the platform of smart metering Risks and opportunities from an SD - - PowerPoint PPT Presentation

Smarter energy markets from the platform of smart metering

Risks and opportunities from an SD perspective Colin Sausman Partner, Smarter Markets

02 November 2011

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Smart meter rollout – some key facts

• Smart meters are meters capable of two-way communication
• Government Programme – reconfirmed explicitly in Coalition Agreement
• Mandated rollout to all electricity and gas consumers – target 2019

– 53+ million meters – 30+ million households and businesses

• Government business case:

– Costs= £11.7 billion – Benefits = £18.7 billion (from industry efficiencies and energy savings)

• Timeline

– Policy design finalised (joint Ofgem/DECC work) – March 2011 – “Foundation stage” to build readiness – to mid-2014 – Mass rollout – 2014 to 2019

• Policy design features

– Supplier-led rollout – New regulated monopoly to collect data and manage data access (“DCC”) – Open, non-proprietary standards to ensure equipment has required minimum functions and is inter-operable

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www.ofgem.gov.uk Data function WAN

Smart meter policy design

Other devices

HAN

IHD

Gas Elec

WAN module

Suppliers responsibilities DCC responsibilities

Suppliers Network

• perators

Other authorised parties Centralised data and comms function WAN

Gateway

Mandated open, non- proprietary technical standards

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Smart meters are an important platform for change

Smart meter rollout Measure energy use in very small time blocks Information

Smarter energy use

Engaged consumers making informed decisions about their energy consumption New types of tariff for energy use Contracts for firm changes in energy use

Substitutes for: Enables smarter central ‘back office’ functions

• Settlement
• Registration
• Switching

..but how best to protect consumer interests?

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Smart meter rollout and sustainable development

OPPORTUNITIES

• More control for consumers –

costs & carbon impacts

• Tariffs that reward efficient

energy use

• Technology/services to help

automate more efficient energy use

• Cheaper, better pay-as-you-

go services

• Deferral/avoidance of network

and generation investment

• Managing system balancing

RISKS

• Tariff complexity leads to

poor decision-making and further disengagement

• Confusion/mis-selling from

increased data and bundling

• f products and services
• Distributional impacts from

move to peak/off-peak pricing

• Market / customer

segmentation

• Affordability of smart

appliances

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Questions for discussion

• How important are these opportunities (and

risks) from the perspective of sustainable development relative to other changes impacting the energy sector?

• What are the roles for Ofgem, energy market

participants, Government and others in realising the opportunities and mitigating the risks?