Utility Week

UTILITY WEEK | 13TH - 19TH MARCH 2020 | 27 Utility of the Future: Consumers The Utility of the Future is also the theme of Utility Week Live taking place at the NEC in Birmingham on 19-20 May. Visit www.utilityweeklive.co.uk for more information. In the future, automated time-of-use tari s could become the norm. The energy intelligence platform Kaluza, owned by Ovo, provides a glimpse of where the market might head. The system connects to a range of smart devices and uses machine learning and AI to determine the amount of • exibility available to help bal- ance the grid. The system can remotely optimise devices in the home to use energy during o -peak hours, when cost and carbon intensity are lower. Automation could help solve the problem of intermit- tence associated with renewable generation, says Octo- pus's Steele: "Greater penetration of renewables like solar farms and wind generation increases intermittence on the grid, but these tari s could intelligently send sig- nals to homes to tell them, for example, now's the time to charge the car." But the di erential pricing proposition faces barri- ers. Apart from smart meter uptake, it relies on suppli- ers gaining access to customers' half-hourly data, which at present they must consent to. The model also places an onus on consumers to make substantial lifestyle changes. Network charging reforms under Ofgem's Targeted Charging Review (TCR) could make • exible energy con- trol and time-of-use tari s less attractive. A market dis- tortion whereby some users avoided network charges altogether by shi‰ ing their demand, failing to contribute to network costs, led the TCR to introduce a Š xed charge for all system users. Ovo's Packenham comments: "Savings that could be generated currently by smart charging an electric car, for example, will be signiŠ cantly reduced by the TCR, at least until April 2023. So while the economics were inter- esting before and something the sector could start to coa- lesce around and build customer support for, they have become quite a lot worse. It is going to be quite challeng- ing for energy suppliers to make the business model fully stack up." Unknown quantity? Flexibility democratises the energy system by allow- ing consumers to become proactive "prosumers" with distributed energy resources who actively manage their consumption, production and storage of energy Peer-to-peer (P2P) energy trading platforms have emerged as a potential mechanism to manage these com- plex local networks of users and co-ordinate transac- tions. Smartphone apps or online platforms would allow users to monitor energy and trade it instantly, helping to facilitate a more competitive energy market as well as supporting grid balancing. But P2P poses a threat to the traditional supplier model and major energy Š rms, including Centrica and EDF Energy, are currently running trials to understand the implications. The £40 million government-backed Project LEO (Local Energy Oxfordshire), launched last April, will see the tech Š rms Piclo, Origami and Nuvve work with EDF to develop new platforms to trade energy and • exibility locally in Oxfordshire. Centrica is part of a trial at a social housing commu- nity in Hackney, London, that aims to explore how P2P trading using blockchain technology could reduce cus- tomer bills. The project will consider how to create clear and fair bills in a network where energy is coming from multiple sources, in this case gas from British Gas, and solar panels. The net-zero challenge has triggered much excitement and experiment across the energy sector. New retail products and services are part of the solution, but what form they ultimately take will hinge on fundamental ques- tions around policy, regulation and the future role of the energy supplier. "We are still trying to squeeze renewables into a fossil fuel paradigm," says Sandys at Challenging Ideas. "My proposition is the system needs to be re-costed because renewables are fundamentally a capital asset (energy generation is very cheap), not a commodity in the old- fashioned fossil fuel sense. Things need to change to unlock investment in renewables." "The sector needs to work on its pricing mechanisms to make sure that the lowest-cost method of solving this problem is able to provide the solution," adds Pakenham at Ovo. "We need to see a carbon price as a proper re• ec- tion of the cost of carbon in our energy system, which a lot of people are pushing for. These factors will change the price of di erent energy sources to customers." Ofgem recently concluded there is a strong case for fundamental reforms to the "supplier hub" model. Deci- sions that result from its consultation on whether the retail market is • exible and agile enough to keep up with the low-carbon transition should also make for interest- ing reading. Stephen Cousins is a freelance journalist "The system needs to be re-costed because renewables are fundamentally a capital asset, not a commodity in the old-fashioned fossil fuel sense." Laura Sandys, Challenging Ideas New technology promises to put customers in the driving seat of the smart home 19 th 20 th MAY 2020 NEC BIRMINGHAM FREE TO ATTEND #UWL20 #UOTF Register now www.u lityweeklive.co.uk

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