Electricity shake-up could save consumers 'up to £40bn'

[Jeremy Harris]

The document this story relates to seems to be this one: https://www.ofgem.gov.uk/system/files/docs/2017/07/upgrading_our_energy_system_-_smart_systems_and_flexibility_plan.pdf

 

From what I can see, the primary driver is as I mentioned earlier, the desire to peak shave the grid.  The terminology adopted seems to be Demand Side Response (DSR) and the major benefits seem to be from business electricity users (not that surprising).  There isn't a lot of detail about the domestic side, other than a hint that we may have mandatory half-hour settlement (variable rate tariffs dependent on grid demand), which would imply mandatory smart meters (I can't see how half-hour settlement could work without them).  There is a crude precedent for variable rate domestic electricity tariffs in France, where for some years they have adjusted the tariff charged at certain dates and times, with consumers being informed by TV and radio well in advance of these.  I remember some friends who used to live in the Loire valley making sure to switch the TV over to a French channel to note the dates and times when the rates were were going to be high some 15 years ago.

[Jeremy Harris]

I'm used to journalists playing fast and loose with the laws of physics, but I really didn't expect a professor from the University of East Anglia to state, on air, something that seemingly implied that the grid defies the First Law of Thermodynamics, or heats up a great deal to lose excess energy.  During an interview on The World at One on Radio 4, she was asked what happened to all the energy generated by solar panels when the grid didn't need it.  Her answer "It just dissipates".  I know some academics can be on another planet sometimes (no offence intended, but I worked for the MOD's Chief Scientific Advisor,  Roy Anderson for a few years) but I really expected a more reasonable answer from someone who was presented on the programme as "Prof Catherine Waddams, an expert in energy policy at the University of East Anglia". 

 

The exact words were:

 

Interviewer: "What happens to the energy that is produced by people who have solar panels?"

 

Prof Waddams: "Well, it gets brought back into the grid, ermmm, but if it can't be used then it can't be used and so it just dissipates"

 

Rarely have I been so annoyed by someone purporting to be an expert in the field talking an absolute load of twaddle, on air, to hundreds of thousands of people.  What the stupid woman should have said is that if the grid doesn't require more energy, then the solar panel systems reduce their output automatically, so they generate less energy, as that is what really happens.  Solar panels are no different to any other generation system in terms of reducing generation capacity as required.  Wind, solar, hydro, coal, gas, oil, even nuclear (on a slower timescale) generation can all be throttled back during times when the grid has enough supply, if they couldn't then the grid would be inherently unstable; it is a fundamental requirement for all grid connected generation.

 

 

Edited July 24, 2017 by JSHarris

[Ferdinand]

Presumably the 40bn is also 1bn a year for 40 years.

[MikeSharp01]

1 hour ago, JSHarris said:

Prof Catherine Waddams

She is an economist, not a scientist / engineer, so 'dissipates' is in the lingua franca I guess while physics, and being able to defy the laws of it is, perhaps, not uncommon when one is reminded of the joke that if you ask 10 economists a question you get 11 opinions. However I like this one better:

 

A man was sent to Hell for his sins.  As he was being processed, he passed a room where an economist he knew was having an intimate conversation with a beautiful woman.

"What a crummy deal!" the man complained.  "I have to burn for all eternity and that economist spends it with that gorgeous woman."

An escorting demon jabs the man with his pitchfork and shouts, "Who are you to question that woman's punishment?"

 

Source of this and more jokes

[Jeremy Harris]

The problem is that she wasn't presented by the BBC as an economist, her introduction just said that she was, quote, "an expert in energy policy".  I would imagine that many listeners would have heard that and thought that it meant that she understood the fundamental principles of our energy generation and transmission system.

 

Having read that paper (linked above, and the source of the news story) through a couple of times, I'm not convinced there is anything very solid in it at all.  There are clear implications that the authors are using the usual politically-driven phraseology to cover up what they are being driven to suggest (almost certainly by the energy industry, who are seemingly increasingly concerned about the volatility of the market).  Use of terms like "empowering", when applied to consumers, pretty much always means " we are saying this to cover up the fact that you're going to be shafted", for example.

