Smart systems can employ two complementary mechanisms to deliver higher efficiency and lower costs:
1. Enjoying the same level of comfort at lower cost
Smart meters, which show electricity and gas use in real time on a display unit in the home empower consumers by enabling them to see energy use in kilowatt hours, and more importantly in £'s in real time. This gives instant feedback on how much it costs to boil the kettle - and how much can be saved by only boiling the quantity of water needed. It shows the building occupants how much they are continuing to spend when they leave the building by leaving on PCs, lights etc. Having this information enables the building occupant to take the actions needed to eliminate this unnecessary energy consumption by changing their behaviours when filling the kettle or switching off equipment when leaving the building. A recent international study by ESMIG (European Smart Metering Industry Group) found that the average savings achieved across a whole range of countries who have run smart trials with in home displays were in excess of 9% - double the assumed savings in the government business case.
Smart home controls can go further, making sure that unoccupied rooms are not lit or heated to the same temperature as occupied rooms, that heating can be switched on remotely meaning that buildings don't get heated unnecessarily when empty.
This data will also be analysed over time and be made available over the web, as it has been for larger commercial industrial consumers for many years now, allowing users to spot anomalies - such as the energy spend on stand-by appliances overnight - prompting corrective action - and saving money.
As a secondary effect any reductions in demand will feed through into structurally lower commodity prices as the supply demand balance shifts towards a lower energy consumption level – delivering additional benefit to consumers.
2. Sharing the benefits of system balancing.
With more intermittent sources of energy coming on stream, such as wind and solar energy, there is great value to be derived from being able to reduce peaks in demand when these sources, anticipated as being 20% of energy supply in 2020, are unavailable. Being able to reduce demand at peak times means that the building of expensive back up power stations, and higher capacity networks, can be avoided.
Smart systems enable consumers to offer up their flexible demand appliances up for demand reduction. We still need to build the infrastructure to do this - but it and the smart appliances which can take use of it is coming. These could be fridges and freezers that turn off for 20 minutes unless their door is opened and washing machines, dishwashers and tumble dryers which can be remotely programmed to avoid peak times.
Even without Smart technology new time of day tariffs will reward off-peak use and will go some way to enabling consumers to benefit from helping to balance the system - indeed these are simply an extension of the Economy 7 tariffs which have been around for decades.
So Smart systems will give consumers the same or better (remote control) levels of comfort at lower cost - a true win-win.