Flexible use of the grid could slash £12 billion in energy bills per year by 2050

Billions of pounds in household energy savings are at risk due to inefficient use of the grid, a new white paper by smart energy specialist geo and heating manufacturer Vaillant finds.

The white paper, DSR flexibility for domestic heat pumps, examines how heat pumps and other household appliances and white goods can help run the grid as efficiently as possible.

The paper warns that the lack of a standard language that such devices can use to manage the demand they place on the grid (known as ‘flexibility’) is putting cost and carbon savings at risk. A common language for household electrical devices will enable flexibility, allowing the grid to offer savings to the millions of households currently facing rising energy bills.

Grid flexibility

Electrifying heat and transport for the home will lead to the grid becoming overloaded if just 10-20% of existing households install heat pumps. The potential for overloads will drive expensive upgrades of the grid unless flexibility is implemented to prevent the overloads from occurring.

Enabling heat pumps, electric vehicle (EV) chargers and household appliances to operate more flexibly would allow them to match their demand to the existing capacity available on the grid, smoothing load throughout the day and avoiding peak overloads. Flexibility will also drive direct cost and carbon savings for consumers by automatically charging EVs and running household appliances off-peak when renewable, low-carbon electricity is the cheapest and most abundant. Turning down demand is known as demand-side response (DSR). This approach provides further support for the rapid up-take of heating and transport electrification without the need for expensive grid reinforcement.

Standardised grid language

If this flexible energy system of the future is to become a reality, then there needs to be an agreed set of standards to allow the effective operation of heat pumps, EV chargers (and vehicle to grid), solar PV, battery storage and white goods. A lack of common standards will create complexity, increase costs and ultimately cost consumers billions of pounds in lost savings.

The white paper calls for a consortium of stakeholders including DNOs, energy retailers, DSR service providers, Customer Energy Manager (CEM) and energy smart appliance (ESA) Manufacturers to be formed to develop mass-market solutions capable of adoption in Great Britain and in international markets.

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Increasing flexibility to slash expenditure

BEIS, Modelling 2050: Electrical Systems Analysis report (Dec 2020) stated that in 2050, system flexibility (including DSR) could yield up to £12 billion ($15.8 billion) per year reduction in costs and reduced carbon intensity.

Steve Cunningham Chief Executive Officer of geo said: “We are on the cusp of a green energy revolution, with the take up of electric vehicles accounting for a record one in 62 of all new cars sold in 2021. To save households the most money and do as much as we possibly can to reduce carbon emissions, homes of the future will be fitted with home energy management systems that automatically operate our heat pumps and charge our EVs at the cheapest and greenest times.”

“But the increase in demand that electrification will drive can only be affordable if we have a much more flexible approach to managing demand on the grid. To do this we need common standards across the sorts of smart appliances which are increasingly becoming part of the modern home. That is why we are calling for a cross-industry consortium to establish common standards to make a more flexible grid a reality: we cannot allow a lack of industry coordination cost British consumers £12 billion a year.”

The paper concludes that heat pumps should be an integral part of a more flexible future. Coupling heat pumps with additional storage can offset increased electricity demand they create and either allow the heat pump to need less power during peak times (via thermal storage) or be offset by electrical battery storage (or Vehicle-to-grid).

The paper also identifies that to reach the Committee for Climate Change’s goal for the installation of 21 million heat pumps between now and 2050, it is likely that hot water storage or battery storage will be needed to provide DSR at times of peak demand.

“Heat pumps are key to achieving the Government’s 2050 net-zero targets as they are a low carbon, low-regret solution to heat UK homes. However, with the growing consumer demand for heat pumps, a plan is essential to ensure the energy system can support heat pumps in their widespread adoption and it is crucial for heat pumps to provide a degree of demand side response. Our joint paper with geo sets out some recommendations for both Government and the industry to explore in more detail.”, said Mark Wilkins, Director of Technologies, and Training.

Read the full report.