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NETWORK / 9 / MAY 2016 S M A RT P O W E R THE REPORT IN BRIEF The National Infrastructure Com- mission's Smart Power report made a clear set of recommenda- tions to government, Ofgem and industry about the infrastructure revolution needed in the UK elec- tricity system if it is to deliver what the wider economy and society needs by 2030 and beyond. Successfully implementing these recommendations could save consumers £8 billion. Radi- cal progress in three areas was identifi ed as being particularly im- portant to realising this saving and creating a more fl exible electricity system, capable of smoothing out peaky demand and accommodat- ing decentralised, intermittent renewable generation. These were: Interconnection: The NIC sees increased interconnection as es- sential to the UK's future energy security, and its ability to manage signifi cant difference between win- ter and summer demand, without having to build huge redundancy into the electricity generation. Fur- thermore, analysis conducted by National Grid and referenced in the Smart Power report identifi ed that the expected net benefi ts of 8-9GW of interconnection to be equiva- lent to nearly £3 million every day through reduced wholesale electricity prices. Energy Storage: Essential to supporting demand-side solu- tions and converting intermittent renewables into something more akin to steady baseload, the NIC is optimistic about prospects for increased deployment of energy storage. Costs for storage technologies are falling across the board with the most common – lithium ion – reducing from around $3,000/kWh in 1990 to less than $200/kWh today. If costs continue to fall on this trajectory, the NIC says up to 15,000MW could be economically deployed by 2030. Demand fl exibility: According to the NIC if 5% of current peak demand was met by demand- side solutions, the energy system would be £200 million a year cheaper to run and consumers would benefi t by £790 million. Today, although some busi- nesses engage in the demand- side market, the NIC says it is underutilised. It also anticipates that the roll out of smart meters will quickly lead to entrepreneurs establishing services that bring domestic consumers into play in demand-side markets. Download the full Smart Power report at: www.gov.uk/ government/publications Recent months have seen escalat- ing debate in the energy indus- try about whether or not rising complexity in system balancing and energy markets, along with the po- tential for confl icts of interest within National Grid, justify the creation of an independent system operator. Weighing into this debate, the National Infrastructure commis- sion said in its Smart Power report: "On balance, there appears to be merit in increasing the independ- ence of the system operator to guard against the risks of confl icts of interest and to help it to address the challenges the electricity system will face. "However, it is not clear whether an entirely independ- ent system operator is the right model to adopt to solve these issues. While a truly independent system operator, particularly if set up as a not-for-profi t organisa- tion, would not face actual or perceived confl icts of interest, there are trade-offs, including the increased diffi culty in setting its incentives." System Operator Generation mix today and possible future scenarios (installed capacity, GW) Today's world 2014/15 8.8 18.1 28.9 12.0 4.8 4.9 3.8 5.8 4.4 Gone Green 2030/31 11.3 27.6 48.0 9.4 3.9 17.7 6.8 6.0 23.3 Consumer Power 2030/31 7.4 3.9 32.7 33.0 29.1 4.9 10.8 5.5 8.1 0.8 Combined Heat and Power Conventional Other Interconnectors Carbon Capture and Storage Other Renewable Solar Wind Gas Coal Nuclear Source: NIC