Energy insight: The UK’s Energy Sector & the ‘Internet of Things’

By Dezembro 23, 2014PT

By Joshua Eldridge & Neeraj Shah, Consultants, London

It has been widely prophesied that the so-called ‘Internet of Things’ (IoT) will transform almost every aspect of 21st century life; from health, transport and energy to the connected home. Countless column inches have been devoted to fuelling IoT hype and consequently people expect much from this burgeoning concept. But what is the IoT? Gartner provides a useful definition, conceptualising the IoT as “the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment”.

At this point it is common for technology writers to include a selection of impressive, but inflated (and ultimately useless) predictions about the number of connected devices that will be in existence by 2030, or some other date in the near future. This is unhelpful because taken as a whole; the IoT is an incomprehensible prospect. However, there are insights to be gained from more targeted examinations, and as such focus shall be given to the system level effects of the IoT in the UK energy sector.

Smart Energy: From meter to grid to city

In particular, the IoT promises to help the UK deliver a more secure, reliable, cost-effective and low carbon energy system. The IoT will help the energy grid to become ‘smarter’ by enabling integration of renewable energy generation – both small and large scale, better matching demand with supply, and helping householders and industry to reduce their energy consumption. A tangible articulation of the IoT can be evidenced by the forthcoming roll-out of smart meters.

What are smart meters? Metering devices with sensors that enable two-way communication between the meter and the central system. Smart meters will put an end to estimated billing by measuring exactly how much energy is actually used, at what cost, and in real-time.

Smart metering technology has the capacity to empower consumers by giving them greater control over their electricity and gas use, and by increasing competition in the retail energy market. It is hoped that this empowerment will not only change the way people think about their energy consumption but provide consumers with the level of understanding about energy usage and pricing to be able to compare tariffs easily and make switching suppliers easy.

Smart meters are a key part of the wider transition to a smart energy grid, but it is crucial that the rollout is a success. The Data and Communications Company (DCC) have considerable responsibility for the fate of smart meter rollout in the UK, having been licensed to establish and manage the necessary smart metering communications infrastructure. Unfortunately it is a highly complex task, like any other nationwide infrastructure programme, and the project has already been subject to delay and upward cost revisions. However, if time and cost risks are mitigated, smart meters have the potential to open up the retail market, lower barriers for supply market entrants, trigger a wave of competition and ultimately empower consumers.

The successful rollout of smart meters will play a crucial role in the development of the smart energy grid, a modernisation that promises so much for the UK energy system of the future. The IoT has the capacity to transform the energy grid through enhanced demand management that will use real-time data to respond to the behaviour of both energy suppliers and consumers and make it easier to accommodate intermittent renewables. In turn, smart energy grids will constitute an essential building block upon which ‘smart cities’ will be built, but what, exactly, are ‘smart cities’?

Cities already use data to improve performance at a departmental level so that they operate more efficiently. ‘Smart cities’ takes this idea further by exploring how cities can use data insights to solve or at the very least mitigate common concerns affecting cities, from congestion and public health, to climate change and peak energy demand management.

Political Intelligence attended Policy Exchange’s recent Smart Cities Conference where speakers and panellists discussed how data could be used to drive the development of smart cities in the UK. Speaking at the conference, Peter Madden, Chief Executive of the Future Cities Catapult, one of seven ‘Catapults’ launched by Innovate UK (responsible for funding, supporting and connecting innovative businesses to accelerate sustainable economic growth), highlighted how the UK has not yet been able to apply the concept of ‘smart cities’ at a city-wide scale.

Future City Glasgow’ – a pilot which recently beat 29 other cities to win funding for a £24 million programme to demonstrate “how technology can make life in the city smarter, safer and more sustainable”, will determine whether the UK can create smart cities. The capacity to demonstrate the viability of sufficiently ‘smart’ energy grids will impact strongly on this determination, and their findings should go some way to informing more accurate predictions about the future of smart cities in the UK.

As with all emerging technologies that promise solutions to previously intractable problems, it is important to separate the hype from the deliverables and focus on the details. The extent to which the IoT will practically help the UK to meet legally binding climate targets and achieve domestic energy objectives will be of paramount interest. As usual, the devil will be in the detail, and smart meters (as a tangible expression of the IoT) are a case in point. However, if smart meters can deliver the expected benefits in terms of demand management, cost reductions and market transformation then the UK will move a significant step closer to possessing a truly ‘smart’ energy grid upon which smart(er) cities may be built.