11 July 2012 – Homeowners’ demands for gadgets that can help them improve their energy efficiency is driving smart grid deployment, says a report by energy expert GlobalData. The report shows that while energy companies used to target industrial consumers with power management schemes, the deregulation of energy markets is giving consumers more freedom and choice and enabling energy companies to target homeowners directly.
Sales of smart grid technologies such as smart meters, in-home displays (IHDs) and electric vehicles (EV) have experienced a recent boom as a result of market deregulation. US-state Texas deregulated its electricity market in 2002 and has since seen 100% deployment of smart meters. Similarly, European countries such as Poland and Finland have also seen the large-scale deployment of smart meters and in-home technologies post-deregulation.
Market competition is encouraging the launch of initiatives that promote the active management of consumers’ energy usage. UK energy regulator Ofgem scrapped electricity price controls following deregulation in order to further boost competition, and this decision prompted suppliers to offer various tariffs, many catering to the intelligent use of energy.
A study conducted by the International Energy Agency (IEA) in 2003 showed that demand response could save the US electricity market between US$10 billion to US$15 billion annually. Utilities often provide free energy efficient equipment in their offerings, enabling consumers to better manage their electricity consumption and indirectly facilitate demand response through using time of use (TOU) pricing.
TOU tariffs allow individuals to participate in load management and benefit from consuming their power during off-peak periods as system operators look to balance demand and supply in order to keep the power system reliable. Smart meter installations are a necessary tool for TOU pricing schemes, as they alert consumers about peak period times during different seasons, enabling them to reduce their electricity bills.
However, a lot needs to be done by governments to enable power market liberalisation as a precursor to the deployment of smart grids in the way that the US and some European nations have done. This will prove to be especially vital in emerging economies to enable the further penetration of the smart grid.