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by Rupert Pigot, Smart Energy GB
11 September 2023
Associate Feature: A smarter, more flexible energy system, enabled by smart meters, is on the horizon

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Associate Feature: A smarter, more flexible energy system, enabled by smart meters, is on the horizon

Cornwall Insight worked with Smart Energy GB to understand the benefits of a smart meter enabled flexible energy system. The Power of Flex – rewarding smarter energy usage considers how if we, as households, use our energy more flexibly we can save money on our bills, and support a low carbon system. That system that will, in turn, cost less and ensure against over-building of energy infrastructure.

Household flexibility involves consumers increasing, decreasing or shifting their electricity use in response to a signal (for example, a message from their energy supplier or a change in electricity price), to help manage the electricity system. This might typically mean using less electricity at peak times and more at off-peak times. As a result, the system will cost less to operate, will rely less on expensive gas and imports, and will better support cheaper renewable energy.  The benefits of this cheaper system can be passed back to all of us at home. 

The cost and affordability of energy continues to be an issue for households across Scotland.  As this report highlights there are benefits for those consumers that want to engage in household flexibility.  Importantly, flexibility will also lead to lower costs for all consumers, as they will benefit from the energy system operating in a more efficient way. Households, including those in vulnerable circumstances will be able to gain from a smarter, more flexible energy system.

Smart meters are a tool to help consumers access the benefits of moving their energy use away from times of peak demand, and provide near real-time information about energy usage and access to Time of Use Tariffs. Without a smart meter, benefits including those from the Demand Flexibility Service cannot be accessed, because most traditional meters do not tell your supplier when you use energy. 

The modelling in this report demonstrates it is a ‘win-win-win’ for using energy more flexibly at home: consumers win, the environment wins and the energy system wins. 
By taking a ‘snapshot’ view of Britain in 2025, 2030 and 2040, we were able to see that:

● Without household flexibility the market would need to build the equivalent of four new gas-fired power stations for 2030. 

Household flexibility could allow us to avoid the cost and associated disruption to local communities and environments that building four new gas fired power stations, or the equivalent 1000 new wind turbines, would likely incur.

Recent debate in Scotland about the best way to make necessary energy infrastructure upgrades underline how important it is to minimise these where possible, and household flexible energy use can play a critical role.

Managing flexible demand technologies like electric vehicles, heat pumps, solar and storage to avoid peaks and support the energy system means in 2030 we could avoid 3GW of peak demand on the network. This would lead to a saving of almost £1bn in spending on the electricity network.  

Flexible households can save around 52% in 2040 on expected wholesale electricity costs compared to a situation where we have limited or no flexibility from households. But, even those households who can’t or don’t want to take part in flexibility will benefit because of wholesale market cost reductions enabled by others taking part in flexibility.

● In 2040, engagement with household flexibility results in a 45% increase in carbon savings compared to a scenario with no flexibility - this is the equivalent of planting 630,000 trees. The Scottish Government has legally committed to a net zero greenhouse gas emissions target by 2045. By engaging with flexibility, households can have a positive environmental impact, shifting consumption away from times when gas-fired power stations are needed to meet demand, to other times when greener energy is being generating. 

● In 2040, consumers and the energy system benefit from £14.1bn in savings if we embrace flexibility. These savings come from lower wholesale electricity prices and lower peak demand which reduces the need to build additional power stations and network assets.
The energy system of the future will have us, as consumers, and flexibility at its heart. Smart meters are a cornerstone technology for this win-win-win future providing the data and information critical to support future benefits for people, environment and the energy system. 

Consumer participation in household flexibility is expected to become easier as new technology and services come onto the market. The rewards are expected to increase, as our energy system decarbonises to use greater volumes of electricity, and household electricity consumption increases through electric heating solutions and electric vehicles. Today, consumers can take first steps into participating through the installation of a smart meter, which opens up access to services such as the Demand Flexibility Service and existing Time of Use tariffs, while providing accurate data around consumption which can be used by suppliers in the design and trials of new propositions. 

This article is sponsored by Smart Energy GB

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