John Cooper takes a look at smart energy systems and explains how they are connecting the future

Smart meters are energy meters enabled with two way communications. Instead of merely registering the amount of energy used, they are able to communicate electronically both with devices within a home or business and with central energy industry systems.

Over the next few years, smart meters will be installed in the vast majority of the 30 million or so properties in Great Britain. The programme to roll-out this technology is one of the UK’s largest current infrastructure projects, with an estimated cost of at least £11 billion.

Early cost-benefit analyses for the project focused on how providing consumers with more and better realtime information about their energy consumption will help promote energy efficiency – changing consumer behaviours, saving money, and contributing towards a reduction in carbon emissions. But an element of the projected benefit was always the ability of the technology to facilitate a wider ‘smart energy’ future.

What this meant exactly was always speculative, and indeed a little vague. However, it is beginning to come into sharper focus as a number of new technologies reach an inflection point. So far from being an unclear vision of a distant future, the need for smart energy systemsnow looks like a requirement in the near term. Major questions of what these systems should look like, how they can be delivered, and how they should be governed, are beginning to be considered seriously by a range of public and private bodies.

Where energy production is concerned, these developments include the deployment of large scale wind and solar photovoltaic farms, which have reached commercial viability (with little or no subsidy) faster than most people could have anticipated. Small scale domestic production of power through, for instance, rooftop solar panels has brought similar technology within reach of a wide range of people, and allowed its use at the most local level. In addition, there is the development of both gridscale and domestic electricity storage – potentially a huge game changer in terms of energy management.

On the consumption side, electric vehicles, heat pumps and smart appliances (the ‘Internet of Things’) will disrupt traditional demand patterns, create new commercial opportunities, and give rise to a need for time-of-use tariffs and automated demand-side response.

Modifications to the UK’s energy infrastructure will be necessary in order to accommodate these changes. Traditionally, the distribution of electricity at a local level has been an essentially passive activity. Power was generated by large central generating stations, and delivered onto local networks which exhibited largely predictable patterns of demand. However, in a world in which electricity is generated (and can be stored) much closer to the point of use, and in which demand patterns may fluctuate significantly (by time and locality) against those which could once be taken for granted, this will no longer be sufficient.

The alignment of energy networks with new expectations for both the generation and consumption of electricity requires a fundamental change that is setto transform the face of the industry and the level of innovation that is possible within it. Indeed, the challenge for the ‘power system architecture’ – the underlying structure for the production, distribution and use of energy – is to ensure that its various components interact in a way that creates a far more seamless, user-friendly and democratised system.

Fundamental to this is data. Systems which no longer benefit from their former predictability of use will need to be actively managed. The gathering, collation, and processing of unparalleled quantities of data aboutactivity on those systems will be essential to their effectivemanagement. That is where smart meters become not just a useful energy efficiency tool for today, but a fundamental element in the management of a ‘smart grid’ tomorrow. It is only through the data that can be captured by those meters that systems can be designed which are responsivein real time to highly localised shifts in the production, storage and use of power.

The aim of a new power system architecture, if done well, should not be to pick technological winners andlosers. Given the pace of technological development, that is a fool’s game for any substantial new infrastructure project. Instead, the aim must be to create a flexible and dynamic system that can support, and in consequence facilitate, a wide range of new technologies. If done well, the investment in smart grids will create opportunities for innovation that have the potential to transform the way in which we all think about and interact with power systems.

Choosing to keep the same structure and simply reacting to change in a piecemeal fashion is likely to fail. Fortunately, few people are proposing it. There is a genuine desire by industry, government and regulators to create a system that is fit for the future. The roll-out of smart meters is just the first stage in the development of a smart energy future for the UK. There will be far more to come.

Gowling WLG
John Cooper is a partner at the international law firm, Gowling WLG. Gowling WLG was created byGowlings, a leading Canadian law firm, and Wragge Lawrence Graham & Co (WLG), a leading UK-based international law firm. Gowling WLG provides clients with legal services at home and around the world to help them succeed no matter how challenging the circumstances. With more than 1400 legal professionals across offices in 18 cities worldwide and specialised expertise in countries around the globe, its clients have access to in-depth expertise in key global sectors along with a top-tier suite of legal services.
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