Get Smart – Make Money from Smart Meters

Since the outbreak of war in Ukraine, the electricity system in Ireland has struggled to cope with a globally difficult situation.

While power is still very much on, it has been without doubt a constant juggling exercise to balance an ever-strained output with increasing demand.

And at no point is that demand higher than between 5pm and 7pm each evening.

In Britain, the DFS - Demand Flexibility Service - has initiated a rolling exercise in which signed up energy consumers get money back for not using “high use” electrical appliances for the hour between 5pm and 6pm daily.

According to statistics published by the UK National Grid, energy is sourced as follows (based on stats published 23rd January 2023):

Britain's Energy Sources

Gas 54%, Wind 12%, Nuclear 11.4%, Biomass 5%, Coal 2%, Hydro 1.2%, Solar 0%

The DFS is currently supporting a test incentive system aimed at cutting energy usage during peak hours, especially the hour in which most people get home from work. Available only to those customers signed up to Smart Meter plans, the pilot scheme refunds money to those who limit their usage to low energy appliances such as lighting and heating (apart from booster charging).

Being Smart with Smart Metering

Users are asked to curtail usage of energy intensive appliances such as electric Ovens, Tumble Dryers, Water Boilers, Washing Machines and so on. So far, the pilot, which typically has consumer engagement in the region of 200k-250k households, has resulted in significant energy savings of approx. 100 megawatts of power (per hour per day) which is the equivalent of the energy used hourly by a city the size of Dublin.

The rationale behind the scheme is the sum of the (small) parts equals a huge gain for sustainability and energy conservation as well as not insignificant savings for those involved in the test project.

Consumer Flex Scheme

On average, participants can expect to net in the region of Euro 3.35 per kilowatt hour (of saved electricity). With data from source courtesy of Smart Meters, electricity providers know the average use per household at any given hourly period across the Winter months (or for any other season for that matter). When consumers restrict usage to low intensity appliances the usage, or lack thereof, shows on the provider’s meter readings enabling them to reward the household appropriately.

The electricity system operator in the UK allows those providers participating in its Demand Flexibility Services scheme to avail of an energy auction which in turn gives them the leeway to rebate monies to consumers at a price higher (per kilowatt hour) than that currently charged by the grid.

In addition to financial rebates earned from energy savings, participating households are also entered into prize draws run by the various providers, bumping up the incentive to continue engaging with the scheme.

Business Flex on the Cards

It’s not just domestic consumers that can benefit from the demand flexibility pilot. It is anticipated that the scheme will be broadened to include businesses across the UK.

It stands to reason that big businesses would benefit significantly from availing of any demand flexibility program based on reduction of usage during agreed time periods, and that savings and consequently ‘green results’ would be greater at the industrial level.

At Euro 3.35 per kilowatt hour savings in the mix, large energy users could stand to make significant cost reductions if they were allowed to take part in a Business Flex model. While not all manufacturing or pharma plants might be able to cut usage at the optimal time of 5pm, it stands to reason that certain energy savings could be made at specific times during the day which allow both provider and consumer to take advantage of demand flexibility services.

It is anticipated an automated demand flexibility service could potentially save countries like Ireland in the region of Euro 1-1.25 billion per year by 2050.

As we look into the future, many of us are likely to become more reliant on electric vehicles, electric heating systems etc., thereby increasing our power use at both domestic and commercial level.

Ipso factor, learning to live with lower or restricted power consumption is a habit well worth forming now. Not only does it help the Irish energy system, it drives sustainability, helps reduce our carbon footprint and gives back to the environment as well as our pockets.

Now if that isn’t a win/win … especially when we are on the cusp of a Green Trade War, when every cost saving can help businesses maintain margins and keep prices as competitive as is possible at a time of growing financial pressure.

Green Trade War

Free Trade means that international competition can be free and fair. At a time when the world is working towards net zero, free trade suddenly appears to be in jeopardy. Around the world governments are working to help local businesses decarbonise but are their green policies in danger of impacting the notion of international free trade?

When it comes to Save the Planet, world leaders are allegedly singing from the same hymn sheet but when it comes to protecting business interests, it would seem that a divide as large as the Verdon Gorge emerged during the recent WEF (World Economic Forum) event in Davos.

Working to the aim of enhancing global trade co-operation (at both public and private level), the 2023 meeting saw disagreement arise over the “green technologies of the future” with the EU and US clashing over Joe Biden’s “Inflation Reduction Act” which offers tax credits to indigenous American EV production.

Tax Incentives for US-based Electric Vehicle Manufacturing Industry

The act is being seen as a sweetener to bring or keep EV car manufacturing “home” to the US, giving competitive advantage to US-based companies by way of millions of dollars in tax incentives. The act also offers financial incentives to US customers to buy US-manufactured EVs, something which is in direct contravention of the “spirit” or unsaid rules of free trade.

The consequences of the act signed into law by Joe Biden during Summer ’22 will be far-reaching. While the EU is already seeking exemptions and concessions, closer to home, re-appointed Taoiseach, Leo Varadkar, told journalists that the commission was not happy (about the act) and that it would be issuing a response which would most likely include “providing state aid and subsidies for EU businesses”, the difficulty with which is that countries “end up in a subsidy war”. At all costs, he said, we (the EU) must avoid entering into a state of “protectionism”.

Most recently and in response to EU concerns, the White House has set up an EU/US task force to manage the situation before it escalates into an irreversible trade war.

Getting back to the topic in hand, we all need to get SMART with our Smart Meters and Energy Usage. At a time when costs are spiraling out of control, businesses need to look into every which way to reduce costs and avail of any rebates and incentives available on the market, whether that’s by way of refunds for energy savings or credits for over-production (and selling energy back to the grid).

ISO 50001 Energy Management System Standard

ISO 50001 is the flag-bearer for Energy Management, and while we’ve said it before, we’ll say it again, it will pay business users to consider working to the rigorous requirements of the standard and implementing its robust management system. The ISO EMS can, without doubt, ensure reductions in carbon footprint, energy consumption, energy waste and energy costs. Simultaneously, it helps businesses achieve sustainability targets and optimal energy management, as well as increasing profits through reduced spend.

If you think ISO 50001 would support your business to reduce energy costs and become more sustainable, give CG Business Consulting a call to speak with one of our consulting team about the transition to a cleaner, greener, more energy efficient future.

* Source BBC Radio 4.

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