 

With regard to the media-quoted "£40bn saving", then what the paper actually says is this: "A study for the Government estimates the benefits of a smart energy system to be £17-40bn to 2050", not far off @Ferdinand's "£1Bn a year for 40 years", but is most probably around half that, I suspect.

Edited July 24, 2017 by JSHarris

[Temp]

4 hours ago, richi said:

This is certainly true with ARM. To hear Steve Furber tell the story, ARM wasn't designed to be very low power, nor mobile. But it was its extreme power efficiency is what put it in so many mobile devices.

 

edit to clarify: the original design objective was less than 1 Watt, but the first test device drew about 10% of that.

 

One lesson Acorn learned early on was the importance of second sourcing components so you weren't dependent on a single supplier for anything. That was well understood by the team that was spun off into Arm. So when the company started designing chips they used design rules that allowed almost any chip manufacturer/foundary to produce them. That made it a much easier sell to companies that wanted to make their own devices. At the time if you wanted to use an Intel processor on your chip then only Intel could make it for you.

[richi]

1 minute ago, Temp said:

One lesson Acorn learned early on was the importance of second sourcing components so you weren't dependent on a single supplier for anything.

cf the memory address decoder chip in the BBC Micro. Acorn tried several "pin-for-pin" replacement chips, but none of them worked.

 

The scary thing is, they concluded they were using the original out of spec, but they never discovered in what way. A subtle manufacturing change to the original part could at any time have made Acorn's sales pipeline grind to a halt.

[Guest Alphonsox]

3 hours ago, Temp said:

 

One lesson Acorn learned early on was the importance of second sourcing components so you weren't dependent on a single supplier for anything. That was well understood by the team that was spun off into Arm. So when the company started designing chips they used design rules that allowed almost any chip manufacturer/foundary to produce them. That made it a much easier sell to companies that wanted to make their own devices. At the time if you wanted to use an Intel processor on your chip then only Intel could make it for you.

 

It took some attempts for the ARM team to get to that point. I was part of a small design team that took the original ARM3  and ARM250 designs through to second source at GEC-Plessey (1990). Up until that point the only source was VLSI Technology Inc. From memory this was a painful and drawn out process although it did give us a head start on the ARM610 design for the Apple Newton. I think that the commoditisation of silicon production and production equipment was probably the biggest driver in bringing the design rules to a common point.

 

[SteamyTea]

6 hours ago, JSHarris said:

University of East Anglia

Better known as the University of Easy Access

 

Re government backing of engineering.  My view is that we have now just about created a good business environment to run an engineering business (planing consent is always a problem) with a low labour cost base.  The aerospace and armament industries are pretty 'high tech', as is the automotive industries.

We have good software engineers too (I dislike the term software engineering).

So probably what is really letting the side down is financing, and that may be because it is too easy for an individual to make good money in it.

 

I have not read up about that £1/4 bn investment scheme, but I think it may be a competition that leads onto further funding (never a good idea).

 

I also think that a lot of the science behind batteries has been done, not as if we are getting a new periodic table to play with, it is now really an engineering problem (I am discounting my 1000V tinfoil and tooth filling amalgam battery that is created when I eat a Quality Street that I have badly unwrapped).

[Ferdinand]

The Government have notional CO2 targets to reach by 2050 of course, so slight exaggerations in 30 year forecasts would not be a surprise !

 

Wearing my cynical head, I see that the chap who was on the TV boosting the revolutionary scheme as a talking head was the same one who's battery company features in the report as a case study.

 

However, I am not convinced that a Challenge Fund will necessarily fail. Have past ones failed on this model? 

 

Ferdinand

 

[Jeremy Harris]

4 hours ago, Ferdinand said:

However, I am not convinced that a Challenge Fund will necessarily fail. Have past ones failed on this model?

