The benefits of a smart, flexible energy system

Demand for electricity in Great Britain is predicted to nearly double by 2050 (¹), as we increase our use of electricity for things like heat and transport, and see the introduction of more innovative and low carbon technologies. We need an energy system that can meet this increase in demand, at the same time as we are reducing our reliance on fossil fuels and increasing our use of cheaper, renewable energy.

The good news for consumers is that Great Britain’s energy infrastructure is undergoing the most ambitious and complex transformation our generation has seen - and a smart, flexible energy system is on the horizon, with smart meters at its heart. This will enable us to increasingly use cheaper, greener renewables such as wind and solar, and put consumers in the driving seat of how they manage their energy use.

We’ve gone from typewriters to laptops, and wind-up watches to smart phones and TVs. We have the flexibility to shop or bank at midnight if we choose to. Our energy system is no different. It also needs to be smart - and flexibility is key.

What is a smart, flexible energy system?

It is a system that uses digital technology to understand when, and how, customers across Great Britain use energy, which will enable us to buy, store and consume energy in a way that is more efficient and responsive than the way we do today.

For example, it will enable more of us to have batteries which will store cheaper, greener energy produced on windy and sunny days, which can be kept for use when there isn’t an abundance of wind and sun. There is even the potential for electric vehicles to charge up at cheaper times of day, and function as additional batteries to store and release power back in to the home when it is needed.

To cope with peaks in demand, such as when people cook dinner in the evening, energy suppliers often need to turn to more expensive fossil fuels to meet that demand. Using more renewable energy sources will mean less reliance on these expensive fossil fuels.

Where households are able to shift their usage away from peak periods, like using their washing machine, dishwasher or shower during off peak hours, the extreme peaks in demand for energy are smoothed and the energy system can make more use of cheaper, cleaner renewable energy sources.

By flattening the peaks in demand - which make the system inefficient and more expensive - and spreading energy consumption throughout the day, cost efficiencies can be made for the benefit of everyone.

What is Market-Wide Half Hourly Settlement?

One of the major milestones in this transition to a smart, flexible energy system is the introduction of Market-Wide Half-Hourly settlement (MHHS). MHHS is a way to facilitate customers with smart meters sharing their half-hourly energy usage with their supplier and enabling suppliers to use this data to match supply and demand, no longer needing to rely on estimates based on a profile of the average consumer.

Why should I share my half-hourly meter readings with my energy supplier?

When you accept a smart meter, you have a choice to send your energy usage to your supplier every 30 minutes. This half-hourly energy usage information will help energy suppliers understand how much energy is being used around the country, and when. With this information, energy suppliers will be able to buy more accurate amounts of energy to supply their customers, reducing waste. With suppliers only buying what they need to supply your home, consumers stand to make significant savings.

Suppliers will also be able to use smart meter data to offer customers more innovative products, such as smart time of use tariffs.

And on a national scale, producing more domestically generated renewable energy will also help Great Britain become more energy self-sufficient, and less reliant on imported fossil fuels. This will both help protect our energy supply from price volatility in the global energy market and help Great Britain to reach net-zero by reducing its reliance on fossil fuels.

What role do smart meters play in a smart, flexible energy system?

The data that smart meters provide is key to achieving a smart, flexible energy system. They record energy consumption in near real time, so are able to gather the information the energy suppliers need to supply the right amount of power, at the right time, to meet customer demand.

Your personal details are never stored on your smart meter - just the energy you use. Smart meters do not use the internet. The data from your smart meter is stored and transmitted very safely via their own dedicated, secure communication system.

What is a Time of Use tariff (TOU)?

Time of use – or ‘smart’ - tariffs allow suppliers to charge different prices for energy at different times of the day. This allows greater choice for households around what they pay for the energy they use, depending on when they use it, financially rewarding customers who use energy when demand is low, or when excess energy is available.

The more consumers are able to move their energy use to off-peak periods, the greater these savings will be for us all.

Smart meters enable different TOU tariffs. TOU tariffs are not a new concept and have been available from some suppliers for quite some time - for example, Economy 7 and Economy 10. Some people may find that they would save money on a TOU tariff, as it suits their lifestyles and budget, and how they use energy throughout the day. As with traditional meters, opting to move on to a time of use tariffs is, and remains, entirely the choice of the consumer, not the energy supplier.

As our energy system develops a better understanding of how much energy we use at different times of day, there will be more smart time of use tariffs to choose from.

Will half-hourly settlements and time of use tariffs result in higher energy prices?

No. Half-hourly readings will make the energy system more efficient and flexible, and will help suppliers to more accurately meet the demands of consumers, reducing waste and therefore making energy cheaper for everyone. Some people who choose time of use tariffs will enjoy additional benefits. These are optional tariffs for consumers that already exist and are rewarding consumers financially for using energy when demand is low or when there is excess clean electricity available, for example on sunny or windy days. This will lead to savings for all consumers, whether they take up time of use tariffs or not.

Our survey says(²) …

We recently surveyed over 2,000 adults across Great Britain to get their views on renewable energy and how flexible they could be around their energy use:

• 74 per cent would be willing to change when they do their chores, to save energy and money
• 76 per cent agreed they would be happy to share more frequent energy readings if it resulted in cheaper energy
• 82 per cent expressed a preference for their energy to come from renewable sources, rather than fossil fuels
• 69 per cent of Brits would like to use energy in a more flexible way
• 25 per cent would be happy to change the time of their shower to save on energy costs
• 53 per cent said they would be happy to change the time they wash their clothes
• 40 per cent were willing to charge their devices at a different time of day

Source:
(¹) BEIS 2020, Energy White Paper
(²) Research was carried out by YouGov for Smart Energy GB, 2245 GB adults, 29th- 30th March 2022.

You can read more about how you could save energy by using it flexibly here.