A grid for the future
Infrastructure
188. The challenges associated with connecting renewable
electricity-generators to the transmission system require investment
in the system's infrastructure. In addition to the construction
of additional transmission capacity—such as the Beauly-Denny
and North-South transmission lines—much of the current infrastructure
is reaching the end of its 50 year lifetime and will need to be
replaced or upgraded.[194]
189. In their 2007-2012 transmission price control
review, Ofgem commit nearly £5 billion to renewing Britain's
electricity and gas infrastructure to meet new demands from gas
imports and renewables connections. National Grid will spend upwards
of £4 billion on electricity transmission investment over
the next five years.[195]
Both organisations expressed confidence that this investment would
be sufficient to provide a Grid with the ability to support 40
per cent renewable electricity by 2020.[196]
Intelligent grid management
190. Intelligent grid management is "a generic
term applied to innovations that coordinate and manage generation
and network resources".[197]
The UK has a strong research base in this area, with a number
of SMEs and academic institutions involved, such as Ecconect,
Universities of Manchester, Strathclyde, and Imperial College
London. First generation products are already commercially available
and are expected to have reached a stage of partial maturity by
2020.[198]
191. Intelligent management of the Grid will become
increasingly important with further deployment of microgeneration
technologies. In the current system, Distribution Network Operators
(DNOs) are passive players as the flow of power is unidirectional.
The connection of microgenerators to the distribution network
will fundamentally change the nature of the relationship between
the consumers and the DNOs, however, as these devices draw power
from, and contribute power to, the grid network raising both integration
and grid management issues.
Research and development
192. In developing the grid, it will be necessary
to invest in R&D for transmission and grid management technologies.
In setting the electricity distribution price control for 2005-2010,
Ofgem initiated three new incentives (Distributed Generation Incentive,
Registered Power Zones and the Innovation Funding Incentive) to
reward generation connections, principally renewables, and to
encourage innovation in network development.
193. Paul Whittaker, National Grid, told us that
National Grid currently spends 0.5 per cent of turnover, or £5
million per year, on R&D in this sector.[199]
Given that the Government has an ambition to increase UK R&D
investment to 2.5 per cent of national income by 2014 (up from
1.9 per cent in 2004),[200]
and that the UK engineering sector spends an average of 4.5 per
cent of revenue on R&D[201],
National Grid's expenditure in this area appears to be particularly
low.
194. We are concerned that the level of investment
in R&D by National Grid is insufficient to identify and respond
effectively to the challenges that face transmission and grid
management technologies.
Demand-side management
195. The pattern of electricity use in UK households
leads to peaks and troughs in overall electricity demand. It may
be possible to use demand-side management tools to achieve a better
balance between consumer demand and the electricity generated
by renewable technologies, for example by smoothing local or national
demand profiles. The use of demand flexibility does not have to
be centrally managed, and could evolve through the autonomous
actions of individual consumers.
196. One way in which this may be possible is through
the use of 'smart' meters which facilitate two-way communication
between the consumer's meter and the distribution network. Capable
of recognising energy demand at different times of the day, smart
meters can display real time price and electricity consumption
information. By developing a tariff that was sensitive to demand,
and by rewarding consumers for using electricity 'off-peak', the
use of smart meters could act to reduce peak electricity need.
197. Professor MacKerron informed us that research
undertaken by Science and Technology Policy Research Unit, University
of Sussex (SPRU) concluded that smart metering should not be "a
matter of individual consumer choice, but as a matter of infrastructure
development that should be treated at a national and policy level
generically".[202]
However, smart meters are currently designed for the commercial
sector, rather than the domestic one.[203]
198. We believe that demand-side management will
be increasingly important as the deployment of microgeneration
technologies gathers pace. We recommend that the Government support
the development, and roll-out to domestic consumers, of smart
meters which are compatible with electricity microgeneration devices.
165 