 

 

Yes.  When I was programme managing the defence research programme we tried to copy the DARPA model to run competitions for innovative ideas, with seed funding to demonstration of concept level.  I don't know of one single idea that went on to be used, or developed into a product.  There was a lot of interest, but almost all from large companies, so much so that we had to set up a second challenge that was restricted to SMEs. 

 

That experience makes me very cynical about government intervention in innovation.  Government should stick to what it can do reasonably well when it tries, and that is to try to put in place all the required enabling infrastructure, or at least create a regulatory environment where this can be done.

 

That paper does contain some good stuff, buried within the stuff that has clearly been promoted by government lobbyists, like standardisation of electric vehicle charge points.  The current situation is ludicrous, with competing companies offering subscription services and incompatible payment systems.  The connectors are pretty standardised (with the exception of Tesla) but even so there are three connector types, that are mutually incompatible.  The current scheme means it costs me a minimum of £5 to charge my car at a public charge point, and for that I get about 4.5kWh, so I'm paying over £1 per kWh for the electricity.  Given that I can charge at home (when the sun isn't shining) for about £0.14 per kWh, then there is a very strong disincentive for me to consider using a public charge point now.  I doubt I'm alone, either, as I now see the local public charge points empty a lot more often than when the cost was a flat rate of £20 a year for a subscription.

Edited July 25, 2017 by JSHarris

[andrew merriman]

Hi, I  already have a Solar PV with Battery storage installation and cant see how I am going to be "amongst the first to benefit?" Does this mean they are going to reduce the payments made via FIT contracts? I only make a tiny amount from this anyhow! We do benefit in brighter months when our Electricity usage reduces to 0 and then once the battery is fully charged we start putting it back into the grid. From full charge the battery lasts from 8pm ish  to 5am ish.

Any ideas on how this will benefit those installations already with a battery?

Edited July 25, 2017 by andrew merriman

[Jeremy Harris]

16 minutes ago, andrew merriman said:

Hi, I  already have a Solar PV with Battery storage installation and cant see how I am going to be "amongst the first to benefit?" Does this mean they are going to reduce the payments made via FIT contracts? I only make a tiny amount from this anyhow! We do benefit in brighter months when our Electricity usage reduces to 0 and then once the battery is fully charged we start putting it back into the grid. From full charge the battery lasts from 8pm ish  to 5am ish.

Any ideas on how this will benefit those installations already with a battery?

 

Welcome.

 

At the moment, as you probably know, domestic battery storage isn't usually whole life economically viable, in that the cost saving from the stored PV energy over the battery lifetime will exceed the cost of grid electricity.  The Powerwall 2 is the most cost effective at the moment, but even that can't deliver a whole life cost saving, in that the capital investment cost cannot be recovered through the life of the unit by the saving in imported electricity cost.  I looked again at this recently, and reckoned that it was currently very tough to get below about £0.20/kWh for the actual stored energy cost through life with the available domestic scale storage products, although that's a lot better than the situation a few years ago.

 

What the government seem to be trying to do is to find a way to incentivise domestic, as well as commercial, battery storage, not to save consumers energy cost, but to reduce the peak demands on the grid.  There is a monetary value, as well as a strategic value, to grid peak demand shaving for the people that manage the grid and distribution networks, and it seems that government want to find ways to encourage consumers to play a part in this.

 

The current domestic scale battery storage systems are not designed to help the grid, they are designed to help the consumer, even if they don't quite make economic sense, in terms of whole life cost.  What the government seems to want to do is allow distributed battery storage to deliver power to the grid during local peak demand periods, something that current systems cannot do (because of the regulatory constraints, primarily).  To do this, they need to put in place a means to reward those that invest in such battery storage systems.

 

The current FIT contracts seem fairly secure, and aren't likely to be torn up, as the judiciary stand between government and the consumer, and I'm pretty sure that the contracts could not be unilaterally rescinded.  Index linking could probably be changed, I think - there are precedents for this with pensions, where the government arbitrarily changed the index link from the RPI to the CPI, to the detriment of lots of pensioners (me included!).

