Delivering the Benefits of Smart Appliances EA Technology A research report completed for the Department for Environment, Food and Rural Affairs (September 2011) Published by the Department for Environment, Food and Rural Affairs Department for Environment, Food and Rural Affairs Nobel House 17 Smith Square London SW1P 3JR Tel: 020 7238 6000 Website: www.defra.gov.uk © Queen's Printer and Controller of HMSO 2011 This publication is value added. If you wish to re-use this material, please apply for a Click-Use Licence for value added material at: http://www.opsi.gov.uk/click-use/value-added-licence-information/index.htm Alternatively applications can be sent to Office of Public Sector Information, Information Policy Team, St Clements House, 2-16 Colegate, Norwich NR3 1BQ; Fax: +44 (0)1603 723000; email: [email protected] Information about this publication is available from: SCP&W Evidence Base Defra Zone 5D, 5th Floor, Ergon House c/o Nobel House, 17 Smith Square London SW1P 3JR Email: [email protected] Delivering the Benefits of Smart Appliances SPMT10_043 Final Report to the Department for Environment, Food and Rural Affairs September 2011 This research was commissioned and funded by Defra. The views expressed reflect the research findings and the authors’ interpretation; they do not necessarily reflect Defra policy or opinions. EA Technology Capenhurst Chester CH1 6ES TABLE OF CONTENTS Executive Summary 1 Introduction and Objectives.....................................................................................1 2 Drivers to manage customer demands...................................................................3 3 Smart Appliances – An Overview...........................................................................10 4 Smart Appliance Experiences................................................................................13 5 Stakeholder Views and Experiences.....................................................................18 6 Barriers to Deployment and Uptake of Smart Appliances in the UK..................28 7 Impact of Selected Smart Appliances....................................................................35 8 Roadmap for the deployment of Smart Appliances in the UK............................40 9 Concluding Remarks...............................................................................................46 Appendix A: End Use Categories.................................................................................A-1 Appendix B: Categorisation of Appliances.................................................................A-4 Appendix C: Smart Appliance Experiences................................................................A-5 Appendix D: Organisations/ Persons Engaged with for Stakeholder Dialogue....A-26 Appendix E: Case Studies...........................................................................................A-27 Glossary AC Alternating Current DC Direct Current DD Dynamic Demand DECC Department of Energy and Climate Change Defra Department for Environment, Food and Rural Affairs DHW Domestic Hot Water DNO Distribution Network Operator DPCR Distribution Price Control Review DSM Demand Side Management EV Electric Vehicle FIT Feed in Tariff GB Great Britain GB-TSO Great Britain Transmission System Operator HV High Voltage L1 Level 1 (as used in Smart Appliance case studies) L2 Level 2 (as used in Smart Appliance case studies) LCNF Low Carbon Network Fund LV Low Voltage MTP Market Transformation Programme RHI Renewable Heat Incentive SBP System Buy Price STOR Short Term Operating Reserve SSP System Sell Price ToU Time of Use UK United Kingdom Executive Summary Smart Appliances are one of the suite of measures that can help the UK meet its policy objectives in terms of carbon emissions reduction, the facilitation of the uptake of renewable energy sources and in reducing overall energy consumption. The development of Smart Appliances is complementary to the ongoing work on Smart Meters and Smart Grids. In many respects the successful deployment of Smart Appliances is essential for Smart Grids and Smart Metering to deliver the full range of anticipated benefits, particularly those in relation to end-use energy efficiency. Recognising the importance of Smart Appliances in enabling end-users to adjust their pattern, and to a lesser extent, their total energy consumption, AEA Technology acting on behalf of Defra commissioned a study to investigate the potential benefits of Smart Appliances in terms of energy and carbon savings and enhanced electricity system operation. This report presents the outcome of this study. Drivers for Smart Appliances in the UK Consideration of the main drivers to manage the pattern of demand in the UK shows that the generic requirements for Smart Appliances fall into two main categories, namely: A- Shorter term measures of up to half an hour, which can be used to provide balancing services (particularly frequency response) to National Grid. This could also include short duration (i.e. up to half an hour) interruptions to assist with the avoidance of peak prices. B- Longer term measures that can be used for a wider range of purposes including the management of network constraints or the provision of reserve services to National Grid. This could also include the integration of renewables, for example during extended periods of low wind. Smart Appliance Experiences A review of selected trials and pilots of Smart Appliances highlights that a range