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Communicating a Smarter FutureKeynote at Network 20124th annual distribution network strategy conference
16 February 2012
Sandy SheardDeputy Director for Future Electricity Networks, DECC
Agenda
• Context
• Smarter systems and customer engagement
• Government action
• Conclusions
2
DECC’s low carbon and security of supply objectives will lead to major changes in future generation and demand.
Today’s electricity generation can easily be flexed to meet changes in demand, and is largely located onshore.
To 2020 and beyond we will see:• increased electricity demand
with different load patterns• intermittent and inflexible
supply• More generation in new
locations, two-way flows• A greater role for non-
generation flexible solutions like demand side response (DSR), storage and interconnection 3
Two key challenges for the system: levels of investment and system balancing
Generation: £75bn could be needed by 2020
Transmission networks: Up to £24bn could be needed onshore in the period 2013-21 and in the order of £7bn could be needed offshore by 2020
Distribution networks: around £28bn could be needed in the period 2015 to 2023; a further £60-80bn could be needed in the period 2020-2050
Investment System Balancing
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Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7
GWLOW WIND - 7 days in January 2050 - no DSR
Peaking output
Spilled output
Intermittent output
Baseoutput
Demand pre DSR
*Actual wind data from 2006
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Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7
GW
BASE GENERATION - 7 days in January 2010
Margin
Unabated Coal
Unabated Gas
Intermittent
European
Nuclear
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Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7
GW
BASE DEMAND - 7 days in January 2010
Resistive 2010
Domestic 2010
Commercial 2010
Industrial 2010
Demand over even days in January 2010
Demand over seven days in January 2050*
Increased intermittency & inflexibility
Smarter systems can help us address these challenges4
Agenda
• Context
• Smarter systems and customer engagement
• Government action
• Conclusions
5
Smarter systems enable a more efficient, dynamic approach
Process of applying information and communication technologies
More dynamic ‘real time’ flows of information More interaction between suppliers, network companies and consumers
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Smarter systems will help us meet future challenges by making the right investment choices and increasing system flexibility
• maximise use of networks (headroom)• factor in and make best use of
distributed generation sources• build less peaking plant • maximise use of intermittent sources • reduce / shift demand (DSR)• use the right ‘tool’ for the job (storage
vs. generation vs. wires)
Use system assets more efficiently
• use non-generation sources and local generation sources to flex ‘supply’ (EVs & heat pumps as storage, distributed generation)
• manage 2-way electricity flows • reduce / shift peak demand through
DSR (user control & remote control)
Use tools & technology innovatively
At the networks level, the main change needs to come from distribution networks.
More active management of the networks including greater interaction with customers.
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…to low carbon transition partner
From electricity user…
Smarter systems require a paradigm shift in engagement to drive behaviour change
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Agenda
• Context
• Smarter systems and customer engagement
• Government action
• Conclusions
9
Government is already taking action on smarter systems
1 Leadership on network investment
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3 Enabling a smarter grid
4 Longer term thinking on future challenges
Changing customer behaviour
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Leadership on network investment, working with Ofgem
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Smart Grid Forum brings together thinking from DECC, Ofgem and
industry
Informing Ofgem’s “RIIO” price control framework for distribution companies
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Changing customer behaviour2
Behavioural Change and Energy Use’ paper written jointly with Cabinet Office Behavioural Insight team – including five trials.
Green Deal: Running trials to understand behaviour and incentives
Smart meters: Using behavioural theory and trials to inform customer
engagement strategy
Smart meters programme and the Green Deal are giving customers choice and the opportunity to take an active role in energy efficiency and demand side management.
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Supporting new smart technology and approaches3
Low Carbon Network Fund
(LCNF)
Low Carbon Investment Fund (LCIF)
EU Funding Streams
• £500m administered by Ofgem over 5 years to fund smart grid trials by DNOs
• Aims to improve networks‘ performance
• Currently 24 projects; £80 million spent
• £2.9m administered by DECC to part-fund 8 pilots
• May be integrated into LCNF or DfT’s “Plugged in Places”
• All funding now distributed and evaluation taking place
• Major funding scheme is Framework 7 programme – leverages national programme demonstrations
• DECC plays active part in developing future calls for these schemes
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Longer term thinking on future challenges to the system4
Electricity Storage
Interconnection
Thermal peaking plant and flexible core generation
Demand Side Response
Publish initial paper in Summer 2012.
Whole system cost analysis
Potential for different technologies to improve future
flexibility / respond to challengesLinkages with wider system
Market framework, incentives for flexibility
Network strategy, balancing
Interaction with Smart Meters, EMR
• Developing an overarching strategy to ensure the system evolves in the most cost-effective way.
• Underpinned by an analytical understanding of the `balancing challenge‘ to the electricity system.
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Agenda
• Context
• Smarter systems and customer engagement
• Government action
• Conclusions
15
Conclusions
•Smarter systems, with the grid at their heart, will be a key enabler to deliver the transition to low carbon.
•Smarter systems will need industry to work in partnership with customers requiring a paradigm shift in engagement.
•Industry, consumers, government and the regulator need to work together, today, to deliver the smart systems of tomorrow.
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