Mind the energy gap

Russia’s invasion of Ukraine has pushed energy security to the top of the political agenda. The war has profound ramifications for our energy supply and the price we pay for it, as well as how we decarbonise our economy in the future.

New research from Cornwall Insight shows that the impact of weaning Europe off Russian energy imports is likely to lead to energy bills remaining high for the next decade, even with the help the Government has recently announced. Decisions by both the EU and Britain to end all Russian oil imports underline the fact that a major structural change in our energy supply is underway, and this is only likely to put upward pressure on energy prices. By the time we see prices return to ‘normal’ we will have a very different energy system.

That’s why the Government was right to focus on expanding offshore wind and solar farms, as well as looking at more nuclear generation to increase supplies in its April 2022 Energy Security Strategy. New wind farms are coming online each year, but it will take several years to reach full deployment, and it could take decades to deliver nuclear. Clearly this leaves a significant gap before all of this new capacity comes on stream. An urgent question we face as an industry is how we bridge that gap, while still managing the other pressing challenges of the energy trilemma.

Luckily, Britain has an ace up its sleeve, which can make a significant difference to energy security, reduce emissions and cut energy bills. This ace is the ability to tap into the rich data available from smart meters that are now in half of all homes, and to use this data in a new generation of Home Energy Management Systems (HEMS).

These HEMS are a natural progression from the original In-Home Displays (IHDs), which provided helpful information about consumption to consumers at the start of the smart meter roll-out, to a much more powerful energy management tool. A HEMS can realise the full value of the smart meter roll-out by giving households more than just visibility of their energy use, as an IHD does, but also a breakdown of when and where the energy is being used so that customers can have greater control over their energy consumption and bills. And these HEMS are now available at a price that means it is realistic to deploy them to every home in the country.

So, we are missing a trick in our ability to respond to the current crisis by not fully leveraging the data that smart meters deliver. The new generation of HEMS link to the home’s smart meter, understanding when the home can use energy more efficiently. Time-of-use tariffs allow households to save money by using less electricity when it’s produced by expensive sources such as gas, and instead take advantage of cheaper sources such as renewables.

Using the data available from the smart meter infrastructure and the capability of the HEMS also means that a new breed of smart thermostats can be delivered at a fraction of the cost of those available on the market today. This is important for bridging the energy gap as a smart thermostat allows existing gas boilers to heat the average home much more efficiently, saving 10–15% on the heating bill. These smart thermostats can also automatically turn down the heating when the house is empty, saving a further 5% for the average home.

Research shows that HEMS have the potential in total to save an average of 20 per cent of household energy bills and cut carbon emissions by the same amount. This would save consumers around £400 per year now and around £600 per year by October, when the price cap is expected to increase to around £2,800 a year according to the regulator Ofgem.

These systems can also empower customers to make informed choices about installing further energy saving measures. They provide a detailed breakdown of where energy is used in the home, for example, how much is spent on lighting and heating so its much easier to calculate the savings that improved insultation or other energy efficiency measures would deliver.

And if a HEMS is installed in the 13 million British homes yet to have a smart meter fitted, it would save more than £15 billion on energy bills and more than 11 million tons of emitted CO₂ over the next five years.