of technologies have been evaluated over a number of years (for example one of the UK trials dates back to the late 1990s). However, Smart Appliances are still very much an emerging concept. To date, the majority of trials and pilots have targeted large single end-uses of energy that contribute towards the peak demands they are being used to alleviate. The review demonstrates the importance of Standards to ensure to allow demand response to be implemented using standard operational instructions and communications. Such a requirement, as yet, does not exist in the UK. Another important feature of a number of the trials is the impact of customer engagement on the project outcome. Some of the smaller trials demonstrate a high degree of customer involvement, and as such high levels of peak load reduction were achieved. However, this is not always the case for larger trials. In addition, the review suggests that not all customers are willing to install control technologies that i enable their end use loads to be remotely or automatically controlled. This demonstrates that customer willingness to participate is an important factor in evaluating the potential impact of a particular measure. Stakeholder Dialogue In addition to consumers, technology developers, appliance manufacturers and appliance suppliers are key stakeholders in the development and deployment of Smart Appliances. They can be expected to understand the requirements of consumers and have direct knowledge of the impact of external factors on their businesses. Therefore a number of interviews were undertaken with targeted industry stakeholders to explore their views and opinions of Smart Appliances. Other industry experts with a specific interest in Smart Appliances and customer behaviour were also selected. As might be expected, the stakeholders provided a diverse range of views and opinions, and in most cases there was little consensus in the responses to the questions posed. However, key issues raised included: - The lack of customer awareness of the benefits of Smart Appliances is regarded as a major obstacle to the deployment of Smart Appliances; - The difficulty of ensuring benefits can be properly allocated between consumers, Energy Suppliers and other stakeholders is viewed as another important factor; - The need for appliance Standards is considered to be a pre-requisite for the development of Smart Appliances, particularly in terms of ensuring interoperability and the provision of ‘plug and play’ solutions; - The role of Time of Use (ToU) tariffs is generally considered to be an essential motivator for the development and deployment of Smart Appliances by those interviewed. Without ToU, many of the stakeholders believe that there will be little stimulus for the development and deployment of Smart Appliances. Smart controls were also recognised in having a role to play in helping to ensure that heating systems are operating efficiently, i.e. not over or under-heating the occupied space. Barriers to Deployment and Uptake in the UK There are a number of barriers that impact on the potential deployment and uptake of Smart Appliances in the UK. These include technology related barriers, market related barriers and customer related barriers. A summary of these is provided overleaf. Technology Related Barriers Not all Smart Appliances respond to inherent changes in electricity network properties. Those that don’t, rely on a communications system to implement changes to their pattern of operation. The Smart Meter provides a communications link directly to the home, thereby providing an opportunity to directly control end-use loads. Therefore, the readiness of the electricity network to interface with Smart ii Appliances is regarded to be an important factor. The wide scale adoption of Smart Appliances is unlikely to happen until Smart Meters and Smart Grids are in place. A number of aspects of the rollout of Smart Meters have yet to be finalised. Whilst it has been decided that data collected from Smart Meters will be channelled through a central communications hub known as DataCommsCo (DCC), it is not yet clear how parties such as Energy Suppliers and Network Operators will interact with the DCC to remotely control end-use loads via the Home Area Network. This is regarded as a crucial element in the implementation of Smart Appliances, as it enables the existing two-way communications system for the Smart Meter to be utilised to control the operation of appliances. Market Related Barriers There are a number of market related barriers that impact on the deployment of Smart Appliances, many of these relate specifically to the structure of the UK electricity market and the rules governing the way electricity is traded. ToU tariffs are generally recognised as an important stimulus for the development and deployment of Smart Appliances. In the UK, the electricity supply market is fully de-regulated, and it is up to Energy Suppliers themselves to design their tariffs. Therefore, it is difficult to determine the extent to which innovative ToU tariffs will be offered by Energy Suppliers in the UK. However, it is important to note that other incentive mechanisms can be put in place. Alternatives to ToU tariffs might include one-payments (suitable for all types of DSM measures) or discounts from the Energy Tariff (applicable only for Supplier led DSM measures). The UK electricity market is fully unbundled, i.e. the competitive and non-competitive businesses