The Utility Market

Individuals have become concerned about their carbon footprint, businesses have become eager to promote their green credentials, energy producers are being regulated and the media are highlighting these issues to ensure everyone is aware of the environmental and commercial impact.

Industrialised nations have become very aware of the climate change issues that are facing the world. By way of an example the European Union (EU) Energy and Climate Package has 2020 targets of a 20% cut in CO2 emissions, 20% of power from renewable sources and a 20% efficiency increase.  The key to meeting these targets is “Demand Management” – reducing total consumption and smoothing demand.  Part of the toolkit for demand management is the ability to price energy consumption by the introduction of time-of-day tariffs combined with enabling non-critical household appliances to automatically schedule operation outside peak hours. 

Once convinced of the inevitability of the step change, it is important to identify the facilitators of this migration to the new energy conscious world, namely the "Smart Grid", "Smart Meter", "Smart Appliance" and ultimately the “Smart Back Office Systems”.

Smart Meters are replacing conventional electricity, gas and water meters thereby removing the need for manual (and potentially inaccurate) meter readings to be taken.  The Smart Meter can transmit actual energy readings to the Utility Operator on an hourly, sometimes half-hourly basis.  Once Smart Meters have been rolled out amongst the consumer population, end-users will be able to “see” their usage and Utility Operators will be able to price energy to encourage behavioural and lifestyle change.

Trials across Europe suggest that once customers can “see” their consumption and the associated costs, they will cut their usage by up to 20%. The Smart Grid refers to the underlying distribution network that will facilitate the transfer of “clever energy” around the network – consumption and production can be monitored and projected more accurately, thereby improving efficiency and ultimately reducing CO2 emissions.  The Smart Grid will also encourage competition within the market, ensuring Utility Suppliers are forced to offer customers improved tariffs and services.  Longer term, it will help simplify the integration of household micro-generation (e.g. solar panels, wind turbines, combined heat and power boilers, etc.) where consumers who generate their own energy can sell excess energy back to the grid.

Smart Appliances are being designed to take advantage of this revolution.  They will support the introduction of the Smart Grid by altering their consumption levels over time to take advantage of cheaper energy during off-peak periods. For example fridges could operate on reduced power during the day, washing machines could power down during the day, while both systems could operate normally throughout the night.

Finally, new Smart Back-Office Systems will need to be deployed to leverage the investment made in the network – without the introduction of updated back-office systems that can take advantage of the detailed data available, the full benefit of smart metering to the Utility will not be realised.