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Assignment ID: 21
regulator (OFGEM in this case), the report was tailored to suit this requirement,
Terms have been defined to the extent suitable to meet the topic requirements.
Further, this report has been produced keeping in view UK power system
Directive’ which implicates harnessing energy to the tune of at least 15% from
renewable energy sources by year 2020 for UK. This move was drived by the
threat of heavy import and volatile prices of fuel(oil), environmental and climate
change issues and to meet the energy needs in a sustainable way. Therefore, the
future power system scenario could be quite different and complex in comparison
today’s power system, for the most part, power flows from huge power houses to
resources, most of which coming from renewables, the energy flow may not remain
and smart enough to cope with the customer requirements. And in case, heating
and transport is also electrified (which there are very good chances of happening),
energy demand could go higher, requiring more control and accuracy. This is
where smart grid creeps in. Study shows that smart grid has the potential to
provide all the functionalities which the power system demands to address climate
Demand side participation will play a vital goal to match the generation and
demand. Based on the study and assumption of Energy Networks Strategy Group,
smart grid will bring net benefits to society and therefore, further work for
development of smart grid has already been started[1]. Auspices for the
development of smart grid like the UK Government’s low carbon strategy, Ofgem’s
Low Carbon Network Fund and RPI-X@20 project are already in place.
supply and demand. This inelasticity makes power systems complex as supply
This requires the system to be designed for peak load no matter how small peak
duration could be. Not only developing such huge infrastructure is costly, but the
same may remain idle/under-utilised during off peak times reflecting poor
operator may have to bring such power plants online which in addition to being
costly may have very high carbon emissions. Smart grid offers the solution in
Matching of load with generation defines demand side participation. Smart grid
can do this by involving demand side participation for the load to be reduced or
increased to match available green generation through the use of smart meters
Time Of Use(TOU) and Critical Peaking Price tariffs (CPP). Information and
consumer and operator and initiating consumer appliance load switching. Smart
meters will be at the heart of this because of their two way communication with
how much energy is being used at what cost at that particular time
the consumer will have a role to play for the sake of environment, his own
Smart Meter Roll Out and Office of the Gas and Electricity Markets(OFGEM):
Government of United Kingdom has announced its program to roll out smart
meters in every home by the end of 2020 to achieve important milestone towards
Research Group route map[2]. Since the future picture of smart grid is becoming
clearer, OFGEM in its role to protect consumers’ interest will have a far reaching
and diverse role to play. Given that smart meters will provide unparalleled
demand side participation, which has never been achieved before, development
the track which leads to smart grid, there may be a lot to do. Currently, as the
smart meters are being installed as pilot and trial projects, it is the best time to
set the pitch for extensive consumer interaction, feedback and involvement.
retailers. Smart meter by itself will fail to invoke demand side participation unless
it is coupled with a willing customer. Good beginning can promise better results.
All forms of interactions, in the form of public seminars, lectures, webinars and
It has already been made clear by the government that energy suppliers will be
responsible for procuring and installing smart meters. In the best interest of
suggested to partly utilize Ofgem’s Low Carbon Network Fund to this effect only
in the beginning until the roll out is at reasonable stage when smart meters’
financial benefits are realized. Further, schemes such as energy (clean) cash-
back schemes could be introduced where people and businesses will be paid
demand management (smart grids and smart appliances) and energy supply
(new tariffs). Introducing smart metering will require a major change to industry
created where there is certainty on what needs to happen in the shorter term,
while providing flexibility for market development and innovation in the longer
term[5]. Such regime will be very much in line with the introduction and ongoing
provider.
parties(operator etc).
impact assessments.
Regulatory and Commercial Frameworks Provisions for New Business and
For a number of decades consumers are used to use energy with very little
revolutionize the energy scenario such that it is carbon free, economical, and is
yet adequately secure, both incentives and penalties(high bill) will have to be
motivation, reward and penalty. It will obviously be wise to put more stress on the
will pave the way for renewable energy development and will train the future
such devices which are more efficient. Smart meters with the functionality to
provide the grid the relief and the operator the time to bring more renewable
It will also be very important to provide flexibility in the commercial and regulatory
developments between 2010 and 2015 as envisaged in the ENSG’s vision. This
could be supported by Ofgem’s Low Carbon Network Fund with other funding
opportunities available e.g. European Union SET funding etc. and off course
investment from private sector. To realize the dream, it will be necessary for all
intensive and technological challenge: Smart Grid. Demand side participation will
simply emerge as a natural byproduct as more and more smart meters are
installed and we move towards the goal with the right regulatory framework in
order.
References:
[1] Electricity Networks Strategy Group(ENSG), A Smart Grid Vision, November 2009
[2] Electricity Networks Strategy Group(ENSG), Smart Grid Routemap, Feb 2010
[3] IHS Global Insight Demand side market participation report for DECC. See
http://www.decc.gov.uk/en/content/cms/consultations/electricsecure/electricsecure.aspx
[4] Smarter grids: The opportunity by Department of Energy and Climate Change Dec 2009
[5] Smart Metering Implementation Programme: Regulatory and Commercial Framework
dated: 27 July 2010
[6] The New Electricity Trading Arrangements. Ofgem/DTI Conclusions Document. October
1999
[7] GB-wide smart meter roll out for the domestic sector. Department of Energy and Climate
Change. 27.07.2010
[8] Smart Metering Implementation Programme: Prospectus. OFGEM. 27 July 2010