Edited July 25, 2017 by JSHarris

[Nickfromwales]

36 minutes ago, andrew merriman said:

Hi, I  already have a Solar PV with Battery storage installation and cant see how I am going to be "amongst the first to benefit?" Does this mean they are going to reduce the payments made via FIT contracts? I only make a tiny amount from this anyhow! We do benefit in brighter months when our Electricity usage reduces to 0 and then once the battery is fully charged we start putting it back into the grid. From full charge the battery lasts from 8pm ish  to 5am ish.

Any ideas on how this will benefit those installations already with a battery?

Hi and welcome Andrew. 

Could we ask that you post a brief introduction in the 'introduce yourself' section please . 

Many thanks. . 

[Ferdinand]

I think we have successful models.

 

Can anyone comment on the success of spin-off companies from our Universities as a possible successful precedent for winners picked by the public sector? One key seems to be to keep politicians and their dirigisme *out* of the programme; another is that the people involved have a personal stake in the success or failure.

 

Imperial College, for example, has a significant portfolio of such companies spun off from research with University seed-funding and/or support). See Imperial Innovations (a support programme) and these lists of eg Engineering and BioTech spin-offs.

 

(This is a different thing to Graduates eg MBAs starting up companies, and again a different thing to City types who know their sector starting up companies - one example of this last is Big Yellow Storage started up by four City Types in their 30s and 40s in the 1990s, with whom I had a job interview in 2001 with one of the founders.)

 

What we don't have is a culture of routine growth from large end of small/medium (say 20-40m) -> either Mittelstand (ie dominant sector specialist) or medium/large (say 250-500 million turnover).

 

And unfortunately we have a political culture of hatred of successful people (though a lot of that is politicians who can't find any other way to promote their bankrupt ideas), while tolerating people leveraging their establishment positions for a few million of personal wealth.

 

Ferdinand

 

 

 

Edited July 25, 2017 by Ferdinand

[Jeremy Harris]

Pretty much every successful spin off from universities seems to have come about as a consequence of individuals with a strong entrepreneurial spirit plus private investment.  I'm not convinced that central government initiatives have really contributed a great deal, other than helping to provide the enabling mechanisms for universities to get funding from the private sector. 

 

There were some instances back in the 50's and 60's, maybe even into the early 70's, where direct government funding did result in marketable innovations.  Many of these came from the government owned energy sector and the defence sector - ones I'm familiar with are LCD displays, thermal imaging bolometers and MEMS, all of which came out of RRE Malvern (sadly a research establishment I helped close down...............). 

[Ferdinand]

5 minutes ago, JSHarris said:

Pretty much every successful spin off from universities seems to have come about as a consequence of individuals with a strong entrepreneurial spirit plus private investment.  I'm not convinced that central government initiatives have really contributed a great deal, other than helping to provide the enabling mechanisms for universities to get funding from the private sector. 

 

There were some instances back in the 50's and 60's, maybe even into the early 70's, where direct government funding did result in marketable innovations.  Many of these came from the government owned energy sector and the defence sector - ones I'm familiar with are LCD displays, thermal imaging bolometers and MEMS, all of which came out of RRE Malvern (sadly a research establishment I helped close down...............). 

 

Also STC and optic fibres, and remarkable science in the Plessey company eg Gallium Arsenide chips - but these were perhaps industrial establishment rather than government?

 

I think a criteria should be that Government support should remove constraints from potential achievers, and insist on success, rather than impose direction. That is a similar model to high performing athletes getting 70-100% of average salary but for 2-3 years at a time.

