Why smart grids are essential to meeting the UK’s housing needs

While the Future Homes Standard (FHS) is a welcome roadmap for the future of decarbonised homes, explains Dan Nicholls of SNRG Group, it will not be realised without accompanying policy measures, which encourage the uptake of enablers like smart grids.

At the end of 2023, the UK government released the long-awaited Future Homes and Buildings Standards consultation, which aims to introduce measures ensuring all new-build housing is ‘net zero ready’ by 2025.

As we inch ever closer to 2035 and 2050 net zero targets, there is increasing pressure to decarbonise high-emitting sectors.

With about 30% of the total energy usage in the UK due to the heat and power needs of residential and commercial buildings, the housing sector will face the challenge of adapting rapidly to a net zero world.

Among a variety of regulations being brought in to decarbonise housing and construction, the Future Homes Standard stands out as highly significant. From 2025, it will require carbon emissions from new build homes to be 75-80% lower than previous standards, and homes will need to be ‘zero carbon ready’ and future-proofed with low carbon, energy efficient heating systems.

Compliance with the Future Homes Standard will become mandatory in less than a year, presenting a notable challenge for developers. It is critical that those in the industry are able to meet new requirements – and smart grids are a crucial tool which developers can use to adapt to this changing landscape.

The UK government must recognise that while the FHS is a welcome roadmap for the future of decarbonised homes, it will not be realised without accompanying policy measures, which encourage the uptake of enablers like smart grids.

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As smaller, smarter, more localised grids, smart grids can significantly reduce the cost and timeline required for a new grid connection, thus avoiding delays and cutting costs for developers. 

A smart grid generates renewable power for a development at its location, rather than by transferring electricity over many miles – using power efficiently and reducing pressure on the national transmission system.

Creating energy from one or more sources, such as solar panels or wind turbines, and in combination with battery storage, electricity is generated for the exclusive use of local customers, and distributed to interconnected buildings on any residential, commercial or industrial site, including housing developments.

Energy is used flexibly and ‘smartly’ using digital control systems to optimise onsite consumption and power homes and buildings when generation is low and demand is high.

This minimises grid-imported electricity and provides a much-needed pathway to creating modern homes as part of a flexible, secure energy system.

With gas boilers being effectively banned by the FHS, the transition away from fossil-fuel generation will bring forward an increasing number of all-electric homes requiring new connections to the grid.

With about 200,000 new-build homes added to the market each year, and the government having set targets for 300,000 annually by the mid-2020s, domestic heat pump installations must ramp up hugely from current levels of deployment (tens of thousands annually).

Analysis has shown that this momentous increase in heat pump usage will significantly increase peak demand on the electricity grid – highlighting the imperative need for smart energy management systems.

Government policy must incentivise flexible energy systems like smart grids to manage this additional demand on the grid, accelerate the renewable transition and reduce the consumer costs of decarbonisation.

Quite simply, the UK will not reach its housing targets unless we embrace the opportunities of smart grids. New developments are facing connectivity delays of up to a decade – and despite recent work undertaken by National Grid ESO and Ofgem to mitigate grid delays, developers are still left questioning the effectiveness and speed of the system.

The NGESO’s Five Point Plan, designed to swiftly tackle the grid connections process, claimed that only 70% of queued projects with a planned connection date after 2026 would be able to connect between two and 10 years earlier – posing problems for developers with projects complete or underway long beforehand.  

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Furthermore, nationwide rewiring would take years and come with significant costs. Recent studies have shown that decarbonising the UK’s electricity system by 2030 would require £116 billion in investment – and in the meantime, economic progress is stalling and UK housing and infrastructure targets are being put at risk. 

The UK government recognises the critical need to enable grid upgrades, as seen through recent policy including the Connections Action Plan and the Transmission Acceleration Action Plan, which set out measures aiming to cut average connection times and halve power line construction times.

However, a lack of provision has been made thus far to encourage the uptake of smart grids – which are a clear solution to the problems the government is trying to tackle. Unlike costly grid upgrades, smart grids can be deployed immediately to unlock greater flexibility and cheaper energy bills. 

Simple, low-cost policy incentives could be introduced to unlock the potential of smart grids; these include simplifying rules around smart grids to make them easier to deploy and operate, and recognising the benefits of smart grids in terms of cost and carbon savings in the upcoming Home Energy Model. 

The Future Homes Standard is currently consulting on two models, one of which would mandate the installation of solar PV as standard. It is clear that the solar pathway should be adopted if we are to meet net zero, but this makes the rollout of smart grid technology even more important so as to maximise electricity generated onsite, distribute it to residents and store through batteries, to be used when demand is highest. 

The savings which a smart grid can provide to developers can be passed on to consumers. This is especially important in light of concerns raised about how the Future Homes Standard legislation may affect the prices of new buildings requiring expensive low-carbon material.

End-user electricity bills can be significantly reduced with a smart grid. The demand-side response aspect means consumers are able to adjust their electricity usage during peak periods, and they will also benefit from long-term protection against rising and volatile gas prices.

The integration of smart grids into the housing sector holds the key to unlocking the full potential of the future of low-carbon living.

By embracing smart grid technology, and fostering a conducive regulatory environment, we can overcome grid constraints, accelerate the transition towards net zero, and pave the way for low-cost, low-carbon housing – shaping a sector that is fit to address present challenges and future-proofed for a decarbonised world.

About the author
Dan Nicholls is managing director of SNRG Group, a NextGen infrastructure developer which provides end-to-end place based renewable energy systems. A net-zero specialist with over fifteen years of experience delivering clean energy products and infrastructure, he is focused on deploying commercially viable and socially equitable solutions to decarbonise the built environment.