are fully separated even where they are in common ownership. Thus, the benefits of Smart Appliances are spread amongst a number of stakeholders, rather than within a single, vertically integrated utility company. As a result, it is difficult to ensure that the costs and benefits are shared appropriately between the relevant stakeholders. This is especially pertinent from the perspective of Distribution Network Operators, who do not routinely engage directly with end-use consumers. The profiling settlement system used to determine the pattern of consumption of households and other (selected) small users means that it is difficult for Energy Suppliers to capture the value associated with load shifting. The introduction of Smart Meters means that it will be possible for all electricity consumption to be settled according to the actual profile, rather than the ‘deemed’ profile. However, there is no requirement on Energy Suppliers to move away from the use of the current profiling system, although they are able to do so if they wish. Customer Related Barriers Customer attitudes towards Smart Appliances represents one of the most significant barriers to the widescale deployment of these devices. In a situation where ‘competitive market forces’ dominate, then the customer is the ultimate decision maker. If customers do not want the appliances, or if developers do not envisage a market where customers will want the appliances, then it is evident that the market for such products will not develop. iii Impact of Selected Smart Appliances A number of case studies have been used to better understand the potential impact of a selection of Smart Appliances and the specific barriers to their uptake. Five appliances that contribute most to demand during peak periods (both now and in future years) and which are suitable for demand response were selected. The selected appliances are heat pumps, air conditioners, refrigeration, washing machines and tumble dryers. The control of the charging of Electric Vehicles is recognised as an important area, however this was outside the scope of the current study. The case studies were used to explore the benefits associated with two levels of Smart Appliances with a ‘Business As Usual’ baseline and to explore the main barriers to their uptake. Under Level 1 only minimal design changes are required to existing appliance designs, whilst Level 2 represents more complex options, as summarised below. - For both heat pumps and air conditioning, Level 1 does not require any changes to the design of the standard system other than the means of remotely switching the appliance off for short periods, whilst Level 2 requires design changes to incorporate thermal storage. - For refrigeration, Level 1 appliances include the capability to provide dynamic frequency response services to National Grid by automatically adjusting to changes in system frequency. Level 2 appliances require further developments to the dynamic demand concept to allow extended interruptions of, say, half an hour. - For washing machines and tumble dryers, Level 1 does not require any changes to the design of the existing appliances, but rather relies on changes in human behaviour to minimise usage during certain periods. Level 2, then requires design changes to enable these appliances to be automatically scheduled to operate during prescribed periods. Alternative designs that allow the operating cycles to be interrupted or to defer the heating load are also briefly considered. Delivering the Benefits of Smart Appliances – the Roadmap The results of the case studies were used to produce a Priority Matrix which compares the relative impact and ease of implementation of a range of measures. This approach is useful in identifying the ‘quick wins’, (i.e. measures that have a high impact and are easy to implement) and those that should be avoided (i.e. those with a low impact and are difficult to implement). iv gh L2A & B Hi L2A & B Key: L2A L1A Heat Pumps L1A L1A Washing Machines / Tumble Dryers Refrigeration ct Air-conditioners a p m I L1 -Level 1 smart appliance L1B L2 -Level 2 smart appliance L1B L2B A -Short term interruptions L1B B -Longer term interruptions L2A L1A L2 B w L1B o L Ease of Implementation Low High Priority Matrix In the diagram above, L1A refers to an appliance with a Smartness Level of 1 applied to a short term measure; L2B refers to an appliance with a Smartness Level of 2 applied to a longer term measure. The Priority Matrix shows that of the appliances considered, heat pumps and air conditioners that provide short term interruptions (L1A) represent ‘quick-wins’, i.e. can be implemented with relatively high ease with reasonable impact. However, it is important to note that the simple on/off control of heat pumps and air conditioners are not believed to represent the measures that have the potential to deliver the highest impact. This is attributed to the provision of longer duration interruptions by these appliances (L2A heat pumps and air conditioners). However, it is not known how much more valuable are the benefits arising from these more complex designs compared to the simpler “quick wins”. The Priority Matrix was used to establish a prioritised list of actions to enable the high impact / high ease of implementation measures to be put into action as soon as possible. These include generic measures that are applicable to all types of Smart Appliances, and specific measures for heat pumps and air conditioners. v