 

Edited July 25, 2017 by Ferdinand

[Jeremy Harris]

Yes, there was a lot of industrial R&D funded from the back of generous government contracts back in the time I was referring to.  That all came to end by the early 80's, when there was a big shake up of government spending and the contracting process.  Until then cost plus contracts were pretty normal, which gave industry funding for R&D.  These were replaced with firm price contracts, which resulted in stronger competition and reduced contract prices, but at the cost of removing the "hidden" government funded industrial R&D.

[gravelld]

I find this a bit odd. They're all "oh we let the market decide" etc etc... but then they go goo-ey eyed over "technology" and make up some "competition" in a romantic fluster with the notion that a silver bullet may be found.

 

I agree government must watch and maintain markets, and sometimes guide them to derive the best outcomes for citizens.

 

So perhaps they should be aiming at areas that are fundamentally broken with no market drive to fix them, rather than ones that were doing ok previously (previous to them fucking it up the first time with the slashes to FiTS).

 

I'm thinking housing performance.

 

I think we know the answer...

 

£££.

 

But don't get me wrong, I'd like batteries to be better priced. But there's still this gaping hole of demand reduction they continually refuse to tackle.

[Jeremy Harris]

The battery price will be whatever the market drives it to be, and at the moment Tesla seems to be calling the shots, with the lowest price per kWh per year of any of the readily available systems.  The government can't change this, but they can introduce a regulatory environment that allows domestic scale storage to be included in the market for energy.  They may need to copy the FIT model, and provide a mandatory incentive scheme to kick start it, but, depending on the value to the market of having a fairly large and widespread microstorage capability to call on then it might just be viable.

 

The key will be whether the sums can add up within the lifetime of any storage system.  Realistically, no battery storage system is going to last much beyond about 10 years, so that means that consumers will need to at the very least recover that cost in that time, by a combination of reduced grid consumption plus revenue from energy sold back to the grid.  The main change that's needed is a way to manage the tariff system - if consumers have to pay full retail price for excess energy from the grid to charge their battery packs up, to then sell back that energy to the grid for peak shaving at wholesale price, then it's clearly a non-starter.  Consumers will have to have the ability to buy in excess generation energy from the grid at less than wholesale price, and sell it back at a price that makes economic sense for them to invest in battery storage. 

 

There seem to be a lot of obstacles that stand in the way of making this work, and because of the fragmented, muti-tariff, nature of energy supply, it seems that only government could set some sort of consistent standard, and create the regulatory framework, to make this work.  One problem is that the major beneficiaries are not the suppliers, at least directly, but the DNOs and the grid.  Getting something that will allow a microstorage scheme to work is not going to be straightforward or easy, given the number of interested parties.

[Stones]

Agreed, why would an individual invest unless he was going to make some kind of return from it?  Given the potentially quite significant benefits to the grid, I can see them considering (or perhaps they should) a system whereby they install storage in individual homes before the meter, perhaps offering some minor payment (no standing charge for example) to householder who participate.  The battery is kept topped up but can be drawn upon when local demand is high thus assisting the grid, consumers simply pay their standard tariff for whatever they use without the complication of buying in or selling.

[ProDave]

Reading this with interest, and sadness.

 

The FIRST thing they need to do is scrap the rediculous need for a certain level of EPC before you can qualify for the FIT in the first place. That has stopped me getting solar PV while I have watched the FIT price plummet.  (yes you may detect I am somewhat bitter about the stupid system)

 

Why can't we have a simple bidirectional meter in every house (NOT a smart meter) and simply pay ANYONE that exports an export rate for what they actually export without the burden of FIT's, MCS approved installations, etc?  WHY do we always ignore the SIMPLE solutions?

 

Sure, then in ADDITION to that have a battery storage system that will export on demand when the local grid needs it, but please don't over burden the system with MCS installers, FIT's with rules to lock you out if you are not "perfect". We know just about the only ones to REALLY benefit with that sort of system are the MCS installers that can get away with charging a premium because they are the only ones "allowed" to install such a system.  If you need an example, go and get a quote for an ASHP install from an MCS installer in order to claim the RHI, then look at the cost of the components and draw your own conclusions.