consumers and all the players within Britain's overall energy system.
Britain is not unique in implementing smart metering as part of an overall energy network digitisation programme. Other countries including France, Germany, Italy, Australia, New Zealand, and certain US states are beginning to roll out, have delivered or are investigating some sort of smart metering network.
Smart metering technology could give us so much more than an in-home energy use display and an end to estimated billing. It will provide consumers and businesses with the chance to fully engage with and take control of the way they use and purchase energy. With improved insight into consumption patterns provided by online smart meter reporting, new saving opportunities can be identified and pursued. In addition, the smart meter could be used as a platform to launch new smart energy services and product offerings.
Consumers will be more proactive in managing their energy use and search out the best technology. The introduction of smart metering has the potential to boost competition across the energy market. This will not only make it easier and faster to switch energy suppliers, but provide consumers with the best possible energy supply deals available. Greater visibility of energy usage will quickly help to identify patterns of usage, equipment that consumes a high amount of energy and drive new behaviour around how customers engage with their energy.
With roll out of smart meters across the nation, new and existing energy market players can offer innovative services and technologies built around the smart meter infrastructure. Accurate and granular energy consumption data provided by smart meters will give energy suppliers greater levels of understanding of how customers consume and manage their electricity. Suppliers could apply this insight to offer new services to personalise customers' experiences.
The Data and Communications Company (Smart DCC) has delivered national, highly secure data communications infrastructure servicing the whole British energy market to offer a smart meter to every household and small business across the UK by the end of 2020. The network was switched on at the end of 2016 and Smart DCC is now focused on in-life improvements and scaling up its service to support energy suppliers in their rollout of over 53 million smart meters to 32 million homes and small businesses across Great Britain.
A key part of DCC's role is to facilitate the evolution of a smarter energy industry in a cost effective manner, benefitting consumers, the energy industry and Great Britain more broadly. Given DCC's role as the provider of a highly secure, nationwide data communications infrastructure and its strategic role in supporting the transformation of the energy sector, DCC is a key enabler in the evolution of a smart, flexible energy system in the UK. The work DCC is doing on the smart meter implementation programmes will lay the foundation for achieving such benefits.
Looking further ahead, Smart DCC is a key delivery partner in OfGEM's Switching Programme to improve consumers' experience of switching between energy suppliers, leading to greater consumer engagement in the retail energy market and, promoting retail market flexibility and competition. In the future consumers will be able to reliably switch to a new supplier by the following working day and to a tariff personalised to them, thereby promising demand side response to energy management. To this effect, the services provided by DCC will be an essential enabler of half-hourly settlement (HHS) as the means by which half-hourly meter reads will be retrieved from smart meters. HHS will in turn form the foundation for the introduction of smart and flexible energy tariffs
As part of its growth and innovation strategy, Smart DCC will be developing new services for its customers and assessing where its core national data communications infrastructure could be applied within other energy market segments such as electric vehicles and smart grids. In so doing, we will be making the first steps towards Britain building a truly smart economy.