I guess if somethings really important then its probably worth fighting for. Its easy to look at the status quo and imagine that it should be very difficult to change things, and be discouraged. Or to imagine that we might try and fail.
As an aside it came to me that a reason England are so poor at the highest level of sport (with notable exceptions) may be that winning is so important that failure cannot be considered as an option. As soon as you write failure off as an option you are exposed to a whole host of psychological pitfalls. As soon as you begin to lose you simply cannot believe that this could happen, and don’t know how to respond. And of course victory can only be expected, never something to be cherished, it just becomes ‘not losing’ rather than the high of victory its simply not the low of the loss….
I guess the point I’m trying to make here is that some people would consider trying to change the way the energy market works as an almost impossible mission. I think I consider it both a duty, and a necessity to try and accelerate change.
The world I’ve described in previous blogs is one where household demand adjusts itself to fit supply without anyone flicking switches or setting timers. This is a world where the wind blows and batteries pick up the excess power generated for use at a later time. Or where a cloud covers the sun and batteries fill in the gap. Or where everyone turns the kettle on after their favourite soap (I guess nobody watches soaps at the same time anymore due to catch up!) and batteries smooth out the load, so we don’t have to switch on diesel generators.
This is a future where technology is used to bring energy generation and consumption together. Where supply meets demand in real time and on a microscale. Where control is divested to a machine that has nothing better to do than watch and watch and watch and … switch on or off at the right moment.
Why do I want to help create such a world? Because the current one is inefficient and wasteful. Because the current solution is dirty and polluting. Because we can make things more efficient and better. Because if we didn’t invent the combine harvester we’d still be living in wooden sheds cooking over and open fire and have cholera and dysentery.
The path to Utopia is always a difficult one. There are many things which stand in the way of transition. The good news for us is that the technological problems have been resolved. All that stands in our way is current thinking.
From my point of view for us to evolve all the key players in the energy world (Ofgem, Elexon, National Grid, DECC & DNOs) need to begin to consider how they will cope with a behind the meter revolution, which is where the current market arrangements stop.
I’d like to see efforts made to reduce the cost of entry into the market for energy storage. Currently collecting embedded benefits requires a supply license. Setting up a supply license in a meaningful fashion requires around £1M of capital (costs and credit). Allowing access for all parties to embedded benefits, or mandating current suppliers to pass these benefits to customers, or aggregators would reduce the cost of entry for players in the storage market. In my mind a simple set of rules could be established which could allocate benefits at the meter, and allow embedded benefits to be collected at the meter point.
All of this feeds down into the creation of a price at the meter point. Ultimately a single traded price at the notional balancing point (a system price) can yield thousands of prices net of costs, one for each household. These prices can and should be made available to individuals so they can make economic decisions about their consumption.
We could allow individuals the ability to allocate their meter to trade energy on their behalf. By aggregating many of these meters together, and optimising over the delivered energy prices we can create a significant efficiency which should drive costs down for end users. For energy consumption behind the meter. Where we can ‘meter’ device consumption behind the household meter, I see no reason why these individual device profiles cannot be added or subtracted from the household profile and managed separately, or together as desired. To do this we will need an agreed methodology for device and/or meter identification and registration to prevent device spoofing.
Or course rules need to be set in the system. Current system rules were set in 2000 and have been incrementally evolved ever since with larger generators typically at the helm of change. Often incremental change fails to deliver the revolution a more significant step change might produce. With this in mind my vision would be to create a group of technology experts with limited energy market knowledge and ask them to deliver proposals to reform the market. These proposals should be established in reference to, but not influenced by the current status quo. We must look to make a step change from where we are now, and not be pushed into incremental change by the incumbents. Rules and regulations must be established which encourage and nurture innovation and change and are not driven by those who seek to slow change, or prevent it from having an impact.
Finally many of those who have worked hard to create a safe and steady system over the years have done so without fanfare and praise. Praise which of course the grid operator and regulator deserves. During the last 20-30 years we needed a steady approach, and an even hand on the tiller. My view is though that the tide is turning, and that we now need to change the risk averse mind-set. I don’t propose putting safety second. But I do believe that if we fail to innovate and fail to drive change up the agenda then we will be putting much more at risk than if we do. We have a great opportunity in this country to drive innovation in electricity markets, and set the standard for the rest of the world. It would be a shame, even a tragedy for British industry if we lost that opportunity because we were too busy keeping things the way they are because that’s what we know works (black swans anyone?). As a nation our forefathers fostered the spirit of adventure, endeavour, intrepid, and that’s what we need to do now as we blaze a trail for those who follow us on this earth. We shouldn’t be afraid too much if there are some blips along the way. I would go so far as to say that grid operators, and regulators need to be incentivised to drive change, rather than to drive security. Otherwise what we will get is more of the same, which is secure, but not optimal in the long run. They need to be able to try things out, and take some calculated risks (not with life) to achieve some measure of return.
So that’s how I see things. In summary the points I’ll be fighting for in the near future are:
We need a coherent strategy for behind the meter
Lets lower the cost of entry for getting access to embedded benefits
A simple way of computing prices at, or behind the meter will aid economic thinking, and economic action at the lowest level (provided its cost reflective)
Facilitate trading at a meter level
Ensure rules encourage change and innovation and don’t hinder it
Encourage and incentivise grid, market operator and the regulator to drive change
And if you like me believe the world should aim to improve from one day to the next, then maybe you would like to lobby for these points too? Indeed if you’d like to join us here at ChargeSync and create a united voice then do feel free to contact me at email@example.com