Smart Grid Vision and Routemap Smart Grid Forum

Smart Grid Vision and Routemap

Smart Grid Forum

February 2014

2

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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