Ofgem plans UK smart grids - and Britons won’t feel the pinch

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In a distinctly unexpected move, the British energy regulator Ofgem has said that it will dedicate £500 million to create up to four “smart grid cities” in the UK, according to Smart Meters. This news comes during the three-month consultation period for the country’s renewable energy plans.

The plan comes as a surprise as the funding for this project is not going to come from the conventional British sources, such as tax-payers money, in fact the company plans to use money generated from customer’s utility bills in order to fund the transformation from a conventional power system to one efficient, smart, power system, therefore giving customers more for their money.

The regulator has asked utility companies to choose different locations where municipal smart grids can be set up, and then, to further the unexpected, Ofgem will pay for the installation of the technology in customers’ homes. The towns or cities will serve as a proving ground for the technology before a nationwide rollout is implemented.

It seems that the country has finally decided that the ancient electrical grid in place is simply not ecological and perhaps – when looking at the renewable energy success of its neighboring European countries such as Germany – Britain is left a little red-in-the-face.

The aging electrical grid will be overhauled and the smart grid cities will be a starting point. It is not only digital technology that will transform how power is distributed and consumed, a larger and larger share of Britain’s power supply will come from renewable power sources such as solar PV.

For renewable power to be integrated most efficiently, Britain’s power supply must evolve from a centralized one to a system with widely distributed power generation sources. The centralized power system in place today is fine for large fossil fuel-burning power plants but renewable power has an intermittent supply that makes such a system impossible.

Ofgem will be taking the example of Boulder, Colorado as a model for its smart grid cities; as the world’s first “smart grid city,” the $100 million project will allow residents to actively monitor and manage their energy consumption. 

Phillip Wolfe, director general of the Renewable Energy Association, is encouraged by Ofgem’s commitment. “This is encouraging news,” he said. “The electricity network has been designed for a centralised energy approach for a few large scale power stations dotted around the country feeding out towards users somewhere down the line in a dumb grid.”

“It will be a substantial task to rewire it,” Wolfe explained. “With the new feed-in tariffs coming in next year, it will dynamite the market for microgeneration but it’s important to have the infrastructure for it.”

Funding for the £500 million project will be spread out over a five-year period, which is a wait we’re willing to bet Britain’s will take as opposed to paying out the money in a more hands-on manner. 

Ofgem announced these plans as part of its five-year review of distribution charges that suppliers pay to use the system. The regulator did say that annual bills would have to increase by £4 per household to pay for the £6.5 billion it says is needed to invest in the power grid of the future, yet this is a small price to pay for renewable energy.

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