By Derek Lickorish

When Google recently announced its new power meter, you can bet it wasn’t just focussed on the 1 billion people who are fortunate enough to enjoy the privilege of today’s energy driven lifestyle. Google has a 6th sense; a well honed and visionary commercial acumen, it recognises a growth opportunity when it sees one and interest in energy and carbon is going to get bigger…much bigger! Reflect this with the political sea change in America about carbon and the environment and perhaps we really are at the tipping point of something very big indeed; perhaps, even bigger than the industrial revolution itself?

David 0’Riley, Chevron’s CEO, gives a great context to help you get the enormity of the energy challenge and opportunity and how big it’s going to get. At the Metropolitan Club, Washington, D.C. late last year, he spoke about the golden billion – of people. There are more than 6 billion of us on the planet today but only about 1 billion who really enjoy a real energy driven quality of life. Of the other 5 billion, 2 billion are on the way up and the remaining 3 billion are in relative poverty. But then, and perhaps the most poignant, is the 3 billion he refers to who have not yet even been born; but will be by 2050! Mind blowing numbers and, when coupled with the new US President’s comments about the potential for a green energy revolution, you can begin to perceive the huge upside of such a transformation and what it will bring for both the world’s economy and the environment. De-carbonise our worldwide energy driven economy and there is a real win-win scenario.

UK Government’s Energy and Climate Change Secretary, Ed Milliband, has just launched what he called the “Great British refurb”. He wants some seven million homes refurbished and fitted out with energy efficiency and renewable heat and electricity measures by 2020. By 2030, he wants every house to have access to such measures.

The UK Government knows that existing buildings will need to reduce carbon emissions to almost zero in order to meet its declared target of an 80% cut in emissions by 2050. To do this, the Government will need to incentivise individuals and communities to take radical steps to save energy. It will, therefore, need to do much more and build on its recent mandate for smart gas and electricity meters in all homes by 2020. Whilst smart meters will:

  • Benefit customers and their families by reducing their energy costs
  • Help energy security and diversity of supply issues
  • Boost a nation’s economy with new green business opportunities
  • Start the ‘voyage of discovery’ to reduce carbon emissions.

…this is the easy bit; turning these new announcements into action and having the political will to facilitate the legislative and financial frameworks plus regulatory controls is much harder. And let’s not forget something much closer to home so to speak; smart meters and standards. All speaking the same ‘language’ and in a common format or translated at some point in the system architecture to ‘sound’ the same? Where will interoperability occur? In a Google world we know a common IP format exists and we know it works, but what about for the smart meter manufacture of today? Not everyone is convinced by Open standard, and to those that are, there is an anxiety about how you get there.

Meanwhile, let’s go back to UK and look at its context and ambition to take on the much bigger challenge of joining together all the energy efficiency and carbon issues to get the ignition and ‘chain reaction’ it needs. In the UK around 90% of homes that will be standing in 2020 have already been built.

It’s not complicated to realise that it is existing homes that are going to be the big problem when it comes to energy conservation and carbon reduction to meet the UK’s legally binding targets. One in four homes were built before the Second World War and one in five before the First World War. Many of these are still in a poor state and have a low level of energy performance and, therefore, emit avoidable carbon and increase customers’ energy bills. In short, poor insulation means that £1 in every £3 spent on heating in UK homes is wasted. The priority must, therefore, be making the existing housing stock as efficient as possible.

The UK’s energy efficiency policy has traditionally been focused on individual low cost measures. Several policy instruments, the latest of which known as the carbon emissions reduction target (CERT) has driven utilities to focus on the lowest cost per tonne of CO2 saved. Policy must now move to facilitate the more challenging and deeper savings in energy, money and carbon emissions that will be required. To this end, it is evident the UK is rapidly moving towards a whole house and energy services approach as outlined in their government’s recent heat and energy saving strategy proposals previously mentioned.

So, the shape of things to come, from both sides of the Atlantic, is clearer and getting more consistent by the day. Turning aspiration into action and despite the best endeavours of different interests to either hinder or assist is where the focus is now beginning to turn. Who will be the agents of this multi billion dollar change programme? Who will have the skills and the ‘balls’ to deliver, co-ordinate and check the value for money deployment of all the elements that could just take us to the future so many of us have envisioned?

The utility businesses all around the world – so long considered to be dull and boring by many, save those of us who know differently – could be propelled centre stage. Despite the notion that many of these energy companies are private and their shareholders are in control, the reality is somewhat different. An essential service such as this is never going to be free from political influence or, as some might say, its interference. We could see a return to a post war era whereby the utilities that then employed the tens of thousands will do so again, but this time to re-build the power infrastructure for the economy of tomorrow. The utility could also tackle the profligate end use that appears to have created the climate challenge of today and deliver the decarbonised future for the billions that will inhabit the planet in the next 50 years and beyond.

To try and explore the potential for the utility to be the ‘agent of change’ for the holistic approach and green revolution, we devote the remainder of this piece to a unique social experiment known as ‘Green Streets’ set up by British Gas, the UK’s largest supplier of energy.

This experiment in energy and carbon savings involved 64 households, on eight streets with a ‘green’ name, spread across the UK. They were chosen to take part in a year long challenge designed to reduce energy consumption and carbon emissions by as much as possible. Households were a mix of British Gas and non British Gas customers in the UK’s totally liberalised energy market. There was no requirement to switch suppliers to British Gas to take part. There was no doubt participants would be motivated as there was a prize for £50,000 for the winning street which could be spent on a community project of the streets’ participants’ choice.

