Smarter energy markets from the platform of smart metering Risks and opportunities from an SD perspective Colin Sausman Partner, Smarter Markets 02 November 2011
Smart meter rollout – some key facts • Smart meters are meters capable of two-way communication • Government Programme – reconfirmed explicitly in Coalition Agreement • Mandated rollout to all electricity and gas consumers – target 2019 – 53+ million meters – 30+ million households and businesses • Government business case: – Costs= £11.7 billion – Benefits = £18.7 billion (from industry efficiencies and energy savings) • Timeline – Policy design finalised (joint Ofgem/DECC work) – March 2011 – “Foundation stage” to build readiness – to mid-2014 – Mass rollout – 2014 to 2019 • Policy design features – Supplier-led rollout – New regulated monopoly to collect data and manage data access (“DCC”) – Open, non-proprietary standards to ensure equipment has required minimum functions and is inter-operable 2
www.ofgem.gov.uk Smart meter policy design Suppliers Other devices Centralised data Data function and comms WAN function Gateway Network WAN operators IHD HAN Other Gas authorised parties Elec WAN module Mandated open, non- proprietary technical standards Suppliers responsibilities DCC responsibilities 3
Smart meters are an important platform for change Information Smart meter Engaged Smarter rollout consumers energy making use Measure informed energy use in decisions New types of very small about their tariff for energy time blocks energy use consumption Contracts for firm changes in energy use Enables smarter central Substitutes for: ‘back office’ functions - Settlement - Registration - Switching ..but how best to protect consumer interests? 4
Smart meter rollout and sustainable development OPPORTUNITIES RISKS • More control for consumers – • Tariff complexity leads to costs & carbon impacts poor decision-making and further disengagement • Tariffs that reward efficient energy use • Confusion/mis-selling from increased data and bundling • Technology/services to help of products and services automate more efficient energy use • Distributional impacts from move to peak/off-peak pricing • Cheaper, better pay-as-you- go services • Market / customer segmentation • Deferral/avoidance of network and generation investment • Affordability of smart appliances • Managing system balancing 5
Questions for discussion • How important are these opportunities (and risks) from the perspective of sustainable development relative to other changes impacting the energy sector? • What are the roles for Ofgem, energy market participants, Government and others in realising the opportunities and mitigating the risks? 6
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