What have smart grids ever done for us?

Last week, our research for Citizens Advice into the consumer impacts of the Low Carbon Networks Fund was published.  The project has been a fascinating look into the world of DNOs, away from our usual focus on energy suppliers.  The £500m Ofgem-managed fund supports projects to pilot new technology, operating and commercial arrangements with the aim of helping DNOs understand how they can provide security of supply at value for money as we move to a low carbon economy.  As part of their remit to ensure smart grids are affordable, accessible, safe and fair, Citizens Advice commissioned this research to make sure the future challenges and opportunities of smart grid for consumers were not missed.

Thirteen of the LCNF projects fell into our research, a mix of desk research and telephone interviews, and included demand-side response, storage, electric vehicles, energy efficiency, community outreach, sub-station monitoring and voltage reduction.  Comparisons across these varied projects - all at different stages in their life-cycle and ranging from £200k to £53m in value - was not always easy, but there were definitely some emerging themes:

1.  Smart grid can work for consumers:  To quote ourselves... “The LCNF trials are demonstrating that correctly implemented smart grid solutions can work for consumers and, if put into business as usual, should deliver extensive benefits for future consumers.”  Although not all the results are in, data shows that consumers in the demand side response and storage / electric vehicle trials are largely benefitting from lower bills. 

2. But it doesn't work for everyone:  There were winners and losers across the trials.   All of the trials had some sort of safety net to make sure participants were not worse off than they would otherwise have been, but we wouldn't expect this to be available in business as usual.  Would people have acted differently if the safety net hadn't been there?  And why did some participants benefit more than others? In the time-of-use tariff trials for example, were the 'winners' more engaged?   Did the 'losers' shift the wrong things, did their lifestyles not allow them to shift their load or did they just not understand? 

3. We don't know enough about vulnerable consumers: We were surprised about the lack of demograhic data being collected from trial participants and think that the DNOs are missing a trick in understanding how different consumers groups respond to smart grid offerings.  Data available so far on vulnerable consumers, particularly low income households, is thin on the ground.  In some cases this is because projects have yet to really get going, but in others low income householders were either exluded from participating, didn't sign up or were underrepresented in the project sample.   Internet access is another issue that could exclude some householders from maximising the potential of smart grids (4 million households in 2014 didn't have an internet connection at home, which includes the majority of people aged 65 and living alone).

4. Feedback is vital: People need to know how they're doing and what impact their actions are making, be it on a large scale (eg network capacity) or at a more local level (eg their own energy use and savings).  In home displays were well received in the LCNF projects (although there's always room for improvements of course!): it would be a terrible missed opportunity if the roll out of smart meters didn't also legislate for IHDs to be part of the package.

5. Do we know who DNOs are (and does it matter)?  Another theme across all the projects was the value of open and honest, consistent and ongoing communications.  At the moment however, DNOs are not set up to pro-actively communicate with the public.  They do not have a strong customer relation because it is not business critical: people tend to only contact their DNO if something goes wrong.  For some of these innovative projects to move in to business as usual, DNOs will either have to shift their relationship with their customers and become more visible, or work with other delivery partners such as community advocates, energy suppliers or other third party intermediaries.

6. DNOs need reliability: The DNOs will only adopt these innovate trials into business as usual if they can rely on them to deliver, for example, increased network capacity or reduced peak load.   The alternative - investing in cables in the ground - is a trusted technology with known results: relying on consumers to maintain good energy behaviour is risky.  We think this means the most likely projects to be adopted are those where reliance on consumer action is minimised and where these 'good behaviours' can be automated, eg through on-site renewables storage in people's homes or network management of loads in the case of electric vehicles.  Smart grid solutions also need to be cheaper than traditional network reinforcement - but some of the most interesting learnings from LCNF have been through expensive, resource-intensive, community-led hand-holding projects.

7. Share and share alike: As always, there is a risk that these innovative ideas will either be forgotten or only adopted by the DNOs that are funded to test them.  But for the best smart grid ideas to perculate throughout the grid, DNOs need to be big enough to take on board the ideas of others, adapt them, and make them work for them.  'Not invented here' must be avoided at all costs if the benefits of the LCNF fund - and the wider opportunities that can be offered through smart grids - can be realised by everyone.

You can download our full report from the Citizens Advice website: they've also written a blog which looks at some of the context for the research and lays out some of Citizens Advice thinking in this policy area.