Smart Grid Vision and Routemap Smart Grid Forum

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  • Smart Grid Vision and Routemap

    Smart Grid Forum

    February 2014

  • 2

    Crown copyright 2014

    URN 14D / 056

    You may re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence.

    To view this licence, visit www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk.

    http://www.nationalarchives.gov.uk/doc/open-government-licence/mailto:psi@nationalarchives.gsi.gov.uk

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    Contents

    Smart Grid Vision and Routemap ............................................................................................. 1

    Foreword .................................................................................................................................... 4

    Executive summary .................................................................................................................... 6

    1. Smart Grids: Vision and Benefits ........................................................................................... 8

    2. Smart grids: Context and Progress ..................................................................................... 14

    3. Smart Grids: The Way Ahead .............................................................................................. 22

    4. Strategic Direction ............................................................................................................... 26

    5. Commercial and Regulatory Frameworks ........................................................................... 34

    6. Customer Participation ........................................................................................................ 38

    7. Technological Innovation and Growth ................................................................................ 42

    8. Conclusion ........................................................................................................................... 50

    Annex 1 Smart Grid Forum workstreams ............................................................................ 52

    Annex 2 Smart Grid Forum Membership and Affiliations ................................................... 54

    Annex 3 Summary of gaps and actions ............................................................................... 56

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    Foreword

    Great Britains electricity networks face a challenging future, but it is also a future of tremendous

    opportunity. Over this decade billions of pounds will be spent on our networks. Most of this is

    needed to maintain the electricity system and replace ageing infrastructure but we need to do

    more than just maintain the existing system. We need to make it more flexible and more

    adaptable. We will need investment in new, smarter technologies combined with the

    development of new commercial arrangements to tackle the uncertainties our network operators

    face and reduce the overall expenditure.

    Smart grids will enable new sources of energy and new forms of demand. They can help us

    keep the lights on at minimum cost to consumers, while creating jobs and enhancing growth.

    They can support our low carbon transition and create opportunities for consumers to play an

    active role in the energy system alongside generators, suppliers and network companies. Many

    of these smart grid benefits will be realised in the 2020s and beyond. But we must not wait until

    then to put in place the enablers for smart grids _ physical, commercial and regulatory

    frameworks. While many of the benefits can be captured now, longer-term benefits will only be

    realised if we identify and start to overcome barriers today.

    We welcome the Smart Grid Forums Vision and Routemap. It sets out the challenges for the

    electricity system and in particular, the electricity distribution network operators (DNOs). The

    next distribution Price Control period starts in April 2015. This document provides a useful

    reminder of the path network companies, and others have taken to date, and the challenges to

    be addressed over that period and beyond. Achieving the vision will require collaboration and

    partnership across the spectrum including the Government Ofgem, network companies,

    suppliers, supply chains and consumers. We are confident that the Smart Grid Forum and

    others will continue to rise to these challenges and facilitate the many benefits of smart grids.

    Rt. Hon Michael Fallon MP

    Minister of State for Energy

    David Gray

    Chairman, Ofgem

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    The Smart Grid Forum

    The Smart Grid Forum was created by the Department of Energy and Climate

    Change (DECC) and the industry regulator, Ofgem. The Forum brings together

    representatives from electricity network companies, consumer groups, energy

    suppliers and wider industry. It considers the full range of technical, commercial and

    regulatory issues associated with developing smart grids in order to support the UKs

    transition to a secure, safe, low carbon, affordable energy system. The Smart Grid

    Forum meets on a quarterly basis and oversees several workstreams as outlined in

    full in Annex 1. Membership and affiliation is listed at Annex 2.

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    Executive summary

    The potential of smart grids are huge. They could revolutionise the way we generate and use

    energy, enabling new forms of generation to connect and bringing customers into the heart of

    the equation with their ability to shift demand and balance the system. To realise that potential,

    we need to rethink the roles and responsibilities of all the players in the electricity system; we

    need to continue to invest in smart technologies in the near term and integrate them into

    existing networks; and we need to maximise the economic and commercial benefits for the

    country as a whole.

    The Smart Grid Forums vision for a Great Britain smart grid is:

    A smart electricity grid that develops to support an efficient, timely transition to a low

    carbon economy to help the UK meet its carbon reduction targets, ensure energy

    security and wider energy goals while minimising costs to consumers. In modernising

    our energy system, the smart grid will underpin flexible, efficient networks and create

    jobs, innovation and growth to 2020 and beyond. It will empower and incentivise

    consumers to manage their demand, adopt new technologies and minimise costs to

    their benefit and that of the electricity system as a whole.

    A smart grid could provide a range of benefits and opportunities for consumers, businesses,

    network operators and the wider energy industry, both day-to-day and in our transition to a low

    carbon economy. These benefits include:

    Reduced costs to consumers through savings on network costs smart grids,

    enabled by the take-up of smart meters and smart appliances combined with demand

    side response measures, enable consumers and communities to have greater control

    over their energy use and benefit from shifting demand to off-peak times of the day.

    Supporting economic growth and jobs with faster and cheaper connections to the

    network and an estimated potential 13bn of Gross Value Added, 5bn of potential

    exports to 2050; and 9,000 jobs to 2030 associated with smart grids1.

    Increased energy security and integration of low carbon technologies through

    greater monitoring and control of the network, enabling network companies to anticipate

    and identify problems more quickly and manage supply and demand at a local level.

    Great Britain has made significant progress to date in deploying smart grids and is recognised

    as a European leader with respect to the investment in smart grid research and demonstration

    projects. This success has been delivered through a range of work and initiatives, including

    1 Source: SmartGrid GB (2013) Smart Grid: A race worth winning, available at: www.smartgridgb.org/benefits-of-smart-

    grid/item/2-smart-grid-development-saves-billions-when-compared-to-cost-of-conventional-technologies.html

    http://www.smartgridgb.org/benefits-of-smart-grid/item/2-smart-grid-development-saves-billions-when-compared-to-cost-of-conventional-technologies.htmlhttp://www.smartgridgb.org/benefits-of-smart-grid/item/2-smart-grid-development-saves-billions-when-compared-to-cost-of-conventional-technologies.html

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    Ofgems new RIIO Price Control model that places greater emphasis on supporting network

    innovation and the creation of the 500 million Low Carbon Networks Fund, which provides

    funding for network company innovation projects that test and trial new smart grid technologies

    and solutions. Great Britain has also begun the nationwide rollout of smart meters, which will

    help improve network management and facilitate demand shifting.

    Great Britain needs to build on the initial success and begin rolling out smart grid technologies

    and solutions across the country, embedding proven innovations into business as usual, so

    that benefits can be realised from the earliest opportunity. In order to maintain progress, we

    need to:

    Provide the str