Properties in the Green Streets initiative represented a full range or flats, terraced houses, bungalows, semi-detached and detached houses. In terms of household size, those involved were a little larger than the national picture at the time of 2001 census. Following meetings in early 2007, where energy assessments including infra red photographs were made of each property, each street was offered £30,000 of energy saving and renewable energy measures. Experts were on hand throughout the project to give advice and information. Customer’s motivations for taking part in Green Streets include:

“It’s not just about the competition. It comes at a time when the debate about energy is front page news” – London.

“I have certainly never been eco-friendly, energy conscious in any way at all … But once we got involved with it, we realised how much it could save us, firstly. But the implications for, in a wider sense of having a 2 year old daughter, possible effects to save CO2 emissions, you start being more conscious of it, reading the newspapers and on television and whatever” – Edinburgh Customer comments from the trial: “As soon as we told the kids they could keep half the savings they were really engaged” – Leeds “It was not about changing the way we live. It was about changing our habits” – London “It was a real journey of education and learning and we were amazed at the amount we could save” – Leed.

The insulation, lighting, appliances and heating system upgrades were installed at the end of January 2008. The focus was on gas and electricity use. Once the measures were in place, meter readings were taken monthly with weather correction factors applied to the data sets to control for differences in temperatures between the two years. Measures included 1,500 low energy lamps, 330 light emitting diodes, 40 new boilers, 5 photo voltaic panels, 3 solar thermal units, and, on the appliance side, some 20 fridge freezers and 15 new washing machines plus a lot of cavity wall, loft insulation and draught proofing. During the trial there were certain important life changing events. All of which had an impact on energy use. There were two births and some movement of people in and out of the households and, sadly, one death.

The holistic approach by British Gas was put to the test for 12 months and the results announced at the UK’s Houses of Parliament on Tuesday 3 March 2009. It was interesting to see politicians from across the political spectrum take a keen interest in what participants had to say and hear of the outstanding results. Each household made an average energy saving of 25%, most streets were in the range of 22 – 27%. The total reduction in emissions over the project was just under 89 tonnes. Analysis of actual versus modelled energy savings implies the behaviour and lifestyle changes have a major role in determining outcomes.

Participants suggest that British Gas energy advisors, energy displays, plus the competition element were key drivers of behavioural change. Social interaction and community spirit was an unexpected benefit with neighbours meeting for the first time and evidence of sustained and additional effects. The implications of the Green Streets initiative are significant; if they could be replicated across all UK households there would be annual savings on customers’ fuel bills of some £6 billion and an emission reduction of 35 million tonnes of CO2. To put this into further perspective, it is the equivalent of the annual carbon emission of three to four modern coal fired power stations. That would be about a third of what is needed for the UK to meet the 2020 emissions reduction target in the new Climate Change Act of 2008. If the gas demand reduction revealed in the Green Streets initiative could be replicated across the UK, then their total gas demand could be reduced by over 8%. This would reduce the UK’s current gas imports by about 33%.

British Gas can, quite rightly, feel proud of what it has achieved and can confidently put forward important policy recommendations to Government:

  • Gas and electricity smart meters with in home displays will have a significant impact on awareness of energy use and stimulate energy saving and should be rolled out quickly
  • The market model, yet to be chosen for the UK’s smart meter roll out, must facilitate innovation in different types of in home displays, but also ensure a minimum standard
  • The provision of face to face energy saving advice in the home is critical and this activity must be significantly increased. Government must explore several routes for advice, commercially based energy service companies, more requirements on suppliers, local authorities and possible a dedicated agency
  • The UK could build on the existing energy performance certificate system to require minimum standards which could, in turn, drive the development of a green mortgage market. A community energy action programme which provides groups with funding, training and technical support needs to be expanded so that services can be widely accessed.

Prior to the privatisation of the UK energy industry, the previous gas and electricity boards enabled customers to purchase appliances with regular payments through their energy bills. British Gas recommends that Government should work with the energy industry to resurrect this mechanism and assist with the obtaining of appropriate credit licences. From a smart metering perspective, it is simple to see how this latter point could be enhanced with a smart meter. For customers who request a ‘pay as you go’ solution for energy it would be technically feasible for additional small monthly amounts to be paid through the smart meter infrastructure. This would bring to those of more limited income a means a by which they also could upgrade to more energy efficient appliances.

Smart meters might also make it easier for those Suppliers willing to take over a consumer loan when, for example, a customer wishes to change their energy supplier.

Policy recommendations such as those from the British Gas Green Streets initiative inevitably have major financial and political implications, as indeed does the whole energy and carbon agenda. Developing the right financial mechanisms which strike the right balance between fiscal measures and increasing customers’ energy bills is going to be a significant political challenge for whichever government is in power.

Returning now to the ‘agent of change’ and the utility being potentially the best placed to take on this challenge, it would need to be incentivised by Government to work more closely with and through community groups to engender the unity of purpose and excitement the Green Streets initiative stimulated. There is no doubt the essence and power of a united community when it recognises the benefits for today and the legacy for their families of tomorrow, is an immense force for good.

We conclude with Lord Kelvin’s observation “if you cannot measure it, you cannot improve it” and a key recommendation made by British Gas for smart meters and in home displays to be rolled out. From PRI’s perspective, it is committed to open standards and recognises the need for engagement to make it happen. Smart metering and the smart grid, like the industrial revolution, will bring about change beyond our current vision of the future. The opportunity to manage the carbon our forefathers caused us to emit will surely live on for the billions, in a common format and, in a Google world of tomorrow.