2 minutes reading time (489 words)

Better coordination of innovation efforts needed if domestic customers are to benefit fully from demand-side response

Activity on innovation projects to help encourage demand-side response is at an unprecedented level, but needs better coordination, and greater focus on customer reactions to innovation,  if customers are to benefit fully.  This is one of the key findings of Paper 11 of Sustainability First’s GB Electricity Demand Project, which was published in April 2014.

This paper explores how, in the longer term, innovation could best serve the customer on demand-side response. It considers the approaches adopted by the current innovation funds (such as the Low Carbon Networks Fund) and related projects, and investigates in detail the potential for two practical examples of domestic customer-facing innovation, automated control of electrical devices and household-level thermal storage.

Innovation funding, and the LCNF in particular, has given a major boost to electricity demand-side research. The LCNF has required cultural change in both the network companies and in Ofgem, and has fostered collaboration, often with partners from outside the industry, and emphasised the need for value for money.  Knowledge sharing is taking place, but there may be a need for some soul-searching as to how far some of the outcomes may prove truly innovative in the end. From a customer perspective, it is perhaps disappointing that LCNF (with some exceptions) tends towards funding technology projects rather than projects which are primarily end-customer focused. The Technology Strategy Board however was seen by those we have spoken to as useful for funding smaller innovators and customer-facing initiatives. One finding in our paper is a need for better coordination between the different funding bodies in their support for electricity demand-side research. This includes a need for greater understanding about where the gaps in knowledge lie, where applied R&D is likely to have greatest impact, avoiding duplication and ensuring value. Lessons from the many smart projects and trials need distilling, analysing across the projects, and feeding into the development of policy and measures.

Both automated control and household-level thermal storage offer significant opportunities for the future, and there is no shortage of potential suppliers of equipment.  However, there is not sufficient value in today’s energy market for market actors to attract many domestic demand-side customers just yet.  And to equipment manufacturers, it was far from clear how quickly the opportunity will develop.  Evidence from innovation trials of the extent of customer interest in innovative products is still limited – especially when it comes to customer appetite for automation and / or household-level storage.  More research is needed, particularly on the customer commercial proposition – and in particular on how the vulnerable customer can benefit from innovation developments. Vulnerable customers should be a focus of electricity demand-side innovation funding. There should also be more proactive dissemination of innovation project results.   

It is however encouraging that Ofgem, government departments and the research councils are starting to work together to improve on current coordination between funding streams –and hopefully to draw out some systematic lessons from the many smart research projects and trials. 

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