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By Dr. Edward Colby

 

Research by Ernst & Young suggested that smart grids could save the UK £19 billion on its energy costs, net of the cost of investment. Smart grids are a smart move, but they won't happen on their own, or at least not quickly. The UK’s regulatory regime for electricity suppliers and providers is focused on price, not innovation, and does little to encourage new technologies.

 

The U.S. now has a thriving smart grid sector and its finger well and truly on the smart technology pulse. For example, President Obama has set up a $4bn (£2.5bn) co-investment fund to back businesses that invest in smart grids. Supporting this view, a recent report from SmartGrid GB argued that the UK must move quickly to secure its leading position on smart grid technology or risk losing out on a £5bn export market and 10,000 skilled jobs. It warned that while the UK is currently well-placed to lead the development of smart grid technologies, a lack of ambition could see it lose its position to overseas competitors, such as the U.S., China and South Korea.

 

In order to make the most of the UK’s new methods of energy generation, and to allow for the extra capacity that will be required for future demand, for example, electrification of heating and vehicles, investment in the smart grid is a necessary requirement. Combine this incentive for new technologies with the abundance of small companies coming up with pioneering products in the UK and it is clear that the UK should be leading the way in innovation in the power network.

Small fish in a big pond disconnect

Small companies work very differently from the way large ones, such as DNOs and utilities, do, and this is causing an ever widening gap between the two. Long

purchasing cycles and the fact that it can take months to test a new product can have serious repercussions for smaller players.  Communication can also be an obstacle. It can be difficult for small companies to access larger enterprises with increased layers of bureaucracy, and this makes it tricky for them to find out what the pain points in the power network are and what changes should be made. Even if they have the perfect solution to a problem, they may not know who would value the solution, or how valuable it is.

 

Also large companies have a tendency to acquire smaller companies if they think they have an interesting technology. In this situation innovation can be stifled and in some cases the further development of the new technology may stop.

 

This is due, in part, to the conservative nature of the energy industry. Unless technology is proven, DNOs and utilities are reluctant to invest in it, and new technology is hard to prove, especially for small companies with a limited budget. Utilities are not focused on innovation; their priority is asset management. They see innovation as a way to firefight problems as they arise, rather than as a way to improve both business efficiency and the customer experience.

 

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