Associate Feature: The role of smart meters in energy security

Smart meters have the potential to play a critical role in energy security, providing near real-time information through a visual in-home display, empowering consumers to change how much energy they use and when they use it. If consumers reduce or shift their energy consumption away from peak periods, they may be able to save money, facilitate making the best use of renewable generation and reduce reliance on imported energy. Below we discuss the findings of Cornwall Insight’s latest research paper “Energy Security and Smart Meters”.

The International Energy Agency (IEA) defines energy security as “the uninterrupted availability of energy sources at an affordable price”. This means having access to uninterrupted and continuous energy provision, which is unaffected by, or able to respond to short-term changes in supply and demand. Currently, a large share of the energy consumed in the UK comes from fossil fuels imported from other countries. While just under 40% of electricity generated in UK comes from renewable sources, around 40% is generated using gas (figure 1 & 2). More than half of the gas used in Britain is imported.

How we use our energy

Households directly consume around a third of all gas and electricity used each year. They contribute to the daily peaks in electricity demand, which occur on weekdays, usually between 4pm and 7pm when there is a greater crossover between industrial, commercial and household usage. Times of peak demand are often linked to an increase in fossil fuel generated electricity, which can be more expensive than other fuels and increases the cost of wholesale electricity at peak times. Looking specifically at the household consumption, figure 3 shows an example of the pattern of electricity consumption over the course of a day for a typical household.

While renewables and low carbon generators have relatively low costs to run and usually operate when they can, other generators require fuel, meaning now that they are often only dispatched when needed to meet peak demand. Due to their reliance on a fuel, the costs of generating are directly impacted by global commodity costs, and so if, for example, the price of gas rises, the cost of generating electricity by burning gas also goes up, with the costs passed on to customers. In Britain, gas fired generation tends to be used to meet peak demand and when wind generation is low. 

Smart meters

A smart meter measures how much electricity and gas a consumer uses every half hour. The visual in-home display (IHD) shows energy usage in near-real time for electricity and updates every 30 minutes for gas, alongside the associated cost. Consumers can use this information to manage their energy costs where they can. This may enable consumers to save money, reduce emissions and to reduce our reliance on imported gas.  

Smart meters are an enabling tool for helping customers to reduce their consumption overall or to move their consumption away from times of peak demand. Using the half hourly data from smart meters, customers can be rewarded for reducing their use of electricity and gas at certain times, in a way that would not be possible with an analogue meter. This kind of near real time energy management is enabled by communication of pricing or energy trends, for example through a Time of Use Tariff. Time of Use Tariffs offer different prices at different times of the day, in a similar manner to peak and off-peak transport tickets. Time of Use tariffs are designed to encourage people to use energy outside of peak times when costs are typically higher. This shift away from concentrated peak-time consumption means that it is less likely the grid will have to use fossil fuelled power stations to meet demand. By moving demand into other periods of the day, such as overnight when wind generation is typically higher, means that renewable energy can be utilised more. 

Communication of energy prices is a key component towards encouraging energy saving behaviours. If consumers have more visibility over the price they are paying for energy, this helps them to take actions where possible to save money on energy. If linked to Time of Use tariffs, this can also help alleviate electricity system pressures. Action does not necessarily have to be direct from consumers, and can come through dedicated services from suppliers and others.

Real-time electricity consumption management can also support in managing supply and demand. There is a  trial, organised by National Grid Electricity System Operator (NG ESO), for households to take part in energy saving sessions until March. This means that consumers are incentivised to reduce their power consumption at peak times that could mean a typical household could save approximately £100. The UK government’s Smart System and Flexibility Plan highlights the numerous ways that greater flexibility drives forward energy independence and decarbonisation.

Energy Security and Net Zero 

By reducing overall consumption of electricity and gas (where possible), consumers can support energy security by reducing the need to operate some of the country’s most carbon-intense generating stations. This would benefit consumers because we would have a more secure supply of energy, prices would be less influenced by external factors such as the war in Ukraine, and we would use more cheaper, greener, homegrown energy. 

This article is sponsored by Smart